Opportunity or Challenge
Do the huge, vast expanses of the African continent provide an opportunity, a potential yet untapped or is it a challenge not worth a second look? This is the question that most investors and companies toyed with for a while. They see the potential; no doubt it. But they also see the huge hurdles that come in the way like accessibility and lack of infrastructure.
Connectivity is a big issue as paved roads in Africa are less than a quarter of the total. Access to electricity and few other basic amenities also pose a challenge. A huge % of the population is rural and poor without access to all these facilities as well as any banking or financial services. Considering all these issues, it is but natural that companies were wary despite the huge opportunity. However the huge push given by the governments of the African countries to improve the commerce through digital finance has really changed the scenario.
There is huge growth predicted in the Africans’ buying in the next few years to come. Commerce is set to take off based on a McKinsey prediction that suggests that Africans may be spending seventy-five billion dollars on goods and services online annually by 2025. That is the huge potential that companies need to tap through the opportunity that digital finance provides.
Digital finance services (DFS)
Apart from all kinds of electronic banking services covering credit and debit card usage, mobile banking forms a huge part of digital financial services. The financial inclusion plans have mostly been based on the mobile banking. 36 out of the 54 sub Saharan countries have mobile banking. This is because of the huge amount of mobile phone subscribers that is growing by the minute. Approximately a billion of the populations in Africa are mobile subscribers. Compare this to the fact that around 2.4 billion of the population does not have access to any banking or financial services and the potential is clear.
This is what has made DFS a huge success and improved the accessibility and the buying power of the Africans. People buying more and more augments well for commerce and hence DFS has come like a boon for the Africa.
The high percentage of penetration of the mobile telephony has ensured mobile financial services through the financial inclusion measures of the government. This has helped overcome the geographical, infrastructural and other related challenges that banks and financial institutions would have faced. Operating the bank accounts are much cheaper, faster and safer. It also provides greater buying power to the people.
It is not just the formal banks, but non-banking institutions, micro finance organizations etc. that have jumped on to the bandwagon. They offer easy, flexible options to the people encouraging them to use the facilities. A good amount of digital finance literacy campaigns is also done to improve awareness.
Without doubt it is a fact that the growing number of registered users in mobile banking, has led to a rise in the online buying habits of Africans. Africans are realizing they have ways and means and access to commerce through digital finance. This would not have been possible through the regular channels at all.