Esther Dzviti in Harare & Colleta Dewa in Johannesburg
Throughout the COVID-19 pandemic, digital money has proved its worth, with sending and receiving of money through mobile phones allowing people to transact despite lockdowns.
In a report titled “Financial Inclusion and COVID-19”, COMESA says financial inclusion in East and Southern Africa has facilitated a shift towards more inclusive economic development, bringing millions of people into the formal financial sector and equipping them with tools to manage their finances more easily.
However, the analysis indicates that there is still room to further enhance financial inclusion in the COMESA region.
“Banks and telcos have been particularly working hard, innovating on transformative ideas that make them more agile and competitive, and actively targeting the unbanked and most vulnerable. Individuals and firms have been empowered to maximise their potential by increasing access to adequate financial services, thereby allowing them to make optimal decisions to enhance lives and livelihoods in the midst of disruption.
“Some of the measures implemented in some COMESA member countries that have enhanced financial inclusion during the COVID-19 pandemic include the following, among others: (a) Introduction of cash transfers to the poor who have lost jobs and livelihoods. This has been through mobile money cash transfers; (b) Most countries have encouraged cashless payment in order to reduce the spread of COVID-19 pandemic.
“Some regulators scrapped transaction fees between banks and telcos for values of less than or equal to US$10, which forms the bulk of all mobile/bank transactions among the poor; (c) Some countries have encouraged other non-cash transactions (transactions without physical contact with cash) such as contactless cards, mobile wallets, Internet banking, mobile banking, telephone banking etc.; (d) Some regulators directed banks and other financial institutions within their jurisdiction to allow loan restructuring or offering moratorium on loan payments for some time or until the economic situation improves;
“(e) Reducing existing capital and liquidity requirements thereby offsetting potential losses associated with capital buffers and increasing liquidity in the banking system; and, (f) Proving financial assistance in form of liquidity support to the vulnerable small and medium enterprises (SMEs) most affected by the pandemic” states the report.
Online banking, prepaid cards and mobile wallets have offered convenience, security and affordability that did not exist with traditional banking. These measures have also allowed transacting to continue while allowing social distancing.
Meanwhile, Africa Analysis’ “5G Market Outlook 2021” report says South Africa’s retail mobile data market generated R58 billion (US$3,88 billion) in revenue during the pandemic, an annual growth of 9.5 percent.
The report says mobile data usage in South Africa grew 73 percent year-on-year in 2020, the biggest increase in three years.
“This demonstrates the need for high-speed, good-quality home connectivity, which will form the basis for a future range of home applications. South Africa has a huge mobile subscriber base compared to most African markets; it has better infrastructure covering most of its population,” the report says.
Africa Analysis also expressed optimism about the rollout of 5G networks, saying these could result in coverage of 43 percent of South Africa’s population by 2025.
Reporting by Esther Dzviti in Harare & Colleta Dewa in Johannesburg