Financial Inclusion Projects
Financial Services in Africa
Institutions: UIC Barcelona
Main researcher: Francesc Prior Sanz
Research has shown that business models based on low-cost prepaid accounts and agent networks, a business model typically referred to as Digital Financial Services, can help address the problem of a lack of access to financial services that can be observed in Africa and the vast majority of developing countries. The proposed solution assumes that the lack of access to financial services is primarily a supply-based problem. In most developing nations, a low level of access to basic financial services is explained by inefficiencies in the supply of financial services, an inappropriate regulatory framework and a lack of financial education or trust in the financial system. Supply inefficiencies explain the high cost of basic deposit and payment services; the lack of a distribution network; and the inappropriate use of credit risk measurement methodologies. To solve this supply-related problem and be able to help low-income segments while making a profit, alternative financial service distribution models need to be developed at a low cost. This project aims to analyse digital financial services for private investors in:
- Mature markets: Kenya, Tanzania, Uganda, Ghana and Rwanda, where the regulatory framework has allowed a number of Mobile Network Operators (MNOs) to compete with relatively small banks in a fragmented financial services market.
- Maturing markets: Zimbabwe, the Republic of Congo, Botswana, the Ivory Coast, Zambia, Cameroon, Malawi, South Africa, Senegal and Madagascar, where mobile money services are gaining traction. These markets tend to have regulations allowing for MNO-led partnerships and the prohibition or discouragement of agent exclusivity.
- Sleeping giants: Egypt, Nigeria and Morocco, where either because alternative mechanisms are available or due to regulatory constraints mobile money services have not yet developed.