PETER BURDIN : Togo paves way for financial inclusion in Africa

The recent Africa Fintech summit reminded us that financial inclusion is likely to be the hot topic for any future discussion on the African economy. A McKinsey Global Institute Report has estimated that digital finance would add $3.7-trillion to the GDP of emerging economies over the next three or four years; the role of financial inclusion in reigniting economies in the post-pandemic world cannot, and should not, be understated.

The challenge public and private sectors across the continent face is fostering the creation of financial institutions that are more user-friendly and encourage digital entrepreneurship for a broad range of customers in a cost-effective and efficient way. This means putting greater emphasis on building facilitatory mechanisms for marginalised groups and breaking down barriers, including poverty and illiteracy.


A key factor in boosting financial inclusion is adjusting the frameworks and platforms used to transfer money, particularly globally. For example, the Togolese government has focused on remittance platforms through the use of mobile banking, as a way to disburse cash payments more swiftly and to a growing number of its population, especially low-income groups.

Mobile banking has been front and centre in Togo’s creation of a digital banking structure, aimed at supporting the whole economy and across the entire country for a while now — the country reported the highest banking rate in the West African monetary union in 2019, at more than 78%.

However, combining a digital landscape with initiatives such as microinsurance and micro-savings is vital in tailoring these financial products to the needs of economically marginalised groups. This ensures there is a layer of protection for socio-economically disadvantaged communities in exchange for regular premium payments proportionate to the livelihood and cost of the risk involved.

Only by supporting an agenda that allows for flexibility, as well as protection, can we begin to ensure that traditionally financially excluded groups can gain access to the financial system.

Another hurdle is often how to identify, prioritise and target marginalised groups. Many countries have now developed enterprising microloan programmes to support women specifically. In Togo this has benefited almost 2-million women, many of whom have turned the initial grant from the government’s dedicated national fund into successful start-up businesses.

One group that should be looked upon as a significant target market of these practices is small and medium enterprises (SMEs). One of the key drivers of financial inclusion should be to promote entrepreneurship and good business practice. For example, equipping SMEs across Africa with legal entity identifiers so they can benefit from globally recognised business identities, ensures the company can be verified quickly and efficiently for potential investors, partners and customers.

But embracing digitisation goes both ways; governments and their citizens must be ready to modernise and promote entrepreneurship, as well as good business practice. Togo has already been rated in the World Bank’s Doing Business 2020 Report as Africa’s best reformer for its ambitious plans to build innovation centres to support start-up ecosystems.

In the private sector, pan-African banking conglomerate Ecobank is probably one of Africa’s greatest examples of pioneering a financial inclusion mission into lower-income communities. It has partnered with Togolese fintech Semoa to create a new WhatsApp-based digital banking service called “Express Cash by Semoa”.


According to Semoa founder and CEO Edem Adjamagbo, this partnership has the potential to change many lives in West Africa, highlighting the fact that people with no bank accounts, or credit cards can now cash out their mobile money directly out of Ecobank ATMs and Xpress Points throughout the West African Economic & Monetary Union. This is undoubtedly a game-changer, and shows where the future of financial inclusion lies.

Given the important role digital finance is expected to play in the economic recovery from Covid-19, some African countries have lobbied to remove mobile money tax altogether. We need to encourage supportive initiatives like this if Africa is to move towards a more sustainable and inclusive economic agenda. The challenge for the public and private sector now is not to invest in digital finance for the sake of it, but to deepen the impact of financial inclusion. Only that will deliver true long-term prosperity.

  • Burdin is a former BBC Africa bureau chief.