By Wally Fisher, Head of Unayo: Standard Bank
Having a bank account is mostly taken for granted. Many of us have had one since our parents decided we were responsible enough to start our financial journey into adulthood. But imagine for a second that you didn’t have one. How much strain and stress it would add to your daily life. To start with, you don’t have a central access point to receive the money you’ve worked for. Then, every financial commitment you have is more challenging to pay. You don’t have monthly debit orders to take care of it. Service providers can’t be paid with electronic transfers. And you can’t simply swipe your credit card at the shop when you’ve suddenly run out of milk or bread.
Apart from the day-to-day inconvenience, you also can’t save money for short or long-term goals or earn interest on your savings. You don’t have the peace of mind that your money is safely and securely sitting in a protected account. You’re also excluded from accessing certain basic services, such as taking out loans, having insurance or medical aid, and building retirement funds.
Yet, these are the challenges that 2.5 billion people around the globe face every day. Known as the ‘unbanked’, over 400-million of these financially excluded adults are living on the African continent. Reasons behind this are vast, ranging from physical access to bank branches, the belief that they can’t afford one, education around why bank accounts are beneficial, and the availability of the required documentation to open one.
Seeing that financial tools, such as bank accounts are vital for the upliftment out of poverty, it is also concerning to see that women make up 56% of all unbanked adults globally. In Kenya, for instance, two-thirds of unbanked adults are women. For women making less than $2 a day, it becomes 28% less likely for them than their male counterparts to have bank accounts. This means that not only is there an urgent call to increase financial inclusion in Africa but to also address the gender equality issues that it has unveiled.
Fintech transforming the unbanked to banked
Fortunately, fintech advancements over the past few years have made great strides to build a bridge towards the unbanked. And smartphones had a big hand in this. With approximately 750 million SIM-card connections in sub-Saharan Africa, which represents 75% of the population, Africa’s high mobile penetration was the answer to change many people’s status from ‘unbanked’ to ‘banked’.
Accelerated by the pandemic, the adoption rates of mobile fintechs, have been consistently climbing. A report on mobile money highlighted that two years ago, Africa’s number of registered mobile money accounts grew by 12% to 562 million accounts, with 161 million accounts active 90 days after registration. These numbers are extremely encouraging if one considers the impact that a banked Africa can have on individuals, communities, countries, and the entire continent. By building an inclusive financial system, Africa can look forward to a more resilient economy.
In saying this, there is a crucial step that stands between the current reality and the future vision. A pertinent and important requirement is to ensure the right fintech falls in the right hands not only for individuals, but for businesses specifically. In sub-Saharan Africa alone, there are 44 million micro, small and medium-sized businesses (SMMEs). With estimations that these SMMEs provide around 80% of employment on our continent- a significant economic impact can be made if fintech enables these entrepreneurs for further growth by unlocking previously inaccessible financial benefits.
Empowering the backbone of Africa’s economies
This is one of the insights that played a role in Standard Bank’s launch of Unayo in 2021. This mobile money platform connects merchants, consumers, products, and producers by creating a network to monetise payments, lending, and even data. By enabling cash transactions, remittances, donor disbursements, collections, and bill payments over and above traditional banking offerings, it empowers anyone in Africa with a cellphone number to become part of the financial world.
Essentially, Unayo creates a connected market value chain that business owners can leverage for transactions at a minimal fee. With features such as an account on your mobile phone to collect wages and salaries, transfer money through EFT transactions, and even create savings pockets for specific business goals or accounts, it is understandable that we saw over 130 000 transactions processed on the new Unayo app in just the first quarter of this year. We have had over 760 000 transactions since going live in August 2021.
It is with innovations such as these that fintech can truly drive Africa’s growth. By connecting an entrepreneur in a remote African village to the next global financial movement, we can pave the way for significant economic transformation. By advocating for the financial inclusion of today and tomorrow’s rising businesses owners, we can strengthen the backbone of our continent’s economies to ensure a sustainable financial future for Africa. This is why, in all likelihood, electronic payments will form the foundation of the fintech revolution.