The race towards a CASHLESS Africa

Globally, economies are in various stages of development having either started developing, replaced or are busy replacing daily batch payment systems with real-time systems that execute payments in seconds with the flexibility to meet the needs of the future digital economy.

Over the last decade innovation in the financial services sector in Africa has seen the introduction of internet banking, multi-currency cards and mobile money amongst other things. The adoption of technology in financial services allowed the sector to leapfrog traditional infrastructure.

The acceleration towards a cashless society in Africa, is one of the key opportunities that has emerged from the pandemic, bringing the advantages of digital payments to the fore including lower fees, convenience, seamless delivery, greater security, and more flexible payment options.

The appeal of a cashless society is obvious: by removing cash from the economy, governments can eliminate black markets, develop better monetary policies and improve the implementation thereof, and develop trackable records that simplify and improve tax collection. Merchants enjoy lower risk by reducing cash kept at hand while also speeding up the transaction process, while consumers benefit through ease of use and improved security. A whole new suite of value-add services also become possible when cash is replaced by electronic-based payments.

The ultimate aim is to reduce the cost of banking services, drive financial inclusion, improve the implementation of monetary policy and facilitate the attainment of the future digital economy goals.

This was the focus of the just concluded webinar session which was co-hosted by CIO East Africa and Global Voice Group with the theme: The race towards a CASHLESS Africa.

The virtual event which was moderated by Carol Odero (Editor-in Chief, CIO East Africa) was aimed at exploring Africa’s race towards a cashless society, through the eyes of public and private sector actors across the continent. It provided an opportunity to analyze the growth of the mobile money ecosystem and the irruption of the digital money pioneers who are strongly minimizing the role of cash. It also provided a platform for diverse insights on the increasing integration of Trusted Digital Identities in the financial ecosystems and in the different regions across Africa.

The event boasts of seasoned panellists that comprised of Adama Aristide Ouattara (Partner & Risk Advisory Leader, Deloitte), Laurent Starr (Technical Director, GVG), Bernard Ewah (Deputy Director, e-Government Development and Regulation, NITDA), Daryl Bhana (VP, Commercial Sales & Strategy, GVG), Andrew Mutua (Founder & CEO, PesaKit), Sofien V. Sidhoum, co-founder & CEO of SEMOA and James Claude (CEO, GVG).

Coming on the heels of the enduring disruptive technology which has impacted business operations in this period of the COVID-19 pandemic that has greatly altered the way things are done, with a change in the definition of normal, the conference was driven by a collective commitment to divergent thinking and global sustainable development to proffer and co-create initiatives to accelerate the adoption of Cashless economy, with focus on Africa and the emerging markets.

In his opening remarks, James Claude made a strong case for Africa’s giant strides to a Cashless society.

“When we look at the mobile penetration, how mobile money is being used, all the initiatives that are taken place at the different Central Banks discussing about CBDC, the development of Blockchain technologies, etc, we all can agree that Africa is already on it’s way to being a Cashless society”, he said.

Emphasizing the broader objective, he further stressed that Cashless is just a means towards financial inclusion aimed at improving the lives of the rural citizens in the society with the collaboration of all stakeholders.

On the regulatory imperatives, James Claude stated that, “From a GVG standpoint, we firmly believe that regulatory bodies have an essential role to play, because they are the ones who can set the regulatory framework that can foster the development of payments system that can enable the Cashless society”.

It’s evident that growing demand is driving mobile operators, banks and other players in the finance sector to innovate in line with different needs and requirements of economies. This demand and the subsequent response by financial services providers has resulted in increased levels of financial inclusion.

In a thought provoking presentation, Laurent Starr provided further statistics to justify the steady traction in the race towards a Cashless society. According to him, the huge and growing investment in African fintech start-ups focused on digitization, coupled with the fact that 70% of Central Banks in the world are at different stage of risk based research on Cashless society, is a key indicator of the Cashless trajectory.

This is corroborated by a recent report which affirms that wide spread use of digital finance has the potential to boost the annual GDP of emerging economies by USD 3.7 trillion by 2025.

Some of the key success factors of Cashless society include the ability of banks and mobile service providers to innovate with a broad-based government commitment to financial inclusion through the backing of central banks and regulators.

On why the attraction to move away from cash is so strong today, Daryl Bhana stated that, “Apart from the fact that for the first time today there are alternatives to cash that are accessible by the citizens, it’s also that the risk of cash today is that more significant than before”.

He further affirmed that more than ever, the conversation around cash has shifted towards financial inclusion, eco-friendly paperless money, digital currency, single regional currency, electronic wallets.

Without a doubt, the financial services ecosystem has evolved, to not only include traditional players such as banks, but also new competitors outside the traditional banking sector. Attaining success and the breakthrough point of financial inclusion is also a key development factor which has a direct positive impact on individual countries’ GDP and the African economy at large.

The general consensus is that as cashless payment methods continue to gain ground across the continent, industry and government will need to work together to ensure that reliability of connectivity and transaction integrity are maintained at all stages of the payment process, taking heed of security concerns to ensure public trust.

About Global Voice Group Founded in 1998, GVG is a world-class provider of ICT and RegTech solutions whose main offices are situated in Spain and South Africa. Through Big Data analytics, GVG helps governments and authorities make a success of their digital transformation and efficiently promote compliance and true inclusiveness in the digital ecosystems. GVG monitors, collects and analyses the data originating from crucial economic sectors, and transforms them into actionable information, thus ensuring that the decision-making process is based on reliable data. For interview requests, please contact Susana Garcia Hiernaux: sgarciahiernaux@globalvoicegroup.com/+34 636 99 48 05