Credit Access Expanding in African Communities
According to Business Day, South Africa’s plastic revolution is putting credit card firms in the pink. Cheeky title, but the subject matter is serious business – signaling that the formal economy is growing rapidly in southern Africa. Visa and Mastercard, the industry leaders, report annual growth of its credit and debit card user base anywhere from 9 to 42 percent (depending on the product).
Some growth can be attributed to South Africa’s credit-access legislation, which prompted leading banks to introduce formal savings and credit programs for low-income communities. Visa’s sub-saharan general manager “expects growth to be in excess of 100% in the region outside South Africa and 150%-200% in some countries.” 200 percent growth in customer base isn’t simply abiding by legislation – its a sign that credit companies are responding to demand. As access to formal finance improves, so will low-income communities’ ability to reap the benefits of their local and regional economies.