The global financial inclusion global findex database shows that an average of 50% of adults worldwide has an account at a formal financial in stitution, with the high income countries at 89% and developing economies at 41%. South africas youth face many challenges, among them an education system that too often leaves them illequipped for the world of work. First, it provides a brief overview of the african financial sector landscape. While formal financial institutions offer an array of financial services, this update focuses on formal payments, savings, and credit. Apr 11, 2017 south africa is a nation of wellknown promise and peril. The panel was moderated by aishwarya ratan, director of the global financial inclusion initiative at. South africas financial services sector is internationally recognised as. An analysis of the financial inclusion in south africa. South africa has made gains in providing previously unbanked people access to accounts, the most basic measure of financial inclusion. Adrien portafaix examines the water crisis in south africa and maps out several future scenarios to help policymakers identify sustainable solutions. South africa is 1% away from its national development plan goal of 90% financial inclusion by 2030. The data revealed that south africa, with its sophisticated financial sector, was early to adopt policies and initiatives to advance financial inclusion and the country has experienced a noticeable increase in financial inclusion from 61% in 2004 to 89% in 2016. The study explored the construct of financial inclusion and sought to understand what measures are being taken by south african financial services institutions to optimise financial inclusion. Pdf vulnerable communities in developing countries like the poor in south.
Global partnership for financial inclusion gpfi country. In addition, other financing sources such as equity markets are underdeveloped. The south africa financial inclusion workshop report. With 350 million adults excluded from the formal financial ecosystem, subsaharan africa is working to provide better access to financial services. This is the future directions for financial inclusion in africa panel. Second, it uses the global financial inclusion indicators global findex database to characterize adults in africa that use formal and informal financial services and identify the barriers to formal account. Financial inclusion status in 2004 south africa has a number of data sources on the uses. Mastercard opens a financial inclusion lab in africa. View the report of the south africa financial inclusion workshop. This volume on financial inclusion in africa was edited by thouraya triki and issa faye under the overall guidance of mthuli ncube chief economist and vicepresident and the direction of steve kayizzimugerwa director, development research department. World bank to help africa expand financial inclusion. How to achieve financial inclusion in africa the market.
Bcg recently carried out research into the state of financial inclusion in the country, which revealed some of the key reasons why south africans are not. Smes in africa cite access to finance as a major obstacle. Assessing financial inclusion advances in subsaharan africa. Offering savings products to low income population 141. Lesley denyes, program manager of the financial institutions group africa at the international finance corporation ifc said africa has the lowest level of financial inclusion. Financial inclusion design in subsaharan africa blog 11. Africa east asia and pacific europe and central asia latin america and.
The use of financial inclusion data country case study. Improving financial inclusion in sas cash society city press. Financial inclusion is through access to financial services such as credit, bank accounts, deposits, payments services, insurance, and pensions. National financial inclusion strategies resource center. Launched in 2011, it includes more than 100 financial inclusion indicators in a format allowing users to compare access to financial services among adults worldwide including by gender, age and household income. Decrees setting up national fi coordination structures pdf. Now it is opening one in east africa to be close to low income people to promote financial inclusion. He also served as economic advisor to the bank of namibia in windhoek 19982004, and taught at universities in nigeria, botswana and namibia. A transaction account is an essential financial service that can serve as a gateway to other financial services such as savings, credit and insurance.
Financial inclusion in south africa on the surface, south africa appears fairly inclusive compared with other emerging. Despite instances of significant financial innovation, financial inclusion in lowerincome countries is uneven, especially in the regional case of subsaharan africa. Financial inclusion status in 2004 south africa has a number of data sources on the uses of financial services. South africa is a nation of wellknown promise and peril. The determinants of financial inclusion in africa sciencedirect. Sep 08, 2017 the financial and digital inclusion project at brookings recently released its 2017 report focusing on access and usage of financial services in 26 developing countries across asia, africa, middle.
Selected vcf experiences in south africa 88 box vi. Potential mapping of financial account types to customer segments. Strategies for optimising financial inclusion in south africa. We first provide a brief overview of the african financial sector. An integrated framework for financial inclusion of vulnerable communities in south africas regulatory system reform. South africa, as africa s only g20 member and as one of the brics, plays an influential global role, and progress in financial inclusion could thus have an important demonstration effect. One way to improve the wellbeing of south africa s population is through financial inclusion the adoption, usage, and sustainability of financial services.
Financial inclusion is a route out of poverty in africa 98 contacts 103. Financial development in subsaharan africa promoting inclusive and sustainable growth identifiers. Institute for african development spring symposium 2017 iad symposium april 2122, 2017 146 stocking hall ciifad seminar april 19, 401 warren hall. Broadening financial inclusion in subsaharan africa. The use of financial inclusion data in south africa, the philippines. Compared to other economies, many firms in africa lack proper access to a bank line of credit a major obstacle for firm growth. A financial sector that serves all south africans a transformative financial sector south africas legacy of discrimination continues to exclude millions of people from meaningful participation in the economy, reinforcing unemployment, poverty and inequality. Financial inclusion is one of the main priorities of the sarbs vision 2025, particularly in terms of digital inclusion. Africa has the lowest formal account penetration with ssa at 24%, and the middle east and north africa at 18% table 1. Financial inclusion cannot be achieved by a single entity. The south africa financial inclusion workshop successfully brought together policy makers, regulators and the financial services industry for a focused discussion on the challenges impeding greater and more beneficial financial inclusion in south africa.
The data, which measures accessibility, use, and quality of financial services, can be used by countries to support their financial inclusion goals. The study details the effect of the introduction of the product and the simultaneous improvement. Apr 11, 2017 in south africas case, the journey to sustainable financial inclusion may be ongoing, but its important to remember that high account penetration and better consumer protection laws tell a story of tremendous progress over the past five years. However, a significant trust deficit and lack of financial. Prior to holding these positions, he was nedbank chair in economics at the university of fort hare 20082011. Financial inclusion design in subsaharan africa blog. Financial inclusion design in subsaharan africa when the world bank launched a focus on financial inclusion in 2011, about 2. Regulatory impact on mobile money and financial inclusion. This publication on financial inclusion in africa is produced by the staff of the african development bank. The financial services sector in south africa is well developed and. We look at the reasons behind this and the lessons learned for other countries considering extensive governmenttoperson g2p implementations.
Inclusions afi financial inclusion data working group fidwg, on behalf of the data and measurement subgroup of the. South africa has a high level of exclusion and only a quarter of lowincome households use their bank accounts for transactions. Second, it uses the global financial inclusion indicators global findex database to characterize adults in africa that use formal and informal financial services and identify the barriers to formal account ownership. Focus on financial inclusion saeu provides an assessment of. South africa on a solid path towards financial inclusion. Supporting recovery of financial systems in fragile states 96. Many would characterize the distribution of social grants in south africa as a severe disappointment from a financial inclusion perspective. Without addressing these constraints, those 700 million accounts are a vanity statistic for the. Financial inclusion in south africa the reading room georgia. There is a need for greater innovation, publicprivate partnerships and consumer education to ensure south africa becomes a truly financially included society, says mark elliott, division president, mastercard, south africa. In the case of banks, some supplyside data are available from the banks themselves, the industry representative body the banking council of. Sep, 2016 with 350 million adults excluded from the formal financial ecosystem, subsaharan africa is working to provide better access to financial services. We are honoured to cohost this event, together with the south african reserve bank and the alliance for.
Welcome to cape town theand southern tip of africa. Africas consumers, as well as those of financial services industry. We find that being a man, richer, more educated and older favor financial inclusion with a higher influence of education and income. Mobile money, financial inclusion, and development in africa. Map of smes access to financial services by region 66 map vii. Although 80% of south africans have a bank account,2 most consumer transactions are still cashbased. We look at significant strategic, technical and operational. Download the little data book on financial inclusion. This paper summarizes the status of financial inclusion in africa. Regulatory impact on mobile money and financial inclusion in.
Map of smes access to financial services by region 66. This indicates that overall, the financial inclusion initiatives adopted by the public and private sectors in south africa were successful. The future shape of financial services in africa the africa financial services journal. Johannesburg, may 29, 20 south africa s highlydeveloped financial infrastructure and welldeveloped mobile technology could increase access to financial services, help reduce poverty and inequality and stimulate job creation for poor south africans, according to a recent world bank report the south africa economic update. As part of a social pact to improve the situation, the banking industry launched a joint simplified product, the mzansi account. Improving financial inclusion in sas cash society city. Financial inclusion is critical for the competitiveness of the middle east and north africa mena region, for employment creation, and for raising incomes and reducing poverty. Developing and operationalizing a national financial inclusion strategy. These countries demonstrated a commitment to improving financial inclusion through a combination of legislation, public policy, financial regulation and supporting the development of the digital and mobile communications. Dec 01, 2016 many would characterize the distribution of social grants in south africa as a severe disappointment from a financial inclusion perspective. On behalf of the government of south africa, it is indeed a privilege to e youwelcom to south africa and to the fourth global policy forum of the alliance for financial inclusion afi.
Against the background of the current state of financial inclusion in south africa, finscope is introducing a new and extensive measurement tool indicator which aims at understanding financial productsservices usage and optimisation. This edition of our annual african financial services journal examines what the future of financial services might look like for africa. It is clear that the main impediments to financial inclusion in africa are the high cost of opening and maintaining formal bank accounts, the long distances to bank branches and the daunting list. Map of smes access to financial services by region.
One way to improve the wellbeing of south africas population is through financial inclusionthe adoption, usage, and sustainability of financial services. Insights from the south african experience 3 box x. South africa, as africas only g20 member and as one of the brics, plays an influential global role, and progress in financial inclusion could thus have an important demonstration effect. This indicator is defined as quali ty of financial inclusion. The use of financial inclusion data country case study south africa. University of massachusetts amherst in partial fulfillment. The objective of this paper is to examine the determinants of financial inclusion in africa. Unfortunately, this is a systemic education problem within south africa that cannot be addressed in the shortterm. While financial inclusion the adoption, usage and sustainability of financial services is generally linked to socioeconomic development, it faces numerous challenges in south africa.
This is according to a new report from the boston consulting group a usbased management consulting firm which shows that south africas financial services sector has mostly excluded lowincome consumers. The g20 financial inclusion indicators assess the state of financial inclusion and digital financial services, nationally and globally. Twin peaks south african financial inclusion model will provide a. We use the world banks global findex database on 37 african countries to perform probit estimations. Increased banking coverage must happen simultaneously with the necessary, domestic macroprudential policies that protect against the greater risks of transmitting financial shocks. South africa s poor are particularly vulnerable due to widespread financial illiteracy, exacerbating the sense of mistrust and levels of exploitation fostered by these practices. The financial and digital inclusion project at brookings recently released its 2017 report focusing on access and usage of financial services in 26 developing countries across asia, africa, middle. In the case of banks, some supplyside data are available from the banks themselves, the industry representative body the banking council of south africa, renamed the banking association of south africa, the. Financial inclusion in africa world bank documents. This paper summarizes financial inclusion across africa. Relationship between sustainable development initiatives. Apr 16, 2017 south africa has a high level of exclusion and only a quarter of lowincome households use their bank accounts for transactions. Unlike many global publications, for nearly a decade we have been committed to showing a complete picture of africa not just a single story. The global findex database is the worlds most comprehensive set of data on how people make payments, save money, borrow and manage risk.
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