South Africa was ranked second in an index for its excellent access to and usage of affordable financial services, a report released on Tuesday shows.
The 2015 Brookings Financial and Digital Inclusion Project (FDIP) Report and Scorecard, which evaluated 21 countries, examined broad dimensions relevant to financial inclusion such as country commitment, mobile capacity, regulatory environment and adoption of traditional and digital financial services.
As of 2014, around 75% of South African adults had bank accounts and 5% used non-bank financial products. ATM/debit cards were more common, with 34% of the banked population owning a South African Social Security MasterCard.
“Unlike in many other countries in our study, women in South Africa are generally not disproportionately excluded from formal financial services,” the report said. “The 2014 Global Findex found that about 69% of men and 69% of women had accounts with a formal financial institution or mobile money provider.”
South Africa earned 80% and was ranked number 12 for country commitment, number one for mobile capacity, number 17 for its regulatory environment and number three for adoption. It also received the highest score for formal account penetration, including among rural, low-income and female groups.
Strong mobile capacity
SA mobile capacity was strong, the report showed, with the percentage of unique subscribers comprising about 70% of the population and about 96% 3G mobile network coverage by population.
“South Africa also has a number of mobile money deployments offering P2P domestic transfers, bill payment, and international remittances,” it said. “This has allowed it to reach more people and engage them in financial services.”
Initiatives to digitise government transfers, along with the country’s quite extensive banking infrastructure, supported financial inclusion, the report showed. “Efforts to diversify the digital financial services market and encourage digital transactions could propel further advancements in financial inclusion.”
According to estimates from a recent Imperial College and Citi report, “a 10% increase in the digital money readiness and commensurate increase in adoption for the countries included in the index, can help up to an estimated 220 million individuals enter the formal financial sector. This translates to an additional $1trn moving from the informal economy to the formal economy […].”
Crucial part of economic development
The report said financial inclusion has become a crucial aspect of economic development.
“Developing economies need consumers who can pay bills or send remittances in an affordable and convenient manner,” it said. “Digital services are an increasingly important component of the nexus between development and financial inclusion.
“Having greater access to financial services promotes entrepreneurship, lifts people out of poverty, and gives them greater hope for a brighter economic future. This is especially the case in regard to women and marginalised groups.”
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