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<p>The impact of technology in business on the continent was very profound in the past five years, but what kind of impact will tech have in the new decade? Salah Goss of Mastercard joins CNBC Africa for more.</p>


Mastercard on the role of fintechs in closing the financial inclusion gap in Africa

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<p>Digital technologies are the most penetrated human invention in history but can it deliver on promises of inclusive growth, and what advantages does it bring to the future of Africa? CNBC Africa talks digitalisation with Raghav Prasad, Division President for Sub-Saharan Africa, Mastercard and Bhaskar Chakravorti, Dean of Global Business, The Fletcher School, Tufts University.</p>


World Economic Forum: How digital technologies can deliver inclusive growth in Africa

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<p>Following from last week’s WEF Africa discussions, CNBC Africa’s Nozipho Mbanjwa spoke with Shamina Singh, Executive Vice President, Sustainability &amp; Founder and President, Center for Inclusive Growth and Michael Schlein, President and CEO of Accion about the recent partnership between MasterCard and Accion.</p>


World Economic Forum: Mastercard, Accion partner to enhance entrepreneurship across Africa

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<p>Mark Elliott, division president of Mastercard, Southern Africa spoke about its new report on “The future of payments in South Africa”.</p>


World Economic Forum: The future of payments in SA

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<p>Raghav Prasad is the man who believes he can transform digital banking landscapes in Africa, He also believes he can get millions of informal traders dealing in cash on the streets to go to banks for the first time in their lives. Prasad, Division President for Sub-Saharan Africa at Mastercard joins CNBC Africa for more.</p>


World Economic Forum: How Mastercard plans to get informal traders to bank for the first time

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<p>Part of the conversation at the inaugural Forbes Regional Summit (FRS) in Kigali focused on the need to increase financial success for women in rural areas and small enterprises. In a discussion on how best it can be achieved, CNBC Africa&#8217;s Arnold Kwizera caught up with Vice President for International Development at Mastercard Worldwide, Salah Goss for more.</p>


Mastercard’s renewed drive for women’s financial inclusion


<p><em>This article was supplied to CNBC Africa by Mastercard </em></p>



<p>Across Africa, there has historically been a heavy reliance on cash, with around 95 percent of retail transactions taking place in cash. Global and local organisations are investing in innovative digital payment systems and new disruptive payments tools to displace cash, while delivering new levels of inclusion to the benefit of consumers, businesses and governments. One of the leading technology companies in this realm is Mastercard.</p>



<p>We recently spoke with Gilberto Caldart, President of International for Mastercard, to help us unpack the key points about how cash is being displaced in Africa.</p>



<div class="wp-block-image"><figure class="aligncenter"><img decoding="async" src="https://www.cnbcafrica.com/wp-content/uploads/2019/05/Gilberto-Caldart-President-of-International-for-Mastercard1.jpg" alt="" class="wp-image-336492"/><figcaption> <br>Gilberto Caldart, President of International for Mastercard </figcaption></figure></div>



<h3 class="wp-block-heading">&nbsp;&nbsp;&nbsp; <strong>Why are cash economies hampering growth in Africa?</strong></h3>



<p>While seemingly inexpensive, cash comes at a high cost
to governments, businesses and consumers, placing unnecessary strain on
economies. The printing, distribution and handling costs of cash alone place as
much as a 1.5 percent burden on national GDP. The impact is even greater if you
take into account the costs associated with fighting illegal activity, fraud,
corruption and the shadow economy – all of which are fueled by cash.</p>



<p>From a consumer perspective, cash is inconvenient,
dangerous to carry and expensive. In South Africa for instance, cash costs
consumers R23 billion a year, with the costs disproportionately carried by
low-income earners. This remains true across several other African countries
where people often have to trade off the demands of an hourly job with the need
to travel long distances to access cash or stand in line to pay a bill. Many
people also face the danger of being robbed when they come home with their
wages.​</p>



<p>Cash also has several negative implications for
merchants and small businesses. Not only does it cost these businesses to
access, secure, transport and store cash, but it can also hamper business
growth if they do not accept electronic payments. For example, entrepreneurs
cannot access the credit or loans they need to grow their businesses without a
financial record or credit history. They can also lose out on revenue when
their customers don’t have enough cash to pay for goods.</p>



<p>You can’t talk about cash without talking about
financial inclusion. What is the opportunity to expand financial inclusion in
Africa, and what are the broader socio-economic benefits of doing so?</p>



<p>According to the Global Findex, 57 percent of people
in sub-Saharan Africa are financially excluded. Without access to formal
financial tools, these people remain locked out of many economic activities, have
extremely limited retail choices, cannot access credit and often pay more for
goods and services.​</p>



<p>While this statistic is much higher than the global
average (31 percent), good progress has been made over the last few years,
driven by several factors including supportive government policies and a new
generation of financial tools and services accessed by mobile phones.​</p>



<p>However, more still needs to be done if Africa is to
realise the full socio-economic benefits that financial inclusion can deliver
including greater income and social equality, an expanded middle class, and
more human fairness and dignity.</p>



<p>At Mastercard, we believe that financial inclusion is
the cornerstone for inclusive growth. By providing access to financial tools
and helping people use those tools, we can break down economic barriers and
contribute to their upward mobility and a better quality of life. The result is
prosperity shared among all segments of society.</p>



<h2 class="wp-block-heading"><strong>How does Mastercard approach financial inclusion, and what
are the benefits from a business perspective?</strong></h2>



<p>Financial inclusion is part and parcel of our business
strategy and vision to create a world beyond cash. We bring our technologies
and infrastructure, our capital and creativity, and our ability to scale
solutions to support people’s journey from poverty to prosperity. But we can’t
do it alone. That is why we bring together an ecosystem of different players,
and partner with both the private and public sectors to make a sustainable
impact.​</p>



<p>For example, we partnered with the Ministry of Finance
and major Egyptian banks on a custom solution for the government to pay its employees
safely and efficiently. It is now one of the largest government payroll card
programmes in the world, with more than 4.6 million public sector employees
receiving their salaries electronically. Today, we’re working with the
government to build an interoperable mobile money platform linked to citizens’
national identification, enabling 54 million Egyptians to participate in the
formal economy.​</p>



<p>Through partnerships such as this, we are growing our
business while addressing some of Africa’s most pressing challenges. Our
approach is based on the fundamental conclusion that we do well by doing good –
that we can make money and make a difference at the same time. When we do this,
we create a sustainable system where everyone benefits — citizens, customers,
governments and businesses including Mastercard. The integration of purpose
into our business strategy helps us to attract top talent, grow our customer
base and create brand affinity with people, businesses and governments.</p>



<h2 class="wp-block-heading"><strong>How has Mastercard transformed its business in Africa as part
of your strategy to create a “cashless Africa”?</strong></h2>



<p>About 10 years ago, we started to ramp up investments
on the continent with a laser focus on executing our global strategy of
creating a world beyond cash. As a technology company, we started to build out
payment infrastructure and create new ecosystems, while innovating locally to
benefit our customers. In order to create scale and make a broader impact, we
changed our business model from partnering with only a few of the largest banks
to working with a range of stakeholders, including governments, mobile network
operators, fintechs, technology companies, merchants and others.</p>



<p>We also expanded our geographical footprint and
employee base significantly, combining local know-how with our global
expertise. As a result of these efforts, our cards are now issued in 58
countries and accepted in 60 countries across the Middle East and Africa
region. Our African business remains an increasingly important part of our
company’s emerging market growth strategy with volumes growing at double the
global rate.</p>



<h2 class="wp-block-heading"><strong>Africa is a widely diverse continent. How is Mastercard
innovating locally to solve country-specific needs?</strong></h2>



<p>Turning cash into digital transactions is all about
designing relevant solutions that address the needs of people, which can vary
by geography, individual preference and community. We’ve spent significant time
and resources understanding their world, and how our technologies fit – or
don’t fit – into it. This has enabled us to build strategies that can be
scaled, while providing locally relevant solutions that actually get used and
impact lives. </p>



<p>In 2015, we set up the Mastercard Lab for Financial
Inclusion in Nairobi with support from the Bill and Melinda Gates Foundation.
It serves as an R&amp;D hub to develop cost-effective solutions for people who
don’t have access to existing digital payments tools. One example is the
Mastercard Farmers Network, which is helping small farmers in Kenya, Uganda and
Tanzania to sell and accept payment for their produce via a mobile phone. By
connecting them directly to buyers, these farmers can get the best prices for
their produce without going through a middle man. </p>



<p>Another example is our Mastercard QR digital payment
and acceptance solution, which enables people to use a mobile phone to pay
merchants by scanning a QR code. For merchants, the solution provides an
affordable way to accept digital payments at the point of sale — even where
traditional card payment infrastructure, or an electric grid, may not be
present. We have leveraged this technology across several African markets, and
integrated it into innovative business models like Pay-As-You-Go, which gives
people the ability to pay for the things they need as they use them. We
recently partnered with Angaza, a leading last-mile technology distributor, to
increase access for millions of people to affordable necessities, like solar
home systems and water pumps, by leveraging Mastercard QR technology.</p>



<h2 class="wp-block-heading"><strong>How is Mastercard supporting small business?</strong></h2>



<p>Small and medium businesses represent about 80 to 90
percent of the total businesses in Africa, contributing significantly to
employment and economic growth. Unfortunately, many of these businesses lack
the tools, knowledge and financial services that they need to grow their
businesses.​</p>



<p>We use our services, partnerships and technologies to
help small business owners manage their records, access market information,
build a financial footprint and use digital communications channels to receive
training and business advice.​</p>



<p>For example, we launched a first of-its-kind digital
lending initiative with Unilever to empower small and micro business owners in
Kenya. This partnership gives shopkeepers access to short-term, affordable
loans to purchase Unilever products so they can stock what they can sell, not
just what they may be able to afford on any given day. It also provides a
tailored education program that helps entrepreneurs gain the skills and
knowledge to grow their business and use the credit facility effectively.</p>


Creating a cashless Africa

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<p>On the side-lines of the World Majlis Expo 2020 that took place in Rwanda, CNBC’s Africa spoke to Adam Jones, Vice President and Area Business Head, East Africa Mastercard, Middle East &#038; Africa, to give his thought on the role of Mastercard in Expo 2020 Dubai.</p>


Expo 2020 Dubai: Role of Mastercard explained

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<p>The Partnership for Financial Inclusion 2018 Knowledge Event is being hosted by the IFC and the Mastercard Foundation in Dar es Salaam, Tanzania. The six-year old partnership for financial inclusion in Africa brought many key lessons for the IFC and the World Bank, as well as regulators on the continent. CNBC Africa&#8217;s Godfrey Mutizwa spoke to Martin Holtman, Manager, Digital Finance and Micro Finance at the IFC.</p>


IFC’s Martin Holtman on 2018 Partnership for Financial Inclusion Knowledge event

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<p>The IFC and Mastercard Foundation&#8217;s Partnership for financial inclusion in Africa was launched in 2012. Over the past six years, its achievements far surpassed the initial expectations. CNBC Africa&#8217;s Godfrey Muitizwa spoke to Ann Miles, Director, Thought Leadership and Innovation, Mastercard Foundation, at the Partnership for Financial Inclusion 2018 Knowledge Event hosted by the IFC and the Mastercard Foundation in Dar es Salaam, Tanzania.</p>


Expanding digital financial inclusion in Africa

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<p>Mastercard Foundation has unveiled “Young Africa Works” a project that aims to reduce poverty on the continent with the ultimate target to enable 30 million youth to secure jobs by 2030; for more CNBC Africa spoke to Reeta Roy, President and CEO.</p>


Mastercard aims to assist 30mn African youth to secure jobs by 2030

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<p>CNBC Africa&#8217;s Aviwe Mtila recently spoke to Raghu Malhotra, President, Middle East Africa for Mastercard at the Deloitte Africa about the Economic Outlook for 2018.</p>


Inclusive growth is a $7trn opportunity for business – Deloitte Africa

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<p>The African Development Bank suggests that Africa’s GDP could increase to over $15 trillion in 2060. Central to this growth will be access to financial services through bridging the digital divide.</p>


How technology will advance the African economy

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<p>Ann Miles, Director of Financial Inclusion for Mastercard Foundation, shared some of the key outcomes coming out of this year’s Mastercard Foundation Symposium on Financial Inclusion.</p>


Key outcomes from the Mastercard Foundation Symposium on financial inclusion

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<p>According to research done by the World Bank in 2014 an estimated 2 billion working-age adults globally have no access to the types of formal financial services delivered by regulated financial institutions that wealthier people rely on. Senior Financial Analyst for CGAP, Gerhard Coetzee, says customer-centricity is key to banking the unbanked.</p>


Why customer centricity matters

<p><em>By: Mastercard</em></p>
<p>&nbsp;</p>
<p style="text-align: center;"><em>Inaugural report shows July retail sales nominal growth was 7.2% while inflation adjusted retail sales volume grew 2.3% versus July 2016.</em></p>
<p>Despite challenging economic conditions, retail sales growth for July 2017 was the highest recorded for that month since 2015. This is according to the Mastercard SpendingPulse™ report, a macroeconomic report tracking retail sales launched today in South Africa.</p>
<p>Nominal (not adjusting for price changes/inflation) July retail sales grew 7.2 percent versus the same month last year, marking the 55<sup>th</sup> consecutive month of positive growth. Volume retail sales &#8211; which removes the effects of inflation &#8211; for July also saw a positive increase of 2.3 percent year-over-year, indicating that consumer spending remains resilient, despite higher consumer prices.</p>
<p>“The continued growth in retail sales in July is encouraging, and points to a slight improvement in the consumer economy as the country emerges from a technical recession,” says Sarah Quinlan, Senior Vice President and Group Head of Market Insights for Mastercard. “South Africa’s consumer has shown resilience in the face of weak wage growth and high unemployment, reported at 27.7 percent in the second quarter.”</p>
<p>The average growth rate of the past three months was up 2.3 percent year-over-year, slightly above the 2.1 percent growth rate in the second quarter of this year. For the past 12 months, volume retail sales are less favourable, growing by only 0.2 percent. This is slightly underperforming GDP, which rose 0.3 percent in 2016 and is forecast to increase to 0.7 percent in 2017.</p>
<p>“While consumer spending is showing signs of recovery, South Africans still face a challenging macro-economic environment. The economic health of the consumer warrants close monitoring as the economy looks to regain its footing,” says Quinlan.</p>
<p>Mastercard SpendingPulse South Africa reports on national retail sales and uses aggregated and anonymous Mastercard transaction data, coupled with survey-based estimates for other payment forms including cash and cheque, to offer insight into consumer spending trends and the South African economy. Available to subscribers on a monthly basis, the report also includes an overall retail sales and price index to illustrate whether spending growth is being driven by increased shopping or by inflation or increased promotions.</p>
<p>“Providing both timely and insightful data on retail spending trends, Mastercard’s new monthly macro-economic report will offer an early overview of market indices to help retailers, investors, card issuers, banks and government agencies in their decision-making processes,” says Mark Elliott, Division President for Mastercard, Southern Africa.</p>
<p>In addition to reporting trends for the retail sector as a whole, the inaugural SpendingPulse South Africa breaks out sales growth trends for General Dealers, and Pharmaceutical, Medical Goods, Cosmetics and Toiletries. These sectors together account for over half of South Africa’s retail sales volume.</p>
<p>Pharmaceutical, Medical Goods, Cosmetic and Toiletry sales have outperformed other retail segments over the past 12 months, with sales volumes rising 3.4 percent.  However, momentum has weakened since the start of the year, with sales volume in July rising two percent year-on-year, slightly slower than retail as a whole. Price inflation for products and services in the health sector accelerated from 5.3 percent year-on-year for July 2016 to seven percent for July 2017.</p>
<p>On the opposite end of the spectrum, General Dealer sales have underperformed, with sales volumes falling 0.3 percent year-on-year in July, and the value of retail sales down 1.1 percent over the past 12 months.</p>
<p>“Consumers spent less and consumed less, partly because inflation has eroded their spending power. South Africa’s CPI increased 4.6 percent, driven largely by a 6.8 percent rise in food prices,” says Quinlan.</p>


S.A Consumer spending turns upward in face of tight economic conditions

<p><em>Daniel Monehin, Division President for Sub-Saharan Africa, Mastercard, shares insights ﻿on Africa’s digital transformation, and its work in Rwanda, creating a new payment ecosystem. The interview below first appeared in Forbes Africa and is republished with its permission. Subscribe today by contacting Shanna Jacobsen <a href="mailto:Shanna.Jacobsen@abn360.com">Shanna.Jacobsen@abn360.com</a>﻿﻿</em></p>
<p>Leading Mastercard’s business across sub-Saharan Africa as Division President, Daniel Monehin is primarily focused on establishing Mastercard’s brand presence, deploying innovative payment solutions and partnering with governments and market regulators. Passionate about making the lives of people around him better, his community-focused volunteer efforts are based on leadership development among the youth, entrepreneurs and professionals. Here, he speaks to FORBES AFRICA:</p>
<p class="Default"><em>Q: With the growing number of incubators in Africa that are churning out newer and newer propositions on the payments and remittance side, what is Mastercard’s strategy to protect traditional income lines?</em></p>
<p>It is an exciting time to be working in Africa, with the public sector and other key stakeholders willing to adopt technology to advance the move away from inefficient cash to a digital payment ecosystem. Mastercard does not view our place in the move towards a ‘cashless Africa’ as being solely in the traditional card space, no – we view our role as a technology company to explore and implement cutting-edge solutions that will meet the needs of economies across the continent, better servicing all citizens.</p>
<p>At Mastercard, we don’t limit our thinking to ‘traditional’ vs. ‘new’ – we explore what is going to meet the needs of a market and its citizens as there is not one solution that can meet all needs. Rather our focus is on creating a ‘world beyond cash’, developed through partnerships and driven by advances in technology.</p>
<p>We get excited about start-ups challenging the status quo, and in fact we have developed our very own <a href="https://www.mastercard.us/en-us/about-mastercard/corp-responsibility/social-sustainability/the-mastercard-labs-for-financial-inclusion.html">Mastercard Labs for Financial Inclusion</a> that is based in Nairobi.</p>
<p>The purpose of the Labs is to drive innovation that meets the various needs across the continent, with specific focus right now on East Africa. Great advances are being made in this space, and it is very much a collaboration with NGOs, local financial institutions and anyone able to provide insight that will feed the development of smart and practical solutions.</p>
<p>The remittance space, for example, is an environment we have solid experience in and are extremely excited about – we do a great deal of work in this area with HomeSend. Launched in 2014, HomeSend is a joint venture of Mastercard, eServGlobal and BICS that enables business to business cross-border and cross-network transfers. Consumers can send money to and from mobile money accounts, payment cards, bank accounts and cash outlets, regardless of their location or that of the recipient.</p>
<p>Recently, we announced a partnership with the <a href="https://newsroom.mastercard.com/mea/press-releases/homesend-mastercard-aim-to-transform-the-3bn-remittance-industry-in-ethiopia/">Commercial Bank of Ethiopia</a> (CBE) to introduce the remittance solution to more than 100 million Ethiopians, empowering them with a safe and easy to use solution directly from their mobile device.</p>
<p>With advances in the payment industry, it is also still very important for us to develop partnership to roll-out full suites of digital payment solutions, including prepaid, debit and credit cards. This year alone, we have seen significant partnerships being forged with the likes of United Bank Africa (UBA) that will impact 18 new markets on the continent.</p>
<p>However, we are also working with our partners to drill down deeper into specific markets – recently announcing a collaboration with <a href="https://newsroom.mastercard.com/mea/press-releases/partnership-boosts-development-rwandas-digital-payment-ecosystem/">Guaranty Trust Bank Rwanda Ltd.</a> Besides the Platinum and Classic debit cards being introduced, we are also introducing the first student card (GTCrea8) to the market to educate the youth on the importance of going cashless and also saving. The partnership will also result in SecureCode being introduced to the market – a solution focused on protecting online payments.</p>
<p><em>Q: How big is the cash economy in Africa, and Rwanda specifically, where you have a tie-up with the government?</em></p>
<p>According to a recent <a href="file:///C:/Users/rankf/Downloads/MGI-Digital-Finance-For-All-Executive-summary-September-2016%20(2).pdf">McKinsey Report</a>, two billion people remain outside of the formal economy.</p>
<p>Various studies confirm that over 90% of retail transactions in sub-Saharan Africa are in cash. In Rwanda, only 42% of adults own a financial account, whether formal or informal, and a total of 1.6 million people have opened accounts in the country’s <a href="http://www.rca.gov.rw/IMG/pdf/Umurenge_SACCOs_strategy_February09.pdf">national SACCO savings and loan program</a>me.</p>
<p>We know that government cannot achieve financial inclusion alone, and neither can the private sector – we need to work together. Rwanda is one of our key markets and to highlight this, we partnered with the <a href="http://www.rdb.rw/">Rwanda Development Board (RDB)</a> to drive financial inclusion. The <a href="http://newsroom.mastercard.com/press-releases/government-of-rwanda-collaborates-with-mastercard-to-meet-rwandas-2020-vision-of-a-cashless-society/">collaboration with the Rwandan</a> government aims to address common challenges faced by poor and remote populations, such as the lack of financial identification and financial illiteracy.</p>
<p><em>Q: What are Mastercard’s efforts to convert cash to electronic?</em></p>
<p>Our work in Rwanda:In May, the Rwandan government announced a partnership with Mastercard which aims to fast-track the country’s move to include 90% of its citizens in the financial mainstream, as set out in its Vision 2020 strategy. <a href="http://newsroom.mastercard.com/press-releases/government-of-rwanda-collaborates-with-mastercard-to-meet-rwandas-2020-vision-of-a-cashless-society/">Read more here</a>. These solutions will include the digitization of school fees and national healthcare claim payments, providing an <a href="http://newsroom.mastercard.com/mea/press-releases/mastercard-bank-of-kigali-and-rwandaonline-help-rwanda-leapfrog-into-the-digital-economy-through-e-commerce/">online payment gateway</a> for RwandaOnline, contributing to the creation of a common mobile banking platform, and contributing to the effective management of spending activities across borders. ﻿</p>
<p>On October 20, Ecobank Group and Mastercard entered an agreement to roll-out MasterpassQR, a mobile payment solution, across 33 African markets with the intention of impacting 100 million new customers by 2020.</p>
<p><em>Q: At a time when customers have so many choices in payment systems, why should they choose Mastercard?</em></p>
<p>Mastercard is at the forefront of driving a ‘world beyond cash’, and what this means for all people is a more inclusive, innovative and safe payment ecosystem that will benefit everyone.</p>
<p>The benefits of working with Mastercard include: proven track record for providing safe world class payment systems as a result of our partnerships across the continent; we operate the world’s fastest payment processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. We use technology and expertise to make payments safe, simple and smart for everyone; we know safety and security are the top priorities for customers, cardholders and partners, so we are continuously committed to developing new and better ways to keep payments safe.</p>
<p>But, it is our commitment to meaningful innovation that really sets us apart. We use advances in technology to directly deal with challenges being faced by governments, policy makers, financial institutions, business and merchants as well as consumers. </p>
<p><em>Q: How is Mastercard tackling other fintech companies?</em></p>
<p>Diversity in the financial sector is important to advancing the evolution of economies, and we view partnerships with fintechs as being an important part in meeting the various needs of people in Africa.</p>
<p>An example of our continued commitment to supporting start-ups in this technology sector, is our start-up engagement program <a href="https://www.startpath.com/">Start Path Global</a>, which works with startups to give them a platform to learn and grow – as well as to connect to our global network. We frequently call for submissions throughout the year from start-ups to apply for our program as there is a vibrant and talented community of start-ups in Africa. Additionally, our Lab for Financial Inclusion works with fintechs to develop sound market insight before developing solutions. This methodology is one shared by our entire business.</p>
<p>– Interviewed by Methil Renuka</p>
<p> </p>


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