30 January 2015

South Africa on a Solid Path Towards Financial Inclusion: MasterCard Report

Submitted by: MyPressportal Team

South Africa is making significant headway in furthering financial inclusion, according to a new MasterCard report entitled “A Progressive Approach to Financial Inclusion.”

The report explores the progress that 30 developed and developing countries have made in enabling access to and driving usage of different financial products including payments, lending, long-term savings or investments, and insurance.

South Africa is in a ‘Transitioning’ stage in driving both payments adoption and usage through private and public partnerships, according to the report. A ‘Transitioning’ country displays a penetration of payments products at a rate of more than 50 percent but less than 75 percent, according to the researchers’ metrics.

The country is on the same progression towards financial inclusion as Russia, Italy, Poland, Brazil, China and Malaysia, displaying alignment with three of its four BRICS partners.

“Financial inclusion cannot be achieved by a single entity; it takes a broad coalition of key stakeholders. There is a need for greater innovation, public-private partnerships and consumer education to ensure South Africa becomes a truly financially included society,” says Mark Elliott, Division President, MasterCard, South Africa.

With 67 percent of South African adults owning a payment product, only six percent of consumer purchases are non-cash despite just over half (51 percent) of adults receiving money via non-cash means (i.e. electronically). This means that while South Africans receive a large percentage of their income via electronic payment methods, they are not using their electronic payment products to transact – they are still depending on cash to do so.

“Adoption of products is an important first step for financial inclusion, but usage is equally important. The majority of South Africans may be financially included, however they are not making maximum use of the range of financial products at their disposal,” Elliott says.

In South Africa, lending adoption and insurance adoption were found to be at 42 percent and 43 percent respectively, exceeding long-term savings adoption, at 38 percent. However, according to the Barclays Africa’s Prosper Report, South Africans intend to grow their savings base. This is consistent with the report findings that South Africa is on a positive trajectory towards financial inclusion.

The report highlights that financial inclusion is a progressive measure, with payments as the optimal entry point. In almost all the African countries studied, payment product adoption exceeds the adoption of the other products studied, although local factors affect the different products in different ways.

“The public and private sector must identify current adoption and usage gaps, and actively pursue ways to close these gaps to boost the rate of financial inclusion. This encourages MasterCard to work even closer with our customer financial institutions and government to expand our acceptance footprint and electronic payment usage across South Africa.”

MasterCard has various payment innovations like prepaid and mobile commerce products and solutions to help fast track financial inclusion here, and elsewhere on the continent. The company has launched many initiatives with public and private sector entities that are bringing the benefits and security of electronic payments to the 560 million people in Africa who are currently financially excluded.

- See more at: http://paymentsafrika.com/payment-news/general/south-africa-on-a-solid-path-towards-financial-inclusion-mastercard-report/#sthash.n6U7XMP5.dpuf