Africa must cash in on digital payments systems to boost financial inclusion and economic growth

Addis Ababa, 8 November 2023 (ECA) – Africa should accelerate adoption of Instant and Inclusive payment systems (IIPS) to ensure financial inclusion and boost economic empowerment of its people. The statement was made during the launch of the second edition of the State of Instant and Inclusive Payment Systems (SIIPS) Report 2023, jointly produced by AfricaNenda, the Economic Commission for Africa (ECA) and the World Bank Group.

In remarks delivered on behalf of the ECA Executive Secretary Mr. Claver Gatete, Mr. Stephen Karingi, Director of the Regional Integration and Trade Division said access to information “is vital for economic progress – the SIIPS – Africa report is a beacon of hope as it provides a reliable source of information – empowering private entities to make informed investment decisions while enabling governments to create evidence-based policies.”

Instant and Inclusive payment systems – IIPs – allow people to use any systems run by financial service providers to make payments immediately, at a low cost, to anyone and at any time. They are also a catalyst for financial inclusion as they accelerate low‑income consumers’ access to digital payment solutions and the formal economy. In this regard, a  shift towards digital payments is important for “enhancing financial inclusion and boosting economic growth,” said Karingi.

Mr. Karingi also explained that African countries have made strides in adapting to the new normal of increased reliance on digital technologies due to COVID-19, emphasizing that the focus was to promote digital financial services as a safer, more efficient, and convenient alternative to traditional cash-based transactions.

While some Instant Payment Systems in Africa have been successful, these facilities were only available to a limited number of financial institutions and for high transaction values, hence the need to scale them out, he said, noting the untapped potential for financial providers to connect with more customers and grow their balance sheets in cash-based economies.

This second edition of SIIPS launched by AfricaNenda explores the current state, limitations, and opportunities of IIPS in Africa. It seeks to provide African payment system stakeholders with valuable insights that can unlock the full potential of IIPS and benefit the people of Africa.

The report was developed following extensive primary consumer research in Rwanda, Malawi, Senegal, Cameroon, and Morocco to gain valuable insights into emerging trends, challenges, and learnings across various schemes. It also includes four new case studies that provide practical insights into eKash (Rwanda), NatSwitch (Malawi), Zambia Electronic Clearing House Limited (ZECHL), and GIMACPAY (Central Africa).

According the ECA, developing the SIIPS is a strategic objective of the Commission as it aims to support member states in issuing digital identification and building a thriving digital economy underpinned by a Centre of Excellence focused on digital identification, digital trade and the digital economy.

To support SIIPS and the digitalization of Africa’s economy, the ECA and the African Union Commission have launched an initiative to create a digital ID for Africa. This platform enables stakeholders to learn from each other and exchange experiences on how digital ID and fintechs can be used to promote financial inclusion.

In addition, the ECA is working on a comprehensive five-pillar capacity development program to enhance member states’ capacity to address the digital transformation of African nations. The program includes a thorough assessment of progress in gender equality, constructive engagement with policymakers, and focused identification of key areas to accelerate digital transformation across the continent.

Mr. Karingi reiterated that the ECA will continue its partnership with AfricaNenda and the World Bank to enhance Africa’s instant and all-inclusive payment systems. This will help promote payment systems throughout the continent while encouraging policymakers and regulators to adopt favourable policies that align with the objectives of the African Continental Free Trade Area (AfCFTA).

“As we strive to achieve our goals, we at ECA are committed to fostering productive collaborations with the African Union Commission, other UN agencies, civil society, member States, regional economic communities, and other development partners,” he added.

The SIIPS 2023 explores the evolution of both the supply and the demand side of instant retail payments. It highlights the challenges and opportunities shaping Africa’s payment landscape to equip stakeholders with the insights they need to motivate investments, partnerships, and progress toward inclusivity. This year’s edition highlights further developments in the IPS landscape and includes a spotlight on cross-border retail payment policy and regulatory harmonization in Africa.

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