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Africa Needs to Harness Technological Advances to Enable Digital and Financial Inclusion

In the last few years there has been a great focus on the opportunities that digitization offers Africa. Not only does digitization have the power to drive socioeconomic growth but research reveals that even a one percent increase in electronic payments has the potential to grow a country’s GDP.

The reality, however, is that digitization has yet to reach the majority of Africa’s citizens. In many rural communities, only a third of people are online. It is estimated that 45% of people living in Sub-Saharan Africa have no official form of identity. Many of those without an official identity are members of marginalized groups and children whose births have not been registered. What this means is that there are still large groups of Africa’s population that are yet to reap the benefits from the economic opportunities associated with digitization. To address persistent and widespread inequality we need an urgent rethink of current approaches to Africa’s digital divide because digital inclusion is an important part of achieving financial inclusion. 

A recent discussion facilitated by US Vice President Kamala Harris in Lusaka, Zambia – which Mastercard participated in – focused on strategies to improve meaningful access to equitable digital finance for the citizens of Africa. I was very encouraged by the consensus that the establishment of an effective pan-African digital infrastructure requires that the continent crowds in public and private sector leaders into a shared digital ecosystem.

Collaborations and partnerships

Mastercard has a goal to build a connected digital economy that is secure, sustainable, financially inclusive, and benefits everyone. An ecosystem of this nature can only be built through a concerted effort by both private and public stakeholders. As such, Mastercard collaborates and partners with banks, e-commerce payment providers, telecommunication providers, governments, fintechs and other organisations to drive digital and financial inclusion.

Recognising that smartphone adoption is inextricably linked to digital inclusion in Africa, Mastercard partnered with Samsung, who made devices available at an affordable rate, Asante Financial Services who acted as the finance partner, and Airtel to provide scale and distribution. This innovative solution made affordable mobile devices available to those who previously did not have a way to engage in the digital economy. 

More than five years ago, Mastercard pledged to connect 500 million people to the digital economy. When we achieved this, we increased our pledge to connect 1 billion people by 2025. Underpinned by our pledge to connect 1 billion people, Mastercard is going beyond its core business of connecting people and businesses to payments, by creating new businesses that enable not just financial inclusion but also digital inclusion. To achieve this, we partner with the private, public and development sectors to develop, incubate and scale locally relevant digital solutions. 

A good example of this innovation is Community Pass, a shared digital platform designed to address the infrastructure challenges that are so often prevalent in rural and underserved communities. These include unreliable connectivity, limited smartphone ownership and a lack of formal identification. Community Pass, which is built on Mastercard’s core competency of digitizing and securing transactions, has been designed to work offline. It provides users, including small scale farmers, with a digital identification which allows them to participate in the digital economy as well as providing them with access to a larger pool of buyers, quality inputs at competitive prices, credit to fund business growth and to get paid more and faster. In addition to providing individuals with a functional digital ID, it also digitizes their financial transactions, making them visible to a multitude of service providers. 

We believe shared digital tools and channels can drastically improve the reach and increase access of services by reducing the cost to supporting underserved communities and improve the effectiveness of service delivery.

We have made a commitment to register 30 million people to the Community Pass platform by 2027. This includes registering 15 million people across Africa, including people in underserved and remote communities, in order to increase their access to digital commerce, agricultural markets, healthcare services and humanitarian benefits. Not only does Community Pass provide users with a digital identity but it also provides access to a digital acceptance network. To date, the platform has enabled 2.4 million people in Africa, primarily smallholder farmers, to participate in the digital economy. Mastercard’s partnerships with the US Development Finance Corporation (USDFC) and Heifer International are helping to drive the scale of Community Pass. 

Digital payments are helping consumers shift away from cash and cheques. This has opened the door for financial institutions to offer multi-rail payments. Mastercard’s multi-rail approach provides  payment innovation across multiple payment rails, adding value and connecting information, while enabling people and organizations to transact across any channel and to any end point. We have made a strategic partnership with HyperPay, the fastest growing e-commerce payment provider in the Middle East and North Africa to drive the adoption of digital payment solutions across the region. However, to be effective, common digital rails need to be leveraged to bring down the cost and to ensure best-in-class privacy and protection principles are widely shared and adopted

A trillion dollar opportunity

The UN estimates that Africa boasts a US$2.7 trillion market opportunity. In the short-term, however, there is an urgent need to bring together donors and investors to catalyze opportunity. In tandem with crowding in investment, organizations like Mastercard need to continue working with local governments to develop national digital and financial inclusion strategies that bring together regulators and the private sector. A public-private partnership model will be key to addressing Africa’s digital divide and achieving financial inclusion for all its citizens. Working together, we can make a meaningful difference in driving digital and financial inclusion.