Digitisation has yet to reach the poorest of Africa’s citizens, typically situated in rural communities.
Mark Elliott, division president for Sub-Saharan region at Mastercard, believes collaboration between telcos, fintech firms, and government is making a difference.
“There is progress being made and we are part of the movement that seeks to empower the African customer, merchant, and small business owner,” says Elliott.
In line with its commitment to ensure the inclusion of 1 billion people into the economy by 2025 (including support for 50 million small and micro merchants, and empowering 25 million female entrepreneurs), Elliott says MasterCard has introduced various initiatives, such as the Mastercard Naija Card in Nigeria.
This is pitched as a cost-effective and affordable solution specifically for the financially excluded, with the aim to bring them into the digital economy. It is designed for domestic use and features contactless capabilities and local currency billing.
Asked why, with the proliferation of mobile money platforms, digital wallets and other virtual payment services, Africa still has such a large unbanked population, Elliott says the lack of infrastructure is still a major challenge.
“Where there are interruptions in production, this hinders development which leads to a possible economic deficiency. Good infrastructure ensures accessibility to products and services that could potentially change the lives of people,” he says. “There is also a challenge with underserved communities that need financial and digital inclusion.
“We have made headway in providing efficient and innovative solutions with many in our communities through partnering with local governments. In South Africa we have provided e-government solutions … As an example, we partnered with Tsogatech to enable customers in the Emalahleni local municipality to buy prepaid electricity with any payment card via WhatsApp. Through collaborative efforts with government, we’re able to develop national digital and financial inclusion strategies.”
MasterCard says digital inclusion is necessary for financial inclusion. The company recently released a whitepaper titled ‘Driving Financial Inclusion In South Africa’s Informal Economy: The Landscape At The Bottom Of The Pyramid’.
This paper explored behaviours and attitudes of consumers and SMMEs (Small Medium and Micro Enterprises) in South Africa’s informal sector, where financial inclusion efforts can make the biggest impact.
According to MasterCard, study respondents still offered cash options to customers, but very few offer digital solutions such as tap on phone, QR code scanning or card machines, citing it’s too difficult to use, or saying data costs are too high.
What this means, he says, is that in a world that is constantly changing, and cash is becoming obsolete, there are people who still prefer cash. "We must develop safe, secure, easy customer-centric designs and solutions that address pain points that are market-specific, so users understand the value of it, and get comfortable doing it."
Elliott recently participated in a roundtable discussion hosted by US Vice President Kamala Harris in Lusaka, Zambia.
The session focused on connecting Africans to the digital economy, and partnerships.
Elliott says, “The UN figures estimate 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 catalyse opportunity.”
MasterCard says the US has made strides in promoting sound investment in Africa, especially within digital and financial spaces. “In the field of fintech there is an opportunity for American companies to provide financial access to small businesses, with a special focus on women-owned businesses. There has been phenomenal growth in women entrepreneurship and leadership. The recent Mastercard Index of Women Entrepreneurship study we conducted, revealed that for the third consecutive year countries like Botswana (38.5%), Uganda (38.4%) and Ghana (37.2%) have the most women business owners globally.”
He asserts that a public-private partnership model will be key to addressing Africa’s digital divide and achieving financial inclusion. “In tandem with crowding in investment, organisations like ours need to continue working with local governments to develop national digital and financial inclusion strategies that bring together regulators and the private sector.”