Driving Digital Financial Inclusion in Africa

Location: Gallery, HQ1-R-700

This session analyzes the promises and challenges of advancing digital financial inclusion in sub-Saharan Africa. Our speaker will focus on his entrepreneurial experiences in the financial services industry, and subsequent discussion will explore how both the public and private sectors can leverage technological innovation in this field—in Africa and beyond.

The event will be immediately followed by a reception in the gallery

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Moderator

Eric Chinje, CEO, African Media Initiative

Eric Chinje is the Chief Executive Officer of the African Media Initiative, the largest network of independent media owners and operators in Africa. Mr. Chinje is the former head of communications at the Mo Ibrahim Foundation, the African Development Bank and the World Bank’s Africa Region. He has advised a number of governments on communication and development. Over the years he has launched a number of very successful social enterprises, including Santa MC2, an award winning micro-finance institution in Cameroon. Mr. Chinje is a Visiting Scholar at George Mason University.

Panelists

Carla Grasso, Deputy Managing Director, IMF

Carla Grasso assumed office as Deputy Managing Director and Chief Administrative Officer of the IMF in 2015. In that role, Ms. Grasso oversees all the Fund’s administrative functions, coordinates the budget, human resources, technology, general services, and internal audit. She also oversees the IMF’s capacity development (TA and training) activities. Before coming to the IMF, Ms. Grasso worked for fourteen years at Vale S.A., one of the world’s largest mining companies. She also served as Secretary of the Brazilian Supplementary Social Security Office. She is a graduate of Universidade de Brasília.

Benno Ndulu, Governor, Central Bank of Tanzania

Benno Ndulu is the Governor of the Central Bank of Tanzania, a position he has held since 2008. He also currently serves as the Board Chair of the Alliance for Financial Inclusion. Between 1998 and 2007, Mr. Ndulu worked at the World Bank, where he served as Research Manager for the Development Economics Group and as Advisor to the Vice President for Africa. He has been involved in policy advisory roles worldwide and has served in a wide range of boards locally and internationally. He holds a Ph.D. from Northwestern University.

Tayo Oviosu, CEO Paga, Nigeria

Tayo Oviosu is the Founder and CEO of Paga, Nigeria’s leading mobile payment platform that serves close to 6 million people. Before launching Paga, Mr. Oviosu worked at Cisco Systems and at Deloitte Consulting. His industry experience spans several sectors, including high tech, telecom, pharmacy retail, government, and healthcare. He holds an undergraduate degree from the University of Southern California and a masters’ degree from Stanford University.

Driving Digital Financial Inclusion in Africa

Contributor: Analisa Ribeiro Bala, Secretary’s Department

Panelists discussed the promises and challenges of advancing digital financial inclusion in sub-Saharan Africa from two different country perspectives.

Key points:

Nigeria (Tayo Oviosu)

- Nigerians are rapidly getting online. In 2005, roughly 5 million had access to the internet. By 2016 over 86 million Nigerians were online, mostly through mobile access. In terms of financial inclusion, however, Nigeria is behind. Only 38% of Nigerians have bank accounts. Half of those banked have ATM cards, which they mostly use to draw cash, not for point-of-sale (POS) transactions.

- Paga – a direct consumer mobile payments service – was created in 2009 with the dual objective of making it easy for Nigerians to pay and get paid, whether banked or unbanked, and to deliver financial services to the mass market. With Paga you can send money to anyone with a mobile phone, either by using a Paga account or by going to any Paga Agent. As Nigeria is a cash-based society, Paga has an agent network of around 11,000 entrepreneurs. In addition to sending money, customers can pay utility and retail bills, open savings accounts and get access to loans. Paga has partnerships with 10 banks, allowing customers to use an ATM to collect money without a bank card (they just need to punch in a code to pick up their payment). Since the company was founded, Paga has processed 31 million transactions, and now has 6 million users on its platform.

Tanzania (Benno Ndulu)

- In 2009, only about 5% of Tanzanians actively used financial services^[1] Within 6 years, with the use of mobile money services, this number jumped to over 60%. There are 6 telecom operators in Tanzania which offer financial services. The competition has driven costs down to less than 1% of the transfer amount. Tanzania is also the first country in the world to allow interoperability between service providers. As a result more than 12 million Tanzanians currently use mobile platforms to save money and apply for credit.

- Tanzania’s success with mobile money services can be attributed to three factors:

1) The stance of regulators toward innovation. Tanzania has one of the most conducive regulatory environments for financial inclusion, including a licensing regime for non-banks intending to offer mobile payments services, with trust accounts at a commercial bank for the float, a National Payment Systems Act, and Electronic Money Regulations.

2) Digital identification. A risk-based tiered KYC regime is being put in place following the completion of Tanzania’s National Risk Assessment under FATF standards. Several Tanzanian institutions are also leveraging digital data and mobile money channels to underwrite and manage loans for small and medium- sized enterprises, through credit scoring models.

3) A financial consumer protection and education framework.

The gender gap

- In Tanzania, women’s financial inclusion has sharply increased but the gender gap remains unchanged. The Bank of Tanzania has consequently decided to include gender targets and indicators in its national framework for financial inclusion.

- In Nigeria the majority of savings accounts – over 60% - are owned by women. Paga was not collecting data on women until they started to expand products to includes savings accounts.

Quotes:

“Agents are the bank branch of the future.” Tayo Oviosu, Founder and CEO, Paga

“No society can be successful if you do not solve these two problems – you have to have an efficient payments system and access to finance.” Tayo Oviosu, Founder and CEO, Paga

“Fast forward to the future and you land in Tanzania as far as technology is concerned.” Benno Ndulu, Governor, Central Bank of Tanzania

“Test, monitor and then regulate.” Benno Ndulu, Governor, Central Bank of Tanzania

“I would describe Kenya as the hotbed of technological activism, especially when it comes to financial inclusion through digital technology” Eric Chinje, Chief Executive Officer, African Media Initiative

[1] To qualify as an active user you would need to use a financial service outlet at least once a month.