Financial inclusion, long considered a critical cornerstone of economic growth and development, has taken on new dimensions in the digital age. A recent roundtable organized by OMFIF’s Digital Monetary Institute in partnership with the Mastercard Policy Center for the Digital Economy explored how digital financial inclusion offers unprecedented efficiency, scalability and accessibility.
The event brought together representatives from Bank al-Maghrib, the Central Bank of Egypt, the Central Bank of Nigeria, Mastercard and the World Bank to discuss strategies to promote financial inclusion in Africa and the Middle East, drawing on some of the issues set out in the Global Economic Law the principles set out Report of the Forum on “Common Principles for an Inclusive Financial System”.
The case for a digitally driven financial inclusion strategy
Central to the discussion was the idea that digital financial inclusion is no longer just a choice; It’s the most efficient way forward. Mohamed Helmy, Head of Payment Systems at the Bank of Egypt’s General Department, pointed out that financial inclusion involves providing affordable access to financial services such as lending, saving, payments and insurance. Digital solutions offer unprecedented effectiveness, reducing costs while improving service quality.
Paul Oluikpe, Head of Financial Inclusion at the Central Bank of Nigeria, echoed this sentiment, stressing that traditional financial products are “rigid and cold” in a world where “agility, flexibility, convenience and proximity” are the norm. become. Digital models, enabled by ubiquitous access to cellphones in many countries including Nigeria, offer the scalability and cost-effectiveness needed to reach rural and urban populations alike.
One of the most compelling arguments for digital financial inclusion lies in its transformative potential. Digital technologies enable rapid change at the national level. Compared to traditional brick-and-mortar institutions, digital platforms are more convenient for users and provide them with one-button access to financial services. This transformation is not only an individual but a national goal and requires the cooperation of all stakeholders, including central banks and other financial service providers.
“Interoperability is paramount”
Panellists underlined the crucial role of interoperability in avoiding fragmentation of financial markets. Dorothee Delort, Senior Financial Sector Specialist at the World Bank, stressed the importance of addressing interoperability in a global sense, focusing on the legal framework that ensures the market is open to new entrants while also considering the technical infrastructure . Both require collaboration and standardization on issues such as consumer protection and resilience, including cyber resilience.
Hakima El Alami, Director of Oversight of Payment Systems and Instruments and Financial Inclusion at Bank al-Maghrib, emphasized that interoperability is a requirement for any financial institution in Morocco before offering its services and means of payment.
Significant progress has been made over the past decade in building resilient infrastructure to create secure and interoperable payment systems at the national level. This is an infrastructure specifically designed for retail transactions, interbank exchange clearing and settlement, and the mobile electronic payment system.
Boost confidence in the payments ecosystem
For any payment ecosystem to thrive, maintaining and ensuring trust is critical. In order to build trust in payment systems, especially digital ones, Helmy says it is important to ensure that cybersecurity risks are addressed through the right infrastructure and a robust legal and regulatory framework.
The biggest challenge in building that trust, as El Alami points out, is consumer education itself. She pointed out that a lack of trust in digital financial services and financial inclusion is one of the biggest challenges. Bank al-Maghrib, along with other stakeholders in the country, has launched several initiatives to improve financial education in the country, such as developing a digital financial inclusion education toolkit and running information and awareness campaigns on related topics.
Oluikpe reiterated the value of improving financial literacy levels and stressed the need to improve digital literacy to complement financial literacy. He pointed out that building consumer confidence in financial services is crucial, especially given the prevalence of fraud. To this end, the Central Bank of Nigeria, together with other partners, has launched a Digital Financial Services Awareness Guide, which will enable operators to engage vulnerable populations and support them in the use of their devices for financial services, with the aim of making them more digital area feel good.
Towards an inclusive financial system
The focus on education should be on the opportunities of digital payments and not just on potential risks like fraud and cybersecurity threats. Mohamed Benomar, Country General Manager for the Middle East and North Africa West at Mastercard, emphasized the importance of creating awareness of the added value of digital financial services.
Using the example of Farm Pass in Kenya, he showed the possibilities of using digital platforms for financial inclusion. Farm Pass, a Mastercard-hosted platform, only allows farmers to send and receive payments. In addition, their transactions are tracked and recorded, allowing them to access loans from financial institutions.
Delort reiterated that point, adding that “the goal is to build an ecosystem” and that it’s time to “go beyond access, to use.” A lot of work has been done in all jurisdictions to improve access to financial services, but the way to an inclusive financial system would be improved use. This means going beyond the basic use of digital payments to send and receive money, and incentivize more sophisticated uses such as accessing credit (as in the case of Farm Pass) and offering other value-added services.
Steps to improve financial inclusion include working with ministries and departments to establish a financial literacy foundation, running information campaigns and developing digital financial inclusion toolkits. To build on the issues discussed in this roundtable, OMFIF, in partnership with the Mastercard Policy Center for the Digital Economy, is hosting a seminar in Marrakech in October on digital transformation strategies in the region.
The round table emphasized that promoting financial inclusion through digital payments in Africa and the Middle East is not just a goal but a necessity. Interoperability, technological innovation and building trust in digital financial services are important accelerators on this journey. As regions embrace the digital revolution, collaboration between central banks, financial institutions, technology providers and governments is the catalyst for financial inclusion.
Arunima Sharan is a Senior Research Analyst at OMFIF.
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