The Southern African Development Community (SADC) Secretariat, through the European Union-funded Support to Improving the Investment and Business Environment in the SADC Region (SIBE) Programme, in conjunction with its partners FinMark Trust, United Nations Capital Development Fund (UNCDF), and the SADC Banking Association, convened its Annual Financial Inclusion Forum to discuss, among others, the proposed new five-year SADC Strategy on Financial Inclusion and Small and Medium Enterprise (SME) access to finance, in Johannesburg, South Africa, from 18th to 19th May 2023.
The overall aim of the Forum was to collectively provide a platform to engage with the SIBE deliverables and outputs on financial inclusion; deliberate on the draft new five-year Financial Inclusion and SMEs Access to Finance Strategy for the SADC Region, in particular on the vision and objectives for financial inclusion in the Region, more specifically linked to financial inclusion for inclusive growth; and pillars and key interventions of the new strategy.
The Forum enabled a learning and knowledge sharing agenda on financial inclusion towards improved livelihoods linked to an investment focus. It was based on actual evidence, best practice, and emerging trends around key themes such as regional and national coordination of financial inclusion policies; innovative digital financial services in national and regional markets; the measurement of the impact of financial inclusion on inclusive growth; sustainable finance; financial inclusion and women’s empowerment; national and regional consumer protection guidelines; and financing for more inclusive growth.
Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way. Several SADC Member States have developed strategies on financial inclusion in order to improve access, uptake, and utilisation of quality financial services and products for consumers and SMEs for effective participation in the SADC Industrialisation Strategy and Roadmap.
The Financial Inclusion Forum targeted policymakers responsible for advancing the national Financial Inclusion agenda, regulators and supervisors from financial and non-financial sectors and private sector industry leaders in innovative financial inclusion technology and solutions, and mobile telecommunication companies.
In his keynote address at the opening of the Forum on 18th May 2023, Honourable Karabo Gare, the Minister of Entrepreneurship of the Republic of Botswana, underscored the importance of Financial Inclusion in many African countries, where the informal sector relies heavily on remittances, savings groups, and credit associations. Financial inclusion plays a significant role in improving livelihoods, contributing to sustainable economic growth, promoting stability, and can support industrialisation, which is core to SADC.
However, achieving meaningful Financial Inclusion is not without its challenges as there are several barriers that hinder access to financial services, particularly for marginalised and vulnerable populations. These barriers include inadequate infrastructure, limited financial literacy, high transaction costs, rigid regulations, and discriminatory practices. Addressing these barriers requires a comprehensive approach involving governments, financial institutions, regulators, and civil society organisations.
Hon. Gare also emphasized that governments play a critical role in creating an enabling environment for Financial Inclusion and had authority to develop policies and regulations which they should use to promote innovation, competition and consumer protection. There was a need for governments to promptly invest in the necessary infrastructure, such as digital payment systems and branch networks to increase financial access in underserved areas.
The Minister noted that over the past 10 years, several SADC Member States have made significant progress in Financial Inclusion however, there are variations between countries in terms of mobile money adoption, access to financial services and the gender gap, therefore further efforts are needed to ensure inclusive financial access for all individuals across SADC Member States.
The Director of Finance, Investments and Customs (FIC) at SADC Secretariat, Mr Sadwick Mtonakutha said the process of developing the new SADC Strategy on Financial Inclusion and SME access to finance covering the period 2023-2028 started in February 2023, and is being developed to overcome poverty, inequality, and unemployment, all of which have been worsened by the COVID-19 pandemic. The new strategy focuses efforts on key development challenges and seeks to improve the livelihoods of SADC citizens.
He said digitalisation is key in reducing costs of financial services and promoting rural and agricultural finance; and that consideration should be given to climate change as the region is currently developing its Strategy on Financial Inclusion and SME access to finance.
Speaking on the SADC Real Time Gross Settlement (RTGS) Renewal Programme and Regional Development Ms Felicia Dlamini-Kunene, Deputy Governor, Central Bank of Eswatini, said that the South African Reserve Bank, as the SADC-RTGS Operator, is presently implementing the renewal programme under the sanction of the SADC Committee of Central Bank Governors.
The SADC-RTGS was implemented almost 10 years ago, in July 2013 and the technology is serving SADC to date, but there has been major technology changes in the last two decades. The business and regulatory landscapes are also evolving and thus require that the SADC-RTGS be able to respond to these challenges.
Ms. Kunene said the main drivers for the SADC-RTGS renewal programme include the cyber and operational resilience; enhanced end-to-end risk management; wider interoperability; wider access; customer satisfaction; and technology refresh. Wider access involves opening-up the payments industry to enable development of new payment products, services and new users which will promote Financial Inclusion as there will be enhanced competition which will foster more innovation among payment service providers, leading to better services and product offerings that will meet the needs of the financially excluded population in the Region.
She said customers have expectations for better quality services and lower transaction costs. The renewal programme seeks to lower transaction costs through efficient processing of transactions, additional products and services to participants and reduction of friction in transaction processing. The RTGS renewal programme seeks to improve interoperability between payment systems and this enhances customer convenience through allowing consumers to make payments across different payment platforms. Without this interoperability, customers have to go through complicated, time-consuming and costly workarounds trying to transact with users in different payment service platforms.
The two-day forum involved panel discussions on Sustainable Finance, Financial Inclusion and the Sustainable Development Goals; Financial Inclusion and Women’s Empowerment and cross-border remittances. Discussions focused on the three pillars of the proposed SADC Strategy on Financial Inclusion and SME Access to Finance 2023-2028, whose goal is an inclusive SADC financial system that empowers individuals and businesses to contribute to industrialisation, inclusive growth and sustainable economic well-being.
