Written by Joshua Masinde | From The Nation
A new report has urged African governments to emulate Kenya in supporting the development of mobile banking and electronic commerce to increase financial inclusion.
The Africa Progress Report 2014, released last week, says the success of the M-Pesa mobile payment platform has greatly enhanced financial inclusion in Kenya.
“African governments can also support the development of mobile banking and e-commerce to overcome financial exclusion, building on successes such as M-Pesa in Kenya. Development finance institutions should work with the private sector to foster more balanced perceptions of risk,” said the report released at the World Economic Forum in Abuja, Nigeria.
It says Africa’s growth has largely been constrained by low levels of access to formal financial systems.
“Only one in five Africans have any form of account at a formal financial institution, with the poor, rural dwellers and women facing the greatest disadvantage. Such financial exclusion undermines opportunities for reducing poverty and boosting growth that benefits all,” the report says.
It also paints a grim picture of access to insurance. It says that productive sectors like agriculture, which lack access to insurance, have constrained growth in many countries on the continent.
African farmers, for instance, who lack insurance, convert their meagre savings into funds for emergencies instead of investing them in boosting productivity.
“Similarly, lacking access to loans and saving institutions, they (African farmers) are often unable to respond to market opportunities,” the report notes, urging governments to adopt innovative technologies to fight financial exclusion.
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