Financial Inclusion in Africa in an Era of Internet Shutdowns

The World Bank estimates that 1.7 billion people globally are without any form of financial account as at 2018. Data from IFC on Sub-Saharan Africa shows that the level of financial inclusion has grown from just over 23 percent in 2011 to almost 43 percent in 2017, with a significant increase coming from digital financial services such as mobile money. The lack of access and usage of financial services by the majority of the population on the continent impedes their ability to significantly contribute to the economy. There not able to accumulate capital or access credit for production and consumption purposes. This underscores financial inclusion as an important socio-economic development tool. Indeed, the financial inclusion has emerged strongly as a topical issue among policymakers, development practitioners and the private sector including as an enabler of the Sustainable Development Goals (SDGs).

With mobile penetration and mobile internet access reaching 45 percent and 24 percent, respectively in Africa, digital finance – mobile money wallets and fintechs – has emerged strongly as a tool towards financial inclusion across the continent. The number of registered mobile money accounts stood at 395.7 million as of 2018.

In Ghana, the mobile penetration is 67 percent and internet access via mobile is 45 percent. The Bank of Ghana estimates that approximately 7.3 million of Ghana’s adult population is unbanked. There are 32 million registered mobile money accounts, across three mobile money operators as at 2018. These accounts are generally used for person-to-person and person-to-business transactions. Account holders are able to access savings, credit, investment products as well as make payments for goods and services procured using USSD codes.

Fintechs on the hand use protocols to deliver financial services totheir customers. Currently, there are seventy-one fintechs offering financial solutions to businesses and individualsin Ghana. An example of such is Fido Credit, a financial technology company that offers fast and easy short-term loans to the unbanked and Bloom Impact, a financial service market place that connects financial service providers to the unbanked.

Recognising the role financial inclusion plays in economic development and poverty alleviation, Ghana, like many African governments is working on improving access to financial services for the underserved. A financial inclusion strategy document which has a digital finance policy as one of the pillars to increase the percentage of financial inclusion in the country from 58 percent to 75 percent by the close of 2023 has been drafted, demonstrating a strong political commitment to create an environment for innovations. The digital finance policy also places emphasis on driving digital inclusion. To provide robust regulatory framework for financial inclusion through digital channels, the Payment System and Service Act was promulgated.

The 2019 edition of the Forum on Internet Freedom in Africa (FIFAfrica) further highlighted how increasing mobile penetration and internet access across Africa is positively impacting the digital economy. At the same time, featuring prominently at FIFAfrica19 was the growing trend of internet shutdowns in Africa. According to Access Now, there were 21 instances of partial or total internet shutdownson the continent in 2018, compared with 13 in 2017 and four in 2016. Countries such as Ivory Coast, the Democratic Republic of Congo (DRC), Chad, Cameroon, Sudan, Ethiopia, Mali, Nigeria and Sierra Leone were among those that restricted access to the internet in 2018.

Internet shutdowns are an absolute restriction placed on the use of internet services due to an order issued by a government body. It may be limited to a specific place and to specific period, time or number of days. Sometimes it can even extend indefinitely. An internet shutdown may be limited to mobile internet that you use on smartphones, or the wired broadband that usually connects a desktop - or both at the same time.

This worrying trend of internet shutdowns impedes efforts towards financial inclusion and economic development. A study by the Collaboration on International ICT Policy for East and Southern Africa (CIPESA) shows that internet shutdowns in Sub-Sahara Africa countries between 2015 and 2017 cost an estimated US$ 237 million - Ethiopia and DRC being the highest affected. At individual and Small-Medium Enterprise (SME) levels, in countries such as Uganda, where an instance of shutdown during 2016 also restricted access to mobile money services, the effect on livelihoods and productivity were likely high.

Taking the example of Ghana, in the event of any internet shutdown, a customer of Fido Credit would be unable to access an emergency loan, with dire consequences.

FIFAfrica19 provided a valuable platform to bring to the fore the conflict between regressive digital rights practices such as internet shutdowns and the quest for financial inclusion in Africa. Governments across Africa must therefore pursue and implement internet and digital rights policies that guarantee uninterrupted access and usage of internet alongside financial inclusion strategies.

In this regard, initiatives such as the Cyberright Research Initiative and Localised Legal Almanac (Cyrilla) are important. The objective is to organise and make accessible digital rights related laws from across the globe so actors can more readily and confidently access legal trends as they shape and impact digitally networked spaces, highlighting threats to human rights and opportunity for legal reforms. While the database is the most visible part of this initiative, it comprises several open tools that can be adopted and adapted by any individual or organisation grappling with questions involving legal restrictions on digital rights.

The works of Collaboration on International ICT Policy in East and Southern Africa (CIPESA) are also important in facilitating the use of ICT in support of development and poverty reduction especially in the East and Southern Africa sub-region. Through their Forum on internet Freedom in Africa issues of internet access and usage across Africa are brought to the fore

These initiatives are important in empowering individuals, civil society organisations, and government agencies to be effective advocates and vanguards for uninterrupted access to internet which is fundamental to financial inclusion and socio-economic development across Africa. 

Financial Inclusion Forum Africa, a non-profit membership-based organisation is also contributing to these efforts at widening access and deepening usage of financial services for people at the bottom of the social and economic pyramid across Africa. Drawing on the expertise of its membership which is currently over 1000, the organisation shapes national policies, contributes to knowledge, develops and supports market-led solutions to effectively address market problems in the area of financial inclusion. You can register your membership and be part of their work here