Financial Inclusion Insight (FII) report has stressed that digital financial services (DFS) can play a key role in managing expenses and setting individuals and households on paths to stay out of poverty permanently. The new research report by InterMedia, which is a FII Survey Tracker, was released recently. According to the report, through digital technology, financial services can reach billions of new customers quickly and efficiently. It noted that digital accounts cut the costs of transactions by as much as 90 per cent. In addition, it showed that digital accounts give people the ability to save and budget for the first time in their lives, allowing them to withstand financial shocks and direct money toward specific uses, such as education and healthcare. Also, new customers and financial interactions have a domino effect of growth, touching providers, merchants, service providers, etc.
“When cash transactions that once circulated outside the formal economy are channeled within it, merchants and providers have new customers and new revenue, which can inspire more services and innovation. DFS gives people a secure way to save, which allows them to build cushions against financial shocks that would otherwise pull them right back into poverty,” it added. Furthermore, it showed that more than 90 per cent of the world’s poor are covered by a mobile signal, which allows people to conveniently make payments digitally rather than in person. It pointed out Africa is living proof that DFS can effectively reach the unbanked, stating that in Cote d’Ivoire, Somalia, Tanzania, Uganda and Zimbabwe, more adults use a mobile money account than a traditional account at a financial institution. In Tanzania, ownership of mobile money accounts surged from one per cent of the population in 2009 to 32 per cent in 2014, according to the report. Also, 60 per cent of Africans live in rural areas (per United Nations). DFS is the only way to reach them cheaply, affordably, and at scale. “In total, the worth of Africa’s mobile money market is expected to top US$14 billion in just another five years,” as a result of greater adoption of DFS. Based on its findings that four out of 10 adult Nigerians do not have access to any form of financial services, it concluded that “life is not only more difficult, but also more expensive” for these set of people. “These individuals must rely on informal services, which are not always trustworthy, such as: keeping their savings hidden — in pots, under mattresses, in fields where they constantly worry about thieves; sending money to a family member in another village is risky and can take days; obtaining even a small loan for an emergency is often impossible.

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