Online Banking Boosts Financial Inclusion in Sub-Saharan Africa

IFC is helping firms in sub-Saharan Africa deploy new technology to increase financial inclusion. © Anna Koblanck/IFC

Making money isn’t the hardest part of Sarah Asiimwe’s job selling produce in a market stall in Uganda. Keeping that cash secure is much trickier. In the past, she worried about her own safety when she traveled to and from the countryside purchasing fruits and vegetables. She knew it wasn’t wise to carry her money with her, but she didn’t have a bank account or place to deposit her earnings.

After discovering Airtel Money, a mobile money service, those worries have left her. “It helps me keep my money secure. I always deposit my money, and when I need it, I withdraw it,” she says. “Since I am a businesswoman I have to keep doing that to keep my money safely.”

Asiimwe now stores earnings and even pays her bills by mobile phone with Airtel Money, one of the 22 digital financial services receiving IFC advisory support in sub-Saharan Africa. IFC helps clients like Airtel deploy new technology and innovative business models to increase financial inclusion.  In Uganda, access to digital financial services has helped to double the national financial inclusion rate in just a few years. Many of those new customers, like Asiimwe, were previously excluded from the financial sector.

These efforts are part of the World Bank Group’s commitment to Universal Financial Access, which includes helping create 1 billion accounts by 2020. As part of this target, IFC is committed to extend formal financial services to 600 million people.


Extending Access to Finance

For Asiimwe, financial access was in part a safety issue. Financial access also facilitates day-to-day living, and helps families and businesses plan for everything from long-term goals to unexpected emergencies. A mobile money account can be a first step toward access to a full suite of formal financial services that helps people receive credit and insurance, start and expand businesses, invest in education or health, manage risk, and weather financial shocks.

Despite attention to issues of financial inclusion, an estimated 2 billion adults worldwide still don’t have a basic account.  Globally, 59 percent of adults without an account cite a lack of enough money as a key reason; financial services aren’t yet affordable enough or designed to fit low income users. Other barriers to account-opening include distance from a financial service provider, lack of necessary documentation papers, lack of trust in financial service providers, and religion.


Focusing on Africa

The African continent is a particular focus of efforts to increase access to accounts. In 2012, IFC and The MasterCard Foundation created the Partnership for Financial Inclusion—a $37.4 million joint initiative to expand microfinance and advance digital financial services in sub-Saharan Africa. The Partnership works with microfinance institutions, banks, mobile network operators, and payment service providers across Africa to develop and test innovative business models for financial inclusion. It also pursues an extensive research and learning agenda, harnessing and sharing insights gained in projects for the industry and the public good.

The seven-year program supports 15 clients in ten countries on the continent and has so far helped bring about 4.7 million new active users of digital financial services. It has enabled $103 million in monthly mobile money transactions, 36,000 new credit accounts, and 900,000 new savings accounts.

The Partnership for Financial Inclusion is also supported by the Bill & Melinda Gates Foundation and the Development Bank of Austria, and collaborates with knowledge partners such as the World Bank and the Consultative Group to Assist the Poor (CGAP), a global partnership that seeks to advance financial inclusion.


Tools to Boost Efforts at Inclusion

As financial inclusion expands through mobile money and agent banking in sub-Saharan Africa and beyond, data analytics can be a key tool to further improve financial inclusion. To support this development, the joint Partnership between IFC and The MasterCard Foundation has just released its Data Analytics and Digital Financial Services Handbook for industry practitioners.  Data analytics can produce key business information for service providers to fine-tune product development, sharpen marketing efforts, and improve strategy to better reach the unbanked.

This is the third handbook on digital financial services published by the Partnership to help create a global market for affordable, reliable, and sustainable financial services for those who previously didn’t have access to an account. The other two handbooks provide guidance on technology and risk management for digital financial services.

A video from the launch of the handbook can be viewed here.

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Published in September 2017


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