The Technology of Financial Inclusion in Africa


With close to 80% of African families still without access to a conventional banking system, there is much work to be done to get basic financial services into the hands of the 1.1bn people that inhabit the world’s second most populous continent. Of that number, around 90 million people have household incomes exceeding $5,000, meaning that they can direct more than half of their income towards discretionary spending, rather than necessities. This number could reach a projected 128 million by 2020*. As average incomes continue to rise, so do the numbers that need access to current account and payment services capable of supporting a more diversified lifestyle.

Driving ubiquitous adoption of secure plastic payment cards is an important step that Africa must take if it is to bring its infrastructure in line with other geographies. In its 2013 World Payment Report, Capgemini identified cards as the ‘basis for innovation and growth in non-cash payments’ in Africa. The problem, however, is that ‘cards still suffer from limited acceptance networks outside large cities or tourist areas’.

There are two sides to migrating to EMV. Firstly, from an issuance perspective, work needs to be done to get the banks to buy into the benefits of EMV and implement the technology. Equally important is the task of getting merchants on board to drive adoption of the EMV terminal acceptance infrastructure. Support is at hand, however, from migration partners, like Thames, who have managed similar projects all over the world.

In support of EMV, and with a view to maximising financial inclusion across the continent as quickly possible, a range of new technologies are mooted for near term rollout in Africa. Firstly, biometric authentication, in place of signatures or a personal identification number (PIN), can help banks deliver services to customers in regions where the levels of literacy and numeracy that are conventionally needed are not widespread. In these circumstances, cardholders can benefit from increased security without needing a PIN or a signature.

Secondly, financial institutions can work with card manufacturers to equip themselves with ‘instant issuance’ cards. The capability to issue cards in a matter of minutes, rather than days or weeks, will dramatically accelerate widespread deployment, especially in remote rural areas.

Bringing the technology in line with other countries globally will enable easier and more secure spending for Africans and tourists alike, providing a significant boost to the banking industry and to the wider economy. EMV will also allow money to move more freely within Africa by lifting the restrictions imposed by local switch networks and giving cardholders the freedom to pay across national borders.

Security will be key for all concerned. Consumers will adopt payment methods that guarantee the safety of their money and banks can reap the rewards of reduced administration and significant hikes in customer recruitment. As a consequence, more bank branches will be required and more jobs created.

Now is the time for banks to seize the opportunity to reduce fraud and increase their customer base. Of course there are unavoidable costs to contend with, but EMV migration opens the door to new revenues that can quickly offset banks’ investments. After all, any bank that is able to secure even a small percentage of Africa’s financially underserved faces a bright future indeed.

*“10 things you didn’t know about the African economy”The Independent

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