In developing economies only 54% of adults reported have an account.


2 billion people lack a financial account in emerging economies.


Up to 90% lower cost from providing digital rather than physical accounts.


Photo gallery of
the Social Fintech Cocktail 


Project objectives
To facilitate and co-finance in a fist phase the elaboration of a diagnostic analysis and of an action plan and in a second phase the implementation of digital solutions by MFIs.  

Areas of intervention
Benin, Burkina Faso, Burundi, Cameroon, Côte d’Ivoire, Guinea, Madagascar, Mali, Senegal, Democratic Republic of Congo, Republic of Congo and Rwanda.

Project manager

The Digital Finance Initiative


The Digital Finance Initiative can really drive financial inclusion. According to the World Bank, mobile money services and technological breakthroughs helped around 700 million adults emerge from financial exclusion between 2011 and 2014.


Mobile banking

Digital finance for all remains a major challenge

Over the past few years, the boom in financial service technologies has had a considerable impact, on conventional finance and microfinance alike. Despite only earning a few dollars a day, more and more people now have access to the internet and mobile phones. For many of them, and especially those in rural areas, mobile technology is their first real gateway to financial services, and to information and education.

Substantial research has proven that digital financial services are the most powerful way of opening up fast, cheap and secure access to banking services. However, despite some impressive strides forward, more than two billion people are still financially excluded, especially among the most vulnerable segments of society. This means that there is still vast potential to be tapped for digital finance.

The crucial role of the MFIs in the access to digital finance

Microfinance institutions (MFI) have long played a crucial role in financial inclusion. They have learned that new technologies will help them serve populations that have so far been out of their reach due to their geographic or economic situation.

For MFIs, the uptake of digital technology is thus a key opportunity to:

  • further expand their client base, with greater geographical reach and new low-income client segments, by offering more affordable services;
  • respond positively to growing demand from clients who will be able to use services outside working hours and at weekends, saving time and money when it comes to meeting a credit agent;
  • streamline certain costs and organisational procedures;
  • record operations in a faster, more secure manner.
  • expand their product range;
  • make their services more affordable;
  • encourage their clients to adopt digital technology to increase their autonomy.

Nonetheless, many MFIs encounter difficulties with the uptake of digital finance tools for a number of reasons:

  • the complex choice of technologies and their implementation;
  • availability of the economic resources and skills required to create and manage a mobile money system;
  • the scale required to justify the financial investment;
  • the need for strong basic digital banking infrastructure;
  • the establishment of a clear strategy for the use of digital financial services.

To overcome all of this, there is a need for skills that few people have, especially in the small and medium-sized microfinance institutions where financial resources are scarcer and which are less well-equipped to take the risks such a significant transformation entails.

ADA is aware of that, although digital finance is an opportunity to boost financial inclusion, it comes with a number of constraints for MFIs. It has thus decided to introduce a co-funding mechanism to further facilitate access to finance for the poorest households in the least developed countries.

 


ADA’s “Digital Financial Inclusion Initiative”

Though this initiative, ADA will co-fund the efforts made by small and medium-sized microfinance institutions in 12 African countries, most of which are least advanced countries: Benin, Burkina Faso, Burundi, Cameroon, Côte d'Ivoire, Guinea, Madagascar, Mali, Senegal, Democratic Republic Congo, Congo Republic and Rwanda. We are convinced that in these countries, where financial inclusion is still low, digital finance tools will help improve access to financial systems at an unprecedented rate.

Mobile banking penetration Countries targeted by the Digital Financial Inclusion Initiative

The Digital Financial Inclusion Initiative will run for five years, from 2017 to 2021. During the first phase, ADA will arrange training for selected MFIs, who may apply to perform a diagnosis and draw up an action plan to implement the selected technology solution. In the second phase, from 2018 onwards, the Initiative will co-fund implementation of the chosen action plans.


 

Actualité

April 2017

ADA launches its first digital finance workshop

Following the official launch of its Digital Finance Initiative in October 2016, ADA has received a large number of entries and / or expressions of interest from its Southern partners. Finally, representatives of 9 MFIs (Benin, Mali, Burkina Faso and Senegal) will participate from 3 to 7 April at the first Digital Finance workshop in Cotonou, Benin.

The objective of the workshop is to give participating MFIs the most comprehensive picture of the challenges, opportunities and constraints of new technologies.

Participants will be invited to analyze the main possible scenarios and to evaluate the expected benefits as well as the operational, technological and regulatory impacts. On the basis of this evaluation, each participant will have the opportunity to set priorities and define his / her own model (expected benefits, prerequisites for implementation, governance, deadlines, budgets, etc.).

This workshop is only the first step in a larger project to support MFIs.

Those who wish to do so will be supported in the finalization of specific specifications, in the selection of service providers and in the finalization of an application for co-financing with ADA and possibly other donors.

After acceptance of the file, the implementation phase may start. At this stage, ADA will offer selected MFIs in addition to financial assistance, assistance to project management and deployment support.

DSC05275

Group photos with the representatives of the various MFIs and Arnaud De Lavalette, head of ADA's Digital Finance Initiative

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