Why Financial Inclusion Must be Addressed Urgently to Boost Trade in Africa

Point of View
3 min readJan 21, 2021

By Osahon Akpata — Head, Consumer Payments, Ecobank Transnational Incorporated

On January 1, 2021 one of the largest trade pacts on the planet, the African Continental Free Trade Agreement(AfCFTA) covering 55 countries, went live. While various regions in Africa have made progress in the area of trade in recent years, Africa currently lags other continents when it comes to interregional trade. Only 17% of total exports from African countries are to other countries on the continent. In comparison, this rate is 68% in Europe, 59% in Asia and 55% in the Americas. Some barriers to the expansion of trade on the continent such as tariffs and regulations will now be addressed by the AfCFTA, however we should not lose sight another key factor — financial inclusion.

According to the World Bank, 1.7 billion adults globally remain unbanked with about 350 million in Africa. 90% of transactions on the continent are still done in cash and this reduces the scope for cross-border payments and trade. For example, a recent report from the Brookings Institute found that of the farmers who received payments for the sale of agricultural products, 85% of these payments were received in cash only. A lack of access to financial services makes it more difficult for them to invest, save for the future and insure against risks. It also limits the ability to conduct business across borders and agriculture represents a large percentage of most African economies.

To be sure, tariffs impact the ability of African countries to trade with each other and it is estimated that the removal of these barriers could increase intra-African trade by 15% to 25%. However, the expansion of financial inclusion and access to digital payments and collections would increase the participation of citizens in trade across the continent. Governments, financial institutions and other stakeholders need to prioritize this to create an enabling environment for cross-border trade. This would include not only expanding access to financial services but also simplifying cross-border payments.

Digital financial services make it possible to reach large numbers of people with financial services without the costs associated with branches, processing paperwork and dedicated personnel. Fortunately, two thirds of the unbanked own a mobile device which could help them access financial services. According to the GSMA, there were 477 million unique mobile subscribersin sub Saharan Africa as at end of 2019.

At Ecobank, we remain committed to expanding financial inclusion and facilitating trade across the continent. We are leveraging mobile and agency banking channels to provide cost effective and accessible financial services to all Africans. About 4 years ago, we launched our flagship mobile banking platform, Ecobank Mobile and included a light KYC account, the Ecobank Xpress Account which is operated exclusively on mobile devices. The account requires no minimum balance, no paperwork and has no fees. There are almost 11 million Xpress Account holders today.

We launched the Xpress Loan in Ghana and offered it in conjunction with MTN Mobile Money. Access to credit is a critical component of financial inclusion. In a bit over a year, we have disbursed 6.4 million microloans worth $342 million to 1.7 million mobile wallet holders in Ghana alone. The product has recently been introduced in Kenya in collaboration with Airtel. We also created the Ecobank Xpress Point agency banking network and in three years have expanded to 65,000 Xpress Point agents across Africa, providing financial services to consumers in the neighborhoods where they work and live.

We are leveraging technology to provide financial services that meet the needs of individuals, businesses and other organizations doing business in and across African countries. Our pan African switch, instant funds transfers and real time settlement capabilities across 33 African countries have positioned Ecobank as a key player in the drive to expand trade across the continent. I recently participated on a panel discussion, The Future of Trade, Economy and Investment in Africa at The Africa Future Summit.

See video highlights below.

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