Addis Ababa, August 05, 2015(WIC)- The linkages between digital financial services (DFS) and the development agenda in Africa were discussed extensively during a panel discussion organized by the African Development Bank (AfDB).
On the ocassion of the Third International Conference on Financing for Development (FfD3) in Addis Ababa. It was noted that technology-based products and services had not received enough attention within the international development community.
Only four of the Sustainable Development Goals currently refer to ICT, yet the sector is considered by all participants as a major contributor to inclusive growth.
In his introductory remarks, Alexander de Croo, Minister of Development Cooperation, Digital Agenda, Telecom and Postal Services of Belgium, identified DFS as a key driver of the formalisation of African economies.
The Executive Secretary of the African Capacity-Building Foundation (ACBF), Emanuel Nnadozie, noted how digital payments are central to domestic resource mobilization because they channel informal savings into the formal financial system.
There is growing evidence that digitising payments boosts transaction efficiency, reduces costs and drives financial inclusion. According to Elaine Weidman, Vice-President of CSR at Ericsson Group, DFS can be as much as 75% cheaper than traditional banking in low-income countries.
The exponential growth of mobile phone subscriptions in Sub-Saharan Africa, from 90 million to 650 million over the last 8 years, offers considerable opportunities to grow the market for mobile financial services.
However several barriers continue to limit this potential, including the lack of standardisation of products, the lack of interoperability between countries and technologies, and inappropriate regulations.
In addition to product creation and enhancement, AfDB’s Director of Financial Sector Development, Stefan Nalletamby, emphasized how innovation could support reliable data collection on creditors, helping to eliminate one of the main obstacles to credit for SMEs in Africa – information asymmetry.
The role of appropriate regulations to foster sound market competition emerged as key. Participants observed that both parliaments and governments at the national level had a crucial part to play in making financial regulations compatible with DFS development. Their participation will also ensure a conducive environment for historical players (banks) as well as new entrants (mobile service providers) to operate.
In least-developed countries, development partners will need to compensate the absence of private players by directly financing DFS for the poor through Official Development Assistance flows or public-private partnerships. (http://africabusinesscommunities.com/)-