Leapfrogging Access to Financial Services through Innovation

A significant portion of the populace across Africa is unserved or underserved by formal financial services providers. Some of the key factors contributing to this state of affairs are costs of financial services, distances to financial services points of presence and high levels of financial illiteracy but above all, lack of clear knowledge of the safety of savings in financial institutions.

With low levels of financial inclusion, Africa cannot achieve its’ development aspirations given it is through financial inclusion that accumulation of capital and hence development takes place.

The Need for Innovation

Given the urgent need to scale up financial services depth and outreach in Africa, there is need to consider cost effective and easy access innovative approaches. Mobile phone technology presents one such opportunity. Mobile phone uptake is rapidly growing across Africa with mobile phone subscriber numbers outstripping the number of bank accounts holders. A celebrated case is the M-Pesa mobile money transfer services operated by Safaricom of Kenya. In just three years since it’s’ inception in 2007, M-Pesa has over nine million customers and over 17,000 agents. The other mobile phone operators have followed this success line and are increasing the space and scope of coverage for this financial service. Conversely, the long-established Kenyan banking sector closed 2009 with 8.5 million account holders and 996 branches and 45 banks.  The next stage is to ask how we can integrate both banking products and mobile phone services to enhance inclusion.

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