Browsing: Financial Inclusion in Africa

• AfDB signs a risk facility worth over $150 million to boost financial inclusion.
• Survey shows risk-supported Commercial Banks in Africa can play a key role in poverty eradication.
• Increased access to capital loans will help lower-income families increase their household earnings

To boost intra-Africa trade in line with the aspirations of the African Continental Free Trade Area (AfCFTA), the African Development Bank Group has approved a $150 million risk facility.

The funding will be through the Trade Finance Unfunded Risk Participation Agreement, a deal which has been entered between the African Development Bank (AfDB) and the Trade & Development Bank (TDB).

Under this agreement, “the AfDB will provide guarantee cover of 50 per cent and up to 75 per cent for transactions in low-income countries and transition states on a risk share basis with TDB to a number of qualifying local and regional banks,” the bank states.

In this first …

The African Development Bank (AfDB) has inked a massive grant agreement to the tune of $400,000 to modernize the regional financial market infrastructure in West Africa.

The funding is to be extended via the West African Monetary Union (WAMU) and among other things is meant to fund the creation of a digital platform to automate securities issuance for the regional financial market.

In a press release, the AfDB said the funding will also help reduce the holding period preceding subscription allocations and registration on the said digital platform.…

Fintech has the potential to revolutionize the African financial services landscape. Already mobile payments and microloan technologies are taking root rapidly across the continent.

The success of mobile money provider M-Pesa in many countries such as Egypt, Ghana, India, Kenya, Lesotho, Mozambique, Romania, and Tanzania among others is an example of the potential of fintech on the continent. 

Read Also: Mobile money making Africa bankable

Financial Inclusion

In Africa access to traditional financial services is limited. Transaction costs with banks are usually very restrictive. This coupled with poor infrastructure, lack of employment and rural environments has created room for fintech innovators in financial services provision.  

62% of the African population remains un/underbanked. Mobile phones are relatively more accessible which has increased the reach of mobile money services. In sub-Saharan Africa mobile money transactions account for 10% of the region’s GDP against an average of 2% in other economies; this …

None of us particularly like money-lenders and few of us would want the stress and unpleasantness of being the type of money-lender that proliferates in cities like Kampala – leeching returns of 10% a month against assets pledged by desperate borrowers.  The reason that these bloodsuckers can exist is that access to credit on reasonable terms, or at all, from banks is still so difficult to get for most businesses.  

Also Read: Mobile money loans affecting banks’ lending – report

The fact is that there are some great businesses that cannot grow and often struggle to survive because cash-flow is such a huge problem. In Europe many businesses use “factoring” to improve their business cash-flow and reduce the time they spend trying to collect money. But the truth is that the banks that provide this service are so selective about the businesses they deal with and the invoices they process …