By: Craig
Albertson as Managing Director for Sub-Saharan Africa, BPC
Southern
Africa has all the ingredients to become an economic powerhouse: a young,
diverse population, rich natural resources, and widespread mobile connectivity.
But inequality still drags on growth, especially when it comes to financial
inclusion. In countries like Namibia, one in five adults is excluded; In
rural Zimbabwe, it is six in ten.
Elsewhere in the region, the picture is much the same, with too many people
shut out of the formal economy.
This
exclusion is not just unjust but also a key barrier to overall growth.
Limited access to formal banking services decreases consumer savings rate,
leading to lower wealth creation and a less resilient economy. Businesses are
also held back, reliant on cash payments and unable to borrow against their
income to fuel future growth.
Understandably,
Southern Africa’s governments, as well as the banking sector, are trying to
tackle this issue head-on with meaningful changes already underway. New models
for engaging with individuals are bringing banking services to previously
underserved communities, with services like agent banking and SOFTPOS (smart
payment terminals) kicking off a new era of innovation and digital
transformation. If embraced, this new way of reaching consumers could boost
economic growth across Southern Africa, from Tanzania to South Africa.
Barriers
to accessing finance
Over the
past decade, digital banking applications have significantly increased
financial inclusion in urban areas across the region, with South Africa leading
in app-based financial services adoption. Bank account ownership in the country
has jumped from 70% in 2014
to 85%, an increase fueled
by city dwellers who are well-served by the banking industry status quo. The
majority are digitally-literate and manage their finances through their phone,
while cities’ high population density enables a wide network of branches to serve
individuals that do not have or cannot operate a smartphone.
However,
rural communities are remarkably dispersed in South Africa and in other
neighbouring countries. In Namibia, for example, there are 4 people for every
square kilometre, the second lowest density in Africa and seventh lowest in the
world. Banks are unable to launch bank branches in the majority of rural
communities, owing to catchment areas with below minimum populations to make
physical locations viable.
Access to
digital platforms is another barrier to financial inclusion. Over 30% of households
in Botswana do not have access to the internet, while over 80% of rural
households do not have a connection. New approaches are necessary for banks to
reach the financially excluded, directly addressing the problems faced by rural
communities in Southern Africa, leveraging advances in technology beyond the
mobile app.
Shift
towards card payments
Despite
these challenges, there is a growing appetite for cashless payments.
Transacting with physical currency adds additional cost through cash
processing, while holding physical currency implies a risk of theft. Consumers
are also favouring cashless payments; in South Africa, mobile-based payment
solutions have increased from 36% of in-store
purchases to 59%. For merchants,
supporting cashless payments is a business imperative, forming a key part of
consumers’ merchant preferences.
The shift
is already underway. In South Africa, the number of card payment terminals has
grown from 425,000 in 2020 to
an estimated 531,000 in 2024.
Across Southern Africa, the number of POS terminals is now estimated at over
700,000. Add to this the widespread availability of smartphones and the
potential to enable digital transactions without expensive hardware becomes
clear.
Inclusive
finance with agent banking and SOFTPOS
For banks
in Southern Africa, agent banking is a cost-effective method of reaching
financially excluded individuals across Southern Africa’s rural expanse. Agent
Banking enables banks to deliver services through authorised agents such as
retail stores, fuel stations or community businesses. These agents act on
behalf of the bank, providing services like account opening, deposits,
withdrawals and bill payments. This model extends financial access to areas
where building a physical branch would be unfeasible due to low population
density, while creating new revenue streams for agents and strengthening
community trust.
In
addition, SOFTPOS technology enables any NFC-enabled smartphone into a secure
payment terminal capable of accepting contactless card and digital wallet
payments. It eliminates the need for traditional POS devices, reducing costs
for merchants and lowering barriers for small businesses in rural and urban
areas to join the digital economy. This is especially valuable for low-volume
merchants who might otherwise be excluded due to the cost of dedicated
hardware.
However,
Southern Africa’s banking landscape is highly fragmented. South Africa has 17
commercial banks, Zimbabwe has 14 banks, Zambia has over 17, Angola has more
than 23 and Mozambique has over 19. Each operates in a market where budgets for
technology investment are constrained, and in-house development of agent
banking and SOFTPOS platforms is unfeasible for the majority of banks.
Partnerships with global technology providers enable fast deployments of
market-leading platforms, rapidly bringing new mediums for expanding financial
access to market.
Supportive
regulatory environment
Regulation
is evolving to support these models. Kenya pioneered Agent Banking guidelines
in 2010, while Uganda, Tanzania and other countries have since followed. The
South African Reserve Bank has published a Digital Payments Roadmap aimed at
creating an inclusive, accessible, effective and sustainable digital payment
ecosystem. These regulatory moves create a framework within which banks can
confidently invest in agent and SOFTPOS strategies.
As Southern
Africa works to overcome the barriers of geography, infrastructure and digital
literacy, banks that embrace new delivery models will be best positioned to
thrive. By adopting agent banking and SOFTPOS, financial institutions will not
only expand their customer base and reduce costs, but they will also help
unlock growth for millions of people and businesses across the region.
The
opportunity is clear: financial inclusion is not simply about payments, it is
about access, empowerment and building a stronger, more resilient economy for
Southern Africa.
About Craig
Craig
Albertson as Managing Director for Sub-Saharan Africa. Zimbabwe-born,
educated in SouthAfrica and seasoned by years in London’s payments
and banking industry, he brings a mix of African field experience and
international expertise. With extensive track record of building agent-banking
networks, digital payment ecosystems and financial-inclusion programs, Craig is
set to bring a digital modernisation playbook to the region, backed by BPC's
SmartVista, a scalable platform that offers modern tech stack to drive digital
innovation, deliver exceptional secure payments experiences to B2B and B2C
customers.
