Ever since the coining of thewords Financial Inclusion, nations tried to move towards the goal of advancingfinancial literacy and ensuring reliability and accessibility of financialservices for their citizens. To understand where they stand ascompared to all other countries that pledged to recognize the importance offinancial inclusion, the 2015 Financial and Digital Inclusion Project Reportand Scorecard ranked 21 countries based on four aspects of financialinclusion: mobile capacity, regulatory environment, adoption of traditional anddigital financial services and country commitment. Kenya, South Africa, Brazil,Rwanda and Uganda turned out to be ones with highest Financial Inclusion.
Following points will illustrate why these nations have fared well. As of August 2014 about 90percent of Kenyan households had used mobile money services. Kenya permits bothbanks and nonbank institutions to offer financial services. Diverse mobilemoney offers have been introduced that allow customers to pay bills, purchaseinsurance and send remittances to other people, among other services. · Vibrant mobile money ecosystem· Majority population has a financial access point within 3 kms ofradius· Adequate bank branches with citizens actively involved indepositing money, withdrawing money, receiving and sending money, borrowingloans and saving at a bank· Central bank’s willingness to provide an enabling environment fordigital services to evolve· Introduction of mobilemoney deployment m-pesa · 74 mobile cellular subscriptions per 100 people in kenya.· Introduction of m-shwari,kcb m-pesa account, lipa na m-pesa, akiba mkononi· Increased the accessibility and cost-effectiveness of financialservices · Inexpensive mobile money agents services· Revised banking act and guidelines, prudential guidelines onconsumer protection, revised agent guidelines for commercial banks, national paymentsystems act and regulations· All electronic money issuers in the country need to have openback-end systems South Africa stood 2ndposition in the list. As of 2014, around 75 percent of adults had bank accountsor have participation in banking system and 5 percent used non-bank financialproducts which are considered to be the part of economy’s financial system.
ATM and debit cards are more inuse, with nearly 30 percent of the banked population owning a South AfricanSocial Security MasterCard. Women in South Africa are not disproportionatelyexcluded from formal financial services. · Increase in banking and associated ownership of ATM/debit cards —for example, approximately· Rising insurance levels· Increased bank transactions, increase in savings and investments,borrowing· High level of mobile subscriptions· Active agent outlets· Re-launch of M-Pesa mobile money service with more points ofservice· National Treasury· Setting higher goals for transactions point availability onceachieved · Mzansi account, launched in as a basic bank account for low-incomepopulations· Financial Intelligence Centre Act was developed as an anti-moneylaundering and counterterrorism measure · South Africa’s national identity system has been credited withfacilitating effective identification and uptake· “12 percent of adults in South Africa held a SASSA MasterCardassociated with bank accounts opened for grant recipients”· South Africa’s regulations permit banks to use third-partyentities to offer banking services on their behalf · Bank-led model in which organizations must have a banking licenseor partner with a bank in order to offer mobile financial services There were regulatory changesmade for Brazil and Rwanda to enable alternatives for financial services, forexample banking services were offered through retailers, post offices andlottery outlets, and mobile money services led by bank and non-bankinstitutions.· Highliteracy rates · Relativelyyoung population· Highlevel of urban concentration· Extensivefinancial infrastructure – adequate number of municipalities and commercialbank branches· Peopleare involved in financial activities – existence of bank accounts, loanborrowing, savings and investments, use of social card, cash transfers fromgovernment· Widespreadawareness of broader financial services · Widespreadbanking correspondents· Competitivetelecommunications sector is quite with multiple players Other countries can improve theirfinancial access by strengthening infrastructure, reforming their policies andregulations, and by improving adoption levels. For example, in Ethiopia, highpoverty levels and limited infrastructure make it challenging to engage thelocal population. In Afghanistan, unrelentinginstability has resulted in limited access to formal financial services.
Eventhough there is focus on reconstruction, telecommunications and bankinginfrastructure remain limited. Moreover, there is widespread mistrust of thebanking system. Even if people do want to access formal financial services,many live too far from a bank branch to reach those access points easily. Yetwith over 80 percent of the population now covered by a 3G mobile network, thecountry is poised for higher utilization of mobile financial services in thefuture.