Africa is rising, they say. Nelly Nneli explains:
Technology in Africa is growing faster than the speed of light, especially in the financial technology (FinTech) sector.
However, 57% of individuals in Africa’s Sub-Saharan area do not have a bank account. Isn’t that sad? This figure highlights the obstacle that financial inclusion in Africa continues to face.
This gap is more than just a statistic; it is a huge roadblock that prevents millions of people from being financially independent and contributing fully to the economy.
Savings accounts, loans, and insurance—all vital assets for economic mobility—are unavailable to these marginalised African people.
Although the bulk of Africans still lack access to fundamental financial services, we cannot deny that mobile money systems like M-Pesa, Orange Money, and Vodafone Cash have made financial inclusion their main goal in specific regions of Africa.
For the uninitiated, financial inclusion refers to efforts to ensure that all people and businesses, regardless of their personal net worth or company size, can access and afford financial products and services.
It is obvious that economic growth greatly depends on financial inclusion, and a country cannot develop to its full potential without it.
In essence, having easy access to financial services is imperative for reducing poverty because it allows people to invest in businesses, obtain credit, save safely, and avoid financial shocks. Additionally, it promotes trade, fosters entrepreneurship, and maintains economic expansion.
However, financial inclusion is inequitable in Africa. This is so because financial progress on this continent is hindered by several issues, including restricted access to banking facilities, financial illiteracy, and a lack of regulatory frameworks.
On the flip side, while informal financial services are essential, their growth frequently carries serious hazards, including fraud and abuse, which exacerbate inequality. This is the more reason effective strategies are pertinent for FinTech companies aiming to take advantage of the untapped potential of the African economy.
Other than being a social problem, financial inclusion is a market that is expanding quickly and offers special chances for innovation.
To reach the underserved population, mobile technologies, digital wallets, blockchain, and data analytics are all disrupting the status quo.
However, simply incorporating technology is not enough to achieve prominent success in this field.
This calls for an in-depth understanding of regional settings, customer behaviour, and the capacity to modify products to accommodate the various demands of African communities.
Here are five key strategies that are aimed at helping businesses overcome the difficulties associated with financial inclusion in Africa:
- Mobility
- Partnership
- Community
- Localisation
- Incentivisation
Note that these strategies capitalise on the instant integration of mobile technologies while addressing obstacles such as a lack of banking options, legal restrictions, and consumer mistrust.
Businesses that use these strategies will not only drive financial inclusion but also open new channels for expansion in Africa’s market. Let’s examine each of these strategies.
1. Mobility
In Africa, where a lot of people lack access to banking services, mobility becomes key to improving financial inclusion. Financial services now have new potential because of the rapid adoption of mobile phones.
Mobile money services, like Kenya’s M-Pesa, have previously shown how effective mobile technology is in getting around structural problems.
Without the need for physical branches, companies that use mobile phones can provide services, including loans, savings accounts, and payments to individuals. Additionally, mobile money makes it possible to conduct safe transactions in remote locations with limited access to traditional banking services.
Nonetheless, for businesses to fully benefit from this, they must make sure their services work well even in places with poor internet connectivity and are interoperable with different mobile platforms.
They must constantly be innovative as mobile technology advances to satisfy the rising needs of Africa.
2. Partnership
For Africa’s financial inclusion sector to succeed, there is a need for strategic partnerships. Due to the variety of the continent’s problems, including logistics and complicated regulations, companies must work with regional partners who understand the requirements of various areas.
Financial services can be accessed more easily with the support of strategic alliances with telecom providers, regional financial institutions, and fintech businesses. For example, Safaricom’s partnership with Commercial Bank of Africa has increased financial inclusion by enabling M-Pesa customers to access savings plans and microloans straight from their phones.
Partnerships with government and non-governmental organisations also offer the community trust and regulatory backing required for broader incorporation.
Partnerships provide companies access to existing networks and guarantee that the financial solutions they provide are sustainable and scalable. Along with providing insights into cultural quirks, these partnerships ensure that items are made to appeal to local consumers.
3. The community
Creating a strong community around financial inclusion products is essential for building trust and encouraging usage. For financial transactions like lending and saving inside family or community contexts, social networks are heavily relied upon in many regions of Africa.
The adoption rates of financial solutions can be raised by utilising this trust and by incorporating community-based models. Peer-to-peer lending models and community-driven savings clubs, for instance, have been informally operating for centuries but are now being digitised in nations like Ghana and Nigeria to provide a more structured and secure method of managing these assets.
Businesses can also modify their services to match the unique needs of users by using community-driven information.
4. Localisation
This is another key strategy for thriving in Africa’s diverse financial environment. Generally, every country has its own regulatory framework, consumer preferences, and financial culture. So, there is no way a generic strategy would work.
This is why businesses must localise their financial products to accommodate local languages, customs, and needs. For example, to serve a diverse demographic, digital wallet providers need to handle several regional languages and currencies.
Understanding the various challenges individuals encounter—such as low literacy rates or restricted access to technology—and creating user-friendly, accessible solutions are other aspects of localisation.
Considering this, companies can guarantee increased integration and engagement by customising goods and services to fit the unique requirements of diverse groups.
5. Incentivisation
Incentives can accelerate the adoption of financial inclusion products in Africa. In addition to providing access to financial services, businesses must encourage people to utilise and interact with these services regularly.
Increasing client acquisition and retention can be greatly aided by providing incentives for registering, completing transactions, or recommending others.
To entice new users, mobile money firms frequently offer microloans, airtime top-ups, or bonuses. Users may find these services more interesting and less daunting if such financial behaviours as investing or saving are gamified.
It is also possible to customise incentives to meet the requirements of a particular group, like providing microloans for small enterprises or savings bonuses to low-income families.
However, companies need to make sure these incentives are long-lasting and in line with long-term objectives. Overall, an ecosystem of trust and loyalty is produced by well-crafted incentives, which promote growth and beneficial societal effects.
Conclusion
As you have already seen, providing products and services is only one aspect of financial inclusion in Africa. Its goals are to empower communities for global development as well as change and improve the lives of Africans.
Companies may produce goods that appeal to Africa’s varied markets by concentrating on strategies that include utilising mobility, establishing meaningful partnerships, interacting at the community level, customising solutions to meet local demands, and providing incentives for adoption.
These strategies not only guarantee market success but also help to improve economic growth, reduce the gap in financial access, and create a more equitable future.
About the Author:
Nelly Nneli is a digital sales leader with a focus on making financial inclusion innovations accessible and actionable. With expertise in payment technologies and a passion for fostering inclusive finance, Nelly regularly shares her insights on the intersection of technology and financial services, offering clear, practical strategies for driving digital innovation and expanding access to financial solutions.
