After spending three months last summer in Kinshasa and connecting with Congolese bankers, just by listening to each and everyone of them, I came to understand that financial inclusion is one of the greatest developmental challenges of our century in African countries. At a time when many nations around the world are achieving sustainable GDP growth, income inequality and access to finance remain critical issues with huge political and economic implications in many African countries. A report recently published by the World Bank shows that 2 billion adult are currently unbanked, with many of these people in employment living in third countries.
It’s arguable that the figures on financial access and education in Africa remains stark. Since most countries in Africa got still difficulty in creating a group middle class society, the result is that millions of adults do not have a bank account with around 40% of adults with little practical understanding of the impact of inflation on the value of money. Therefore people in Africa face a double bind with finance: a lack of access to financial institutions and gaps in savings education.
Thus, FinTech innovations come to provide some solutions to these problems. With the rise of telecoms, startups and smartphones, there are multiple platforms and systems currently in development by hubs and incubators around the world to provide crucial steps in ensuring wealth does not remain insulated to the few. Most of them have been developed to first suit their environment conditions before extending their service globally. For this, I have chosen two UK based startups to indorse my reasoning.
The first startup is called DoPay. This startup basically is making a change through the utilisation of mobile communication by targeting the two billion employed unbaked. Its team has developed a cloud-based payroll software platform to enable employers to pay workers with prepaid debit cards instead of cash. By providing this mandatory solution, there is greater possibility for transparency in economies with fragile institutions and exposes the number of “ghost employees” usually lodged within employee payrolls.
The second example is the startup called MoneyBox. This is another Fintech startup that is making waves in financial access with a mobile phone apps that encourages users to start saving by educating users about money. This platform helps people to review spending habits, incentivise the process of saving through rounding up everyday purchases and offering simple investment options and saving goals.
To conclude, unlocking the potential of the unbanked is not only important for humanitarian reasons. The economic and business opportunities arising from tapping into the purchasing power of the unbanked can transform communities, empower individuals and change the path of the global economy. By providing a multiple of platforms for payments and savings, it is possible to democratise the financial destiny for the masses not only across Africa but also across the globe.