The Senior Vice President, Product Management Digital Payments & Labs, Middle East and Africa at Mastercard¸ Gaurang Shah, speaks with IFE OGUNFUWA on how to accelerate digital and financial inclusion in Africa
In your view, is Africa making good progress towards financial inclusion?
We are in conversations with governments and other key stakeholders across the continent and one thing is consistent, financial inclusion is high on everyone’s agenda.
At Mastercard, we believe that no one can thrive in a failing world. We thrive when economies thrive, and a successful economy is sustainable only when it is inclusive and when prosperity is shared.
Our journey began because we saw the social and economic implications of being excluded and the hidden cost of cash on people, communities and businesses at the base of the pyramid.
So far, we have brought 500 million into the digital economy and have made a pledge to bring another 500 million, to a total of one billion by 2025.
We have only achieved this by working with key stakeholders including governments around the world and in Africa. This is because we know that no one can do this alone but working together, we can drive financial inclusion across Africa till everyone has the right tools they need to prosper.
Our role in supporting this vision is enabling financial and digital inclusion that empowers individuals, businesses and governments to connect, interact and interoperate. Through innovation, integration and infrastructure investment, the positive impact of payments technology can continue to grow.
How can barriers to financial inclusion be removed in Nigeria and other African countries?
In order to remove barriers to financial inclusion, we must focus on fostering public–private sector collaboration and partnership, as it’s unrealistic to expect governments to pursue economic development alone. We must ensure everyone is included through easier access to digital financial services.
As part our pledge to financially include one billion and 50 million micro and small businesses, Mastercard has adopted a partnership approach where it is applicable in Nigeria and the rest of Africa.
These examples highlight the significance of partner-centric solutions to enhance financial inclusion. Effective collaborations with governments, the development community and industry players are key in removing barriers to financial inclusion in Africa.
What is the future of payments in Africa?
The future of payments in Africa is digital. There is an array of digital payment options such as QR, mobile money, virtual card numbers, etc. The genie has long been out of the bottle in respect to payment options. Mastercard has a long-standing commitment to helping governments and other institutions digitise their economies.
Cash still represents 85 per cent to 90 per cent of all consumer transactions globally and often comes with significant direct and indirect costs. Mastercard’s commitment to digitisation is underpinned by our proprietary Payments Ecosystem Design and Development methodology, which helps governments systematically and effectively assess and capture the potential of payment digitisation.
Payment digitisation provides the overarching economic foundations to counteract the direct and indirect problems of cash across governments, businesses and consumers. Although the objective is not to eliminate cash entirely, the bringing of unbanked and under-banked people into the financial system vastly improve livelihoods.
What are the economic and social benefits of pay on demand for Africa?
The economic and social benefits of pay on demand are immense because Pay on Demand solutions are boosting digital and financial inclusion across Africa through connectivity. People have different pain points, payment needs and security requirements, and this varies among the different segments of society.
When looking at the customer’s needs in Africa, we consider how we can address those needs with convenient, accessible solutions. Our Pay on Demand platform, built by Mastercard Labs, connects partners that can provide financial inclusion solutions to emerging markets, with a focus on paying for services as they are consumed.
In 2018, Mastercard partnered with M-KOPA Solar to light up homes and businesses in Africa. A few weeks ago, we announced a partnership with Airtel, Samsung and Asante to enable digital inclusion through Pay on Demand.
Such collaborations with key players in the ecosystem allow us to drive a new wave of inclusion through connectivity and smart devices, creating a digital economy that works for everyone.
One of the indirect benefits of Pay on Demand is that it helps individuals and MSMEs establish a digital transaction history, making other financing solutions accessible (such as credit, loans and insurance). Pay on Demand creates a model that converts unsecured lending into secured lending; that is at the heart of its solution.
What role will a unified digital identity play in accelerating pay on demand on the continent?
Pay on Demand solutions help to accelerate digital identities because consumers, even the unbanked, have a digital footprint as reference. Financial data can be invaluable in fostering financial inclusion.
In the absence of relevant data, financial inclusion becomes impossible to expand into the areas where it is needed most.
Earlier this year we released our white paper ‘Pay on demand: The digital path to financial inclusion’, which explores how digital inclusion has provided better access to financial and other services.
This is particularly relevant in sub-Saharan Africa, where mobile money has so far been the main driver of financial inclusion. While the share of adults with an account at a financial institution has remained flat, the share of those with a mobile money account almost doubled to 21 per cent between 2014 and 2019.
The availability of financial data that indicates trends can ensure policy-making for prosperity and increased adoption of Pay on Demand solutions.
What kind of policies can encourage digital and financial inclusion to meet the rising demand for payments?
Every country has different challenges relating to the barriers of digital and financial inclusion which inform their policies. However, governments are recognising that payment digitisation and the associated promotion of digital payments have multiple advantages.
On the one hand, it can reduce the negative impact of criminal activity, instances of fraud, and the shadow economy. On the other hand, it can help to recuperate lost tax revenues, increase GDP and generate more wealth across the board.
– Punch