Financial inclusion is highly relevant for South Africa’s economic and social development. High levels of financial inclusion, driven by high access to bank accounts, have not adequately translated into improvements in the quality of life and economic environment of low-income South Africans and SMEs. Digitalization is a key enabler for financial inclusion. It offers opportunities and access to previously excluded parts of the population. It provides many advantages, from security and safety aspects in not carrying cash around, to convenience, speed, transparency and cost effectiveness.

The program will provide digital payments solutions for SME’s and the poor in South Africa and across the border with five pilots in the areas of digitizing payments in townships, in the informal services sector, cross-border remittances, cross-border trade and financial inclusion data collection. It addresses the problem that financial inclusion can also lead to exclusion if not implemented appropriately. Especially in South Africa, there is an important part of the population not served yet by digital payments. Receiving payments digitally also necessitates that the funds can be used digitally or that they can be easily cashed out. In South Africa, the gains of financial inclusion have not yet trickled down to SME’s and the poor. The pilots aim at changing this by providing adequate digital solutions.

Outcome 1: Increased acceptance and use of digital payments by merchants and consumers

Outcome 2: Reduced cost of cross-border remittances through digitization

Outcome 3: Increased use of digital means for cross-border trade

Outcome 4: Increased use of monitoring and evaluation by central banks to further policy and regulation

Outcome 5: Institutional and professional capacity or skills improved

Expected results:  

Output 1a: merchants and consumers recruited and participating in the pilot

Output 1b: services industry employees recruited to receive their tips digitally

Output 2: digitization of cross-border remittances through training, data sharing and remittance products

Output 3: low-cost digital payment services platform for informal cross-border traders for the South Africa-Lesotho corridor introduced

Output 4: capacity building provided to members of the Southern African Development Community to support financial inclusion monitoring and evaluation in the region for remittances and financial inclusion

Output 5: financial literacy training workshops conducted