TRENDING
D
eloitte and Mastercard have
released a joint report titled
‘Leveraging digital to unlock
the base of the pyramid market
in Africa’, with focus on the waves
of digital innovation in financial
services. The report, released during
the World Economic Forum on
Africa (WEF), reinforces that digital
technology is financially empowering
more Africans.
With focus on lower-income earners,
referred to as the base of the
pyramid (BoP) market, the report
looks at how best to facilitate
financial inclusion by providing
financial solutions, products and
services that focus on affordability,
reach, access and trust.
“Half of South Africa’s workface falls
into the BoP income bracket, with
this share likely to be much higher
in the rest of the African continent,”
says Roger Verster, Financial Services
Industry Leader at Deloitte Africa.
“Although BoP consumers represent
the majority of African consumers
and spending power, their low
income has been seen as a hindrance
to gaining access to products
and services through traditional
distribution models.”
The widespread reach of digital
technology across sectors in Africa
has spurred the introduction of new
market entrants and solutions that
aim to disrupt those traditional
models and accelerate financial
inclusion. A key enabler and catalyst
for digital disruption in the financial
services sector has been the rapid
adoption of mobile phones, which
play an important role in delivering
digital services to those still
unbanked or underbanked at more
affordable prices.
Safaricom’s mobile wallet, M-PESA, is just
one example of how digital solutions are
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unlocking new markets in Africa.
Raghu Malhotra, President, Middle
East and Africa at Mastercard, adds
that developing a more inclusive
Africa will take a combination of
strong partnerships, relevant financial
solutions and a willingness for
governments to move beyond cash.
He identifies several trends impacting
financial inclusion, including mobile
devices as a payments acceptance
tool, the digitisation of key value
chains, the growth in online cross-
border money transfers and electronic
identity solutions.
Partnerships with mobile network
operators (MNOs), in particular,
enable these new entrants to tap
into an existing customer base and
gives them access to solutions such as
mobile wallets that help to streamline
credit extensions, the collection of
premiums and the overall claim pay-
out process.
As part of identifying innovative
ways of unlocking new markets
and providing more affordable and
accessible solutions to the BoP, the
report identifies three waves of
digital disruption across Africa.
The first wave involves Fintech
companies disrupting the banking
sector by developing digital
banking and payment solutions,
started mainly in collaboration with
telecommunication companies.
The most well-known example is
Safaricom’s mobile wallet, M-PESA,
which is now available in 10
countries and has a customer base of
approximately 30 million active users.
Successful companies that leverage
mobile technology – often through
partnerships, cloud computing and
advanced data analytics – to bring
down costs, achieve reach
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