Skip to Main Navigation
FEATURE STORYSeptember 26, 2023

Digital Financial Inclusion in Africa Interview Series | Tim Masala

African lady working in a kiosk smiling

Photo: Vic Josh/Shutterstock

Scaling digital financial services in the African region is critical to enable and achieve economic and social development, driving access for those that remain unbanked and underserved. In this series of interviews on Digital Financial Inclusion (DFI) we hear from experts about the current landscape in Africa, why DFI and cross-border integration are important for financial inclusion, the key challenges, and - most importantly - what actions they would like to see from private and public sectors and the World Bank.

The Association of African Central Banks (AACB) set up the African Inter-Regional Payments Integration Task Force in 2020, and the Task Force established two working groups, the Payment Systems Integration Working Group, and the Mobile Integration Strategy Working Group. The World Bank supported the establishment of these bodies and is a development partner member of all three.  Responses have been edited for style and clarity.

Interview with Tim Masela, Vice Chair, AACB African Inter-Regional Payments Integration Task Force

What is the current landscape for financial services in Africa and why is Digital Financial Inclusion (DFI) and integration important? 

DFI is the ability of adults to access and use digital financial services. According to the Global Findex Database, account ownership in Sub-Saharan Africa (SSA) rose from 43 percent in 2017 to 55 percent in 2021, however, this is still substantially lower than the global average of 76 percent.

There has therefore been a recognition that DFI is lagging on the continent. Addressing this situation will stimulate economic activity and positively impact our development. Technology gives us an opportunity to broaden use of financial services, including payments, savings, lending, and insurance. 

Broader integration initiatives could dismantle barriers and open service provision across borders in the most practical way. Thus, regulatory harmonisation and collaboration in rolling out infrastructure becomes key. In the payment landscape, interoperability and interlinking of infrastructures would go a long way in establishing a platform for financial transactions. Relating to savings, lending, and insurance, I believe that we have pan-African institutions that could leverage infrastructure and advances in innovation and technology to rollout products and services across regions and countries. 

DFI is also important for (1) generating data that can be used for Informed Decision-Making, (2) reducing transaction costs, (3) government efficiency, (4) reducing financial exclusion and (5) improving monetary policy implementation, etc.

Technology gives us an opportunity to broaden use of financial services, including payments, savings, lending, and insurance.
Tim Masela
Tim Masela
Vice Chair, AACB African Inter-Regional Payments Integration Task Force

Could you describe the AACB Inter-Regional Payments Integration Task Force initiative that you are leading and how it contributes to DFI/integration? 

At the continental level, our initiatives are focused on strategies that would enable access to digital payments and transfers. I believe that in the next strategic cycle, these initiatives should be expanded to address DFI in its broad sense beyond payments and transfers. 

The retail payment integration strategy for the continent that is spearheaded through the AACB should make a positive impact on DFI. In this regard, an aspect of entrenching interoperability of the offering and interlinking of infrastructures will lay a solid foundation for DFI.

Could you provide any examples of DFI/integration in action? 

My idea of DFI in action would be, development and provision of transactional, savings, lending, and insurance services where access, convenience, cost considerations and transparency are considered from the user’s perspective, e.g.:

  • design of lending products for emerging farmers; and
  • integration of mobile transactional services across borders with consideration of the domestic customer experience.

On the inclusion side DFI is most often driven by mobile money wallets. Some outliers are bank driven, such as South Africa, where social grant payments were made to the bank accounts of more than 15 million people. 

On the integrations side, the PAPSS (Pan-African Payment and Settlement System), a cross-border financial market infrastructure, which aims to enable payment transactions across regions of the continent, promises to make a contribution to DFI. More progress is being made at regional levels, including the SADC RTGS renewal programme and complementary retail Transactions Cleared on an Immediate Basis (TCIB) scheme; and the COMESA MSME Digital Financial Inclusion Project (a regional digital retail payments platform). TCIB went live in November 2021, and transactions may be initiated by a bank or non-bank via multiple channels, such as through a mobile phone or cash-in/out agent.

What are the key challenges?

The main challenge to realising DFI on the continent is ineffective collaboration, and most importantly, divergent, rigid, or onerous regulatory requirements. Regulatory challenges occur at the continental, regional and domestic levels.

For DFI, a specific challenge is the usage of the digital stores of value. Although uptake has improved, people are not using the accounts optimally, e.g. cashing out handouts straight away, and there are questions about the contribution this makes to livelihoods. 

Other key challenges include weak digital literacy, high cost of mobile phones, limited physical infrastructure, lack of capacity to implement a risk-based approach, limited participation of non-banks, high costs of existing cross-border payments, limited access to digital store of value platforms especially for migrants etc.

What would be your ask for the Private/Public Sectors, and the World Bank? 

Alignment of all the key stakeholders on key strategic objectives should be the starting point. Then all stakeholders need to focus on the realisation of the identified shared goals for the jurisdiction rather than self-interested goals, and collaboration in the execution of agreed strategic initiatives. 

From international organisations, we need knowledge sharing of practical approaches and experiences that they may have acquired in similar initiatives in other parts of the world.


    loader image


    loader image