African Development Bank Plots a Future of Financial Inclusion with a Financing Facility

African Development Bank Plots a Future of Financial Inclusion with a Financing Facility

By Nnamdi Odumody

The African Development Bank in conjunction with strategic partners recently launched the African Digital Financial Inclusion Facility to scale access to the provision of digital financial services across Africa.

The African Development Bank, with donor partners, will launch the Africa Digital Financial Inclusion Facility (ADFI) on 12 June 2019 at the Bank’s Annual Meetings in Malabo, Equatorial Guinea….

Digital financial services are emerging as a powerful force for financial inclusion, gender equality and inclusive economic growth. For consumers in low and middle-income countries, digital financial tools, such as mobile payment systems, provide a gateway to greater economic security, empowerment and opportunity.

Although there is a growing ownership of mobile phones in Africa, the benefits of digital financial inclusion have not been fully harnessed.

This fund which was recently launched at its Annual Meeting in Malabo, Equatorial Guinea, is supported by the Bill & Melinda Gates Foundation, Agence Francaise de Developpement and the Government of Luxembourg contributing to this initiative.

It is to ensure that at least 320 million financially excluded Africans of which 60 percent are women have access to digital financial services. About $100 million will be deployed in grants while $300 million will be on debt capital from the Bank’s resources. There are instruments to solve the financial inclusion paralysis by providing digital financial services to low income communities across Africa.

According to the African Development Bank’s President, Dr Akinwunmi Adesina, with the right investments in Innovation and Smart Digital Growth, the obstacles to achieving financial inclusion and greater economic opportunity for all will be overcome.

The four pillars which this initiative will focus on are infrastructure which includes digital and interoperable payment systems, digital products and innovation, policy and regulatory reform and harmonization and capacity building. It will bridge the transaction gap between men and women in Africa.

Michael Wiegand, Director of the Financial Services For The Poor Programme at Bill & Melinda Gates Foundation, posits that financial inclusion achieved through digital financial service models is simultaneously a powerful antipoverty strategy and a catalyst of sustainable economic development for national and regional economies.

The AFDI’s opening project which will serve as a pilot for the fund is $11.3million grant from the Bill & Melinda Gates Foundation to the Bank and the ECOWAS Central Bank. The grant will create an interoperable digital payment system that allows consumers to send and receive money between mobile wallets, and from these wallets to other digital and bank accounts.

The AFDI will utilize banks and non bank financial institutions, mobile network operators, remittance and payment service providers, fintech companies, government ministries, regulatory bodies as well as regional economic organizations to drive access.

It is estimated that only about 43 percent of Africans have bank accounts and interventions like the AFDI are timely and necessary to fix this friction in provision of access to financial services.

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