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  • Arnachani Riaseta

Beyond Savings: Promoting of Financial Deepening in Africa

In the past decade, countries in Sub-Saharan Africa have seen a significant increase of financial inclusion rate. According to the World Bank’s Global Findex Database, the rate of adults with access to formal financial services in the region rose from 23% in 2011 to 43% in 2017. This significant growth can primarily be attributed to Africa’s digital financial services revolution, which essentially decoupled financial services from traditional banking infrastructure. This has allowed for the growth of mobile money and agent banking, reaching populations in Africa where traditional banks weren’t able to reach before. According to a 2021 report by GSMA, Sub-Saharan Africa has been at the forefront of the mobile money industry for over a decade, and in 2020 it accounted for the majority of growth with 43% of all new registered accounts in the world.

Source: State of the Industry Report on Mobile Money 2021, GSMA

Amidst this exciting growth in financial inclusion rate, it’s important to remember that the number primarily refers to basic services such as savings and payments. The fast penetration of mobile money and agent banking has not been able to meet the demand for financing in the real economic sector, as domestic capital markets in Sub-saharan Africa remain shallow. Among other types of institutional investors, insurance coverage in the region is still remarkably low. The total insurance penetration rate in the continent stood at only 2.78% in 2019, and growth since then has been expected to stagnate due to the impact of Covid-19. While pension funds in several African markets have been on the rise, the fact that over 85% working Africans are employed informally pose unique challenges to the pension fund industry. These indicate the urgent need for financial deepening in the continent.

The digital-first nature of financial services development in Africa has opened up opportunities for fintech players to innovate in this space. Unburdened by the inflexibility of legacy financial systems, fintech players are able to develop services that are tailor-made to meet the specific needs of local communities. The past few years have seen an emergence of fintech solutions for insurance and pension, supported by the willingness of regulators to review legislations and governments’ experimentation with unique solutions such as micro-pensions. Combined with steady economic growth and increased demand for digital services, this low insurance and pension coverage rate open up immense possibilities for financial technology companies to innovate and grow in the market.

DDFinance is one of the companies that is seizing this growth opportunity. Learning from its agent banking predecessor, DDFinance has developed a collective-based insurance that connects local insurance companies’ capacity to underwrite and carry risks directly with low-income consumers through its franchisees. Instead of relying on traditional channels for insurance customer acquisition, the company uses a digital platform to formalize existing and pervasive trust in low-income communities (informal social capital) across Africa, with Kenya as its pilot country.

Source: DDFinance (

Similarly, Ghanaian fintech company People’s Pension Trust is tapping into growth opportunities in the pension sector by developing digital-first services. With around 80% of the population working in the informal sector, Ghanaian workers typically do not have access to any form of pension. People’s Pension Trust offers a micro-pension solution where workers can build up daily, weekly and monthly voluntary contributions to their own retirement goals. It also offers flexible pension solutions to informal employers, allowing them to administer occupational pension.

These fintech solutions leverage their understanding of local challenges and existing cultures to develop innovative solutions that are bespoke to local communities. These creative innovators of financial deepening require wider attention and funding, so that they can sustainably scale their solutions.

In line with the spirit of sustainable development, we at Investure are supporting these companies in accessing funding from a pool of global investors on our platform, so that they can continue to grow.

At the end of the day, financial inclusion is not the end in itself, but rather a means to an end. Greater access to financial services in Sub-Saharan Africa will serve as a catalyst to end poverty and continue economic development in the region, thus supporting the UN Sustainable Development Goals (SDGs) for 2030. Particularly, improving financial inclusion fulfills the fourth target of SDG 1 (“by 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as to basic services, ownership and control over land and other forms of property, inheritance, natural resources, appropriate new technology and financial services, including microfinance”) and the tenth target of SDG 8 (“strenghten the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all”).

Join Investure today to finance financial deepening in Africa!

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