The Great Reset has happened. The COVID-19 pandemic accelerated the inflection point with systemic effects that affect how people live their lives ― it’s the masks, social distancing and increased digitisation of social and commercial interactions to name a few. Lockdowns have helped people develop the sensibilities for making digital payments, which makes the informal economy less opaque, as more cash is digitised through bank and non-bank financial service providers. This observation resonates with institutions with a financial inclusion strategic mandate.
FinMark Trust and the UNCDF continue to support the implementation of financial inclusion strategies and support the measurement of progress. The Making Access Possible (MAP) programme has supported the process of developing national financial inclusion strategies in the SADC region. The argument can be made that the Great Reset now makes it necessary to rethink the data and measurement framework of financial inclusion. FinMark Trust recently published its third MAP Monitoring and Evaluation (M&E) report based on data in five countries across the SADC region, namely Zimbabwe, Eswatini, Lesotho, Malawi and Botswana.
Why is this M&E Report important?
The findings from the new report show the effect of mobile money in driving the expansion of financial inclusion in the focus countries. In 2019, the Reserve Bank of Malawi started allowing interest on mobile money wallets to increase the value proposition of mobile money relative to cash in an economy that is mostly informal. In Zimbabwe, there are more registered mobile money accounts than the total adult population. In Lesotho, P2B (peer-to-business) transfers are growing at a faster rate than P2P (person-to-person) transactions on mobile money platforms. Merchant payments data depicts personal consumption and small business activity, which could be proxies for economic activities that are communicated typically using macro-economic data. The implication is that measuring financial inclusion is inextricably linked to macro, real economic, outcomes such as household consumption and production sectoral activities.
The SADC Financial Inclusion programme at FinMark Trust supports the development and implementation of national financial inclusion strategies. This is one of the pillars of regional financial integration under the leadership of the SADC secretariat and the SADC Committee for Central Bank Governors (CCBG). As the CCBG 2020-2022 strategy lists financial inclusion as one of the strategic focus areas., all the countries with representation at the CCBG will require a data and measurement framework to assess the effectiveness of the strategy. However, not all the countries have a national financial inclusion strategy. Some will require a baseline demand-side survey to develop their financial inclusion strategic roadmap, while those that have nationally representative data can use supply-side and regulatory administrative data to assess the role of financial inclusion in improving people’s lives by facilitating access to basic services or enabling supply value chains that incorporates the MSME (Micro, Small and Medium Enterprises) sector.
We are still faced by many challenges
These insights from the third MAP Monitoring and Evaluation (M&E) report were drawn from administrative data sourced from bank supervision and national payment system units from the five focus countries. Such sources give exact and in-depth information on the state of supply and actual usage of the formal financial services ecosystem in a country.
Administrative data is however as limited as the level of uptake and usage of formal product and services. It also provides limited insight into the motives behind transactions and financial services use. Demand-side surveys like FinScope completes this picture by ensuring that the demand side is also heard – and a full perspective is available to policymakers as well as FSPs.
The Measuring Progress: Financial Inclusion in selected SADC countries 2019 report is the third in an annual series that assess the level of financial inclusion in selected SADC countries where the MAP programme has been implemented. The two previous reports can be found https://finmark.org.za/system/documents/files/000/000/183/original/ME_Report_2019.pdf?1601964365 and https://finmark.org.za/system/documents/files/000/000/184/original/ME_Report.18.pdf?1601965010 respectively.