Expanding Africa’s digital payments systems

The disparity in Africans using financial payment systems is compounding the rate at which the regional economies can grow, according to Dr. Robert Ochola, CEO of AfricaNenda. In a recent interview with CNBC Africa, Dr. Ochola discussed the challenges and opportunities for scaling up the adoption of financial payment systems in African countries. He highlighted the remarkable growth in financial inclusion over the past decade, with a significant drop in the number of financially excluded individuals. However, he pointed out that at the current rate, by 2030, only about 100 million people would be onboarded, leaving a substantial 350 million people financially excluded. This number is projected to decrease to 200 million by 2050, emphasizing the urgent need to accelerate efforts to include those left behind. AfricaNenda's primary focus is on driving and expediting the onboarding of financially excluded individuals to enhance economic development and bridge the existing digital divide. One of the key strategies Dr. Ochola outlined to promote financial inclusion is leveraging digital public infrastructure. He emphasized the critical role of digital public goods in revolutionizing payment systems in Africa. By adopting open-source technology, countries can develop cost-effective solutions that reduce the barriers to entry for millions of individuals. Dr. Ochola referenced the success story of Brazil's payment system, PIX, which serves 130 million people at a minimal cost, highlighting the potential for African nations to follow suit. However, he acknowledged the significant challenge of financing the infrastructure required for such initiatives and proposed a hub-and-spoke model as a viable alternative to conventional data centers. Women's economic empowerment emerged as a crucial point of discussion during the interview, with Dr. Ochola shedding light on the gender gap in financial inclusion. He revealed that 60% of the 400 million financially excluded Africans are women, underscoring the importance of adopting a gender-centric approach to developing financial products and services. AfricaNenda advocates for tailored solutions that cater to the unique needs of women, emphasizing the significance of inclusive onboarding processes, product design, and accessibility. Dr. Ochola also stressed the necessity of collecting disaggregated data to track the participation of women in financial transactions, enabling data-driven policymaking to address the gender gap effectively. In addressing the challenges of implementing digital payment infrastructure, Dr. Ochola highlighted the need for a conducive policy environment, affordable infrastructure, and capacity building for developers. He emphasized the importance of harmonizing policies at both the pan-African and regional levels to foster innovation and collaboration across the continent. Additionally, he proposed a partnership model to facilitate the cost-effective development and maintenance of infrastructure, while also advocating for upskilling local talent to drive technological advancements and promote homegrown solutions. Ensuring the safety and security of digital payments remains a paramount concern, given the growing interest in digital financial services across Africa. Dr. Ochola emphasized the crucial need for robust cybersecurity measures and integrity in financial systems to instill trust and confidence among users. AfricaNenda is actively partnering with experts to pilot innovative solutions, including open-source fraud management tools, to enhance the security and efficiency of payment systems. By equipping local fintech firms with affordable resources, AfricaNenda aims to empower them to serve a broader customer base and foster financial inclusion for the millions currently excluded from digital financial channels.