Financial Inclusion — The power of G2P Digital payments

At the last Africa Block Chain Conference, industry leaders and fellow enthusiasts challenged and questioned our readiness for the 4th Industrial Revolution as African nations. We now start to think about AI and Robotics; innovations that are meant to form the bedrock of efficiency the world over. The biggest takeaway being that, it is coming whether we like it or not!

However without a robust financial ecosystem the benefit/logic behind these innovations is lost. Today most of us who are already considered to be financially literate and tech savvy, are still trying to appreciate the benefits Bitcoin presents by decentralizing value. How do we then ensure that those at “the last mile” are fully included before they are further devastated by another boom? Will these innovations only cater to communities and cities that can easily access them?

In the words of Sri Mulyani Indrawati, Minister of Finance of Indonesia, former head of the World Bank Group “Financial inclusion matters not only because it promotes growth, but because it helps ensure prosperity is widely shared. Access to financial services plays a critical role in lifting people out of poverty, in empowering women, and in helping governments deliver services to their people.”

Statistics in emerging markets referenced by the likes of The Global Findex Report 2017 and National Financial Educators Council, assert that millions of these populations remain excluded from global financial systems, which reinforces their chronic poverty which is then passed down for generations. Recognizing that access to basic financial services is a prerequisite for changing the financial status of any nation, some governments have taken the initiative to push for greater inclusion through deliberate Digital solutions and programmes.

The government of Uganda in partnership with partners like DFID piloted and has continued to scale the Social Assistance Grants for Empowerment (SAGE) Programme as part of the implementation of the Expanding Social Protection programme (ESPP), in a bid to reduce chronic poverty and improve livelihoods of people in areas like Karamoja. This region alone is classified as one of the world’s poorest areas, with 61% of its 1.2 million people living in absolute poverty. The impact evaluation found evidence that SAGE has improved economic security by empowering these households to purchase food, agricultural inputs, building materials, livestock and their ability to borrow money as and when required.

Similarly Somalia ,where millions of previously excluded and underserved populations are moving to formal financial services through the use of mobile money, a lack of regulation and taxation affects the level of confidence in it and reduce its usefulness for more advanced applications. The government is now piloting salary payments to an “e-Wallet” that has systematically been built into their current Mobile Money system. This would help vastly increase the range of financial services offered, expand customer usage and overall population reached and grow the revenue generated within this sector.

In Nigeria, the government launched a pilot for 13 million cards that serve as both a national identity and re-loadable prepaid card. The cards integrate smart chip and pin functionality, as well as photo and biometric identity-verification technology. Nigerian ID cardholders can receive electronic social benefits payments and carry out other basic banking services. The project aims to roll-out more than 100 million cards to Nigeria’s population.

As evidenced from these ground breaking programmes, the infrastructure from G2P electronic payments deepen financial access on larger scales, harness relevant partnerships and paves the way for other governments that look to adopt more efficient methods of driving financial inclusion.

Such government initiatives have the ability to create wider impact first within the boundaries of their nations, which ripple into other markets, the continent and the world, as we continue to advance into the impending 4th Industrial Revolution.