Latest reports from the Economist Intelligence Unit (EIU), has revealed that inconsistent regulation in Nigeria, and among other countries in Africa, restrict the growth of financial inclusion within the region.
The report released on Tuesday, titled, ‘Global Microscope 2018 Report’, indicated that electronic money (E-money) is growing in Africa, but some countries have disproportionate regulations that restrict the market including Morocco, Sierra Leone, Tunisia, Uganda, and Ethiopia.
The Global Microscope on Financial Inclusion, now in its 11th year, is a benchmarking index that assesses the enabling environment for financial access in 55 countries.
According to the report, E-money is making inroads, becoming more accessible, as a wider variety of providers are able to enter the market in Kenya, Mozambique, Rwanda, Senegal, and Tanzania.
Most countries in the 2018 Microscope have made efforts to facilitate new digital providers and generally have few market entry restrictions. The global positive operating environment, along with client demand, is helping e-money to become a leading digital financial product.
However, the report suggests that competition and innovation can make e-money more accessible, especially if a wide range of institutions can become e-money issuers.
Also, it revealed that consumer protection is an area with some success, with South Africa scoring the highest, with Nigeria, and Tanzania also showing high scores.
All other countries, except for Chad, DRC, and Morocco have some consumer protection requirements for e-money and other digital financial service providers that are similar to banks and other non-bank financial institutions. In this area as well, countries in Central Africa score the lowest, but all regions have room for improvement.
Africa, overall, falls well behind in all the countries’ average in infrastructure, while countries in Central Africa, struggle the most. Rwanda has the highest score for infrastructure, with Sierra Leone at the bottom of the index. There are areas of success, as South Africa, Senegal, and Ghana also scored among the top half of countries in this category.
Another sign of progress is that most countries have mandated fair and non-discriminatory access to payment infrastructure, although the actual infrastructure has considerable room for growth.
Specifically, the report identified enabling environment for financial inclusion, and expansion of digital financial services as drivers of sustainable development across Africa.