Finance for All: Promoting Financial Inclusion in Central Africa
September 20, 2016
ECOWAS Regional ConferenceDakar, Senegal 1
International Monetary FundAfrican Department
Financial Development, Financial Inclusion, and
Growth in Africa
Roger NordDeputy Director
African department IMF
ECOWAS Regional Conference, Dakar,
Senegal,September 20, 2016
Outline
1. Financial development and growtha c a de e op e t a d g o t2. Financial inclusion in Africa3. The role of technology: Lessons from Kenya4. Policy implications
Finance for All: Promoting Financial Inclusion in Central Africa
September 20, 2016
ECOWAS Regional ConferenceDakar, Senegal 2
Financial development has supported growth and reduced its volatility in sub-g ySaharan Africa
10
15
20
25Pe
rcen
t cha
nge
in G
DP
Reducing borrowing constraintsReducing participation costsIncreasing intermediation efficiency
Long-Term Impact on GDP of Relaxing Financial Constraints
3
0
5
Keny
a
Moz
ambiq
ue
Nige
ria
Ugan
da
Zam
bia
CEM
AC
WAE
MU
Sources: Dabla-Norris and others (2015); IMF country staff reports; and IMF staff calculations.
Note: CEMAC = Economic and Monetary Community of Central Africa; WAEMU = West African Economic and Monetary Union.
Access varies significantly across SSA
Account at a formal financial institution(% age 15+), 2014
Account used to receive wages (% age 15+), 2014
Source: Findex.
Finance for All: Promoting Financial Inclusion in Central Africa
September 20, 2016
ECOWAS Regional ConferenceDakar, Senegal 3
The Role of Technology: Mobile Financial Services have significant potential in sub-Saharan Africa
Roughly 1 billion people have a mobile phone but no bank account
(CGAP)
SSA Africa leads the way fin the adoption of mobile
banking
Mobile banking helps reach the unbanked
0
10
20
30
40
50
60
70
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ica
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ya
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rce
nt o
f p
opu
latio
n,
ag
e 1
5+
5
The Role of Technology:Lower transaction costs
Mobile money use has expanded rapidly… …thanks to low transaction costs.
6
Finance for All: Promoting Financial Inclusion in Central Africa
September 20, 2016
ECOWAS Regional ConferenceDakar, Senegal 4
Case study: KenyaThe Rapid expansion of transfers …
Kenya shows one of the highest share of population with access to financial services after South Africa…
…to a large extent because of the success in making mobile-phone payments available to its population.
43
50
54
58
59
61
69
70
75
79
17
13
31
16
8
20
8
3
7
5
40
37
15
26
33
19
23
27
17
16
Nigeria 2012Swaziland 2011
Uganda 2013Tanzania 2013
Botswana 2009Lesotho 2011
Zimbabwe 2014Namibia 2011
Kenya 2016South Africa 2013
Regional Comparison of Financial Access
7
38
40
41
43
21
14
15
17
41
46
44
40
0 20 40 60 80 100
Zambia 2015Malawi 2014Ghana 2010
Nigeria 2012
Formal Informal Financially Excluded
Case study: Kenya… was rapidly followed by other services
The number of deposit accounts (million) and net loans andadvances (Ksh billion) have increased too
8
Finance for All: Promoting Financial Inclusion in Central Africa
September 20, 2016
ECOWAS Regional ConferenceDakar, Senegal 5
Promoting financial inclusion through innovation …
Leveraging IT to E d S i
●Mobile phone-facilitated micro
payments
●●New framework for
payments (including taxes, utility bills, etc)
Customers can save, earn interest and access small loans
Platform for new products
(insurance products,
consumer finance)
Expand Services
9
Promoting financial inclusion through innovation …
R id i
Facilitation factors
Rapid expansion of mobile phone
use
Exploit technology for service improvement
Willingness to penetrate new
markets
Design of government policiesg g p• Allowed parallel payment system• Secured customers funds
More financial products to low income HH
10
Finance for All: Promoting Financial Inclusion in Central Africa
September 20, 2016
ECOWAS Regional ConferenceDakar, Senegal 6
Promoting financial inclusion through innovation …
Innovative Financial Instruments : Support Infrastructure
Credit Reference BureausCredit Reference BureausReducing cost of doing business - Build information capital, reduce information search costs and problems associated with information asymmetry; and extending credit based on financial identity. This allows change in the collateral technology in use. So far CBK has licensed 3 credit reference bureaus.
Consumer Protection The missing link in financial inclusion and innovation –
i di l f i diencouraging transparent disclosure, fair treatment, dispute resolution and financial education/awareness and costs.
11
Conclusions
Financial inclusion: critical role in sustainable development,Financial inclusion: critical role in sustainable development, reducing poverty, boosting shared prosperity
Technology offers significant scope for rapidly expanding access to financial services, notably for households and SMEs
Governments should focus on providing a supportive regulatory framework, ensuring competition among providers, and educating & protecting customers.
12
Finance for All: Promoting Financial Inclusion in Central Africa
September 20, 2016
ECOWAS Regional ConferenceDakar, Senegal 7
Th k !Thank you!www.imf.org