Financial Inclusion Remains a Work in Progress in South Africa
On the surface, South Africa appears to be financially inclusive compared with other emerging markets: 70% of adults, for example, have a transaction account. However, it’s not nearly as inclusive as most mature markets, and serious and stubborn gaps remain, according to a new report by The Boston Consulting Group.
Improving Financial Inclusion in South Africa, which is based on primary research consisting of surveys and interviews and a fresh analytical approach, shows that South Africa remains largely a cash society and that low-income consumers are wary of fees and distrust many financial services.
“South Africa has several strengths that it can build upon to create a more financially inclusive society but also many troublesome weaknesses that will require dogged effort and cooperation to overcome,” said Adam Ikdal, a co-author of the report and head of South Africa’s Johannesburg office. “For example, financial institutions will need to work with telecom operators and others to create digital banking channels.”
Given the importance of financial inclusion in promoting socio-economic development and well-being, the report concludes that “the South African government needs to take the lead in improving financial inclusion, while financial institutions themselves need to make radical changes in their operating models.”