SADC strategy promotes growth in access to financial services

SANF 23 no 7 – By Clarkson Mambo

SADC has improved access to financial services for most residents of the region through strategies aimed at improving livelihoods and broad participation in economic development.

SADC Heads of State and Government approved the SADC Strategy on Financial Inclusion and SME’s Access to Finance (2016-2021) in 2018, aimed at improving access, uptake and utilisation of financial services and products by consumers and small businesses.

Financial inclusion is defined as access to a wide range of a financial services which are provided by sound and sustainable institutions at a reasonable cost.

Since the adoption of the strategy, at least 10 of the 16 SADC Member States have developed national strategies or roadmaps on financial inclusion, which has resulted in an increase in the number of SADC citizens who have access to financial services, besides just having a bank account.

The latest statistics from the SADC Banking Association show that implementation of the strategy has seen an increase in access to financial services to 70 percent of adults in the region, from 68 percent in 2018 and 57 percent in 2011.

It is also estimated that about 30 percent of adults in SADC now use mobile money services, compared to 23 percent in 2014.

The increase in the number of new banked people is about 48 million adults, including 22 million women, who have entered the formal financial system in the last decade.

The SADC Banking Association has said that that while the Covid-19 pandemic experienced in the last three years had severe economic impacts, the associated restrictions in movement of people created new opportunities for financial innovation and adoption of digital financial services which are now key enablers to access and use of financial services in the region.

Member States have adopted different national strategies to expand access to financial services, with Malawi driving the agenda through financial education and easing access to mobile money which has reduced financial exclusion in that country from 51 percent to 22 percent.

In Botswana, where a National Financial Inclusion Roadmap and Strategy was developed, focus has been placed on facilitating access to low-cost savings products, consumer protection, development of the payment ecosystem as well as improving the workings of the credit market. This has helped to attain growth in use of e-money and remittances as well as access to insurance products.

Eswatini has prioritised mobile money and remittances, while Zimbabwe is focusing on consumer protection, microfinancing, financial innovations, smallholder farmers as well as youth, women and people living with disabilities to drive the financial inclusion agenda.

The SADC Secretariat is assisting Member States in reviewing and developing new financial inclusion strategies, with particular support to Angola, Botswana, Eswatini, Lesotho, Malawi and Namibia in the domestication of the SADC mobile money guidelines.

The SADC guidelines are based on the appreciation of the evolution of mobile money in the provision of financial services to the unbanked population through use of relevant banking infrastructure.

They assist SADC Member States the harmonisation of their legal and regulatory frameworks for mobile money in support of greater financial inclusion and market development in the SADC region.

To further widen access to financial services especially to the economically underprivileged, the SADC Banking Association has called on the private sector to play a bigger role in advancing this agenda.

Inclusion of the majority of SADC citizens in using formal financial services is key in driving economic growth as well as use of formal channels for cross-border sending of money. SADC is also working on strategies to reduce the cost of sending money across borders.

Challenges faced by different institutions involved in promoting financial inclusion include the lack of commitment by some officials, the informality of SMEs as some want to remain unregistered to avoid paying taxes, and the absence of financial inclusion communication strategies.

The United Nations Capital Development Fund, which is partnering with SADC in the drive, has cited financial inclusion as a critical enabler in improving the quality of life of households and individuals as well as raising the productive capacity of small and medium enterprises.

SADC has since established various platforms, programmes and bodies which allow stakeholders to meet to discuss and share experiences on the promotion of financial inclusion and integration across Member States such as the annual Regional Financial Inclusion Forum, the Support to Improving the Investment and Business Environment Programme, and the Committee of Central Bank Governors, as well as the Peer Review Panel of SADC Ministers of Finance and Investment.

Southern African News Features offers a reliable source of regional information and analysis on the Southern African Development Community, and is provided as a service to the SADC region. 

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