think: act STUDY "Inside Africa" - Roland Berger

Roland Berger Strategy Consultants
Role of government
organizations in enabling
financial inclusion
Financial inclusion has been on the agenda of development
organizations and governments for decades. Bringing money from
the informal sector into the banking system boosts the availability
of credit, brings down lending costs and enables investment
projects from small business expansion to major infrastructure
developments. Regulators and policy makers can catalyze access
to finance by providing an enabling framework. When supportive
regulation is in place, things often start to move surprisingly fast
Institutions
Banking supervisors historically target traditional financial
institutions to keep the sector stable, by subjecting them to an
array of standards for reporting, operations, branch security,
internal processes, staff qualifications and minimum requirements
for capital ratios or risk management. To ensure continued future
stability, they must hold new types of institutions entering
traditional banking to the same standards as banks. From largescale
microfinance organizations that have grown from small
grassroots NGOs to mobile network operators that offer payments
and savings services, these new financial services providers must
be subject to the same regulation to avoid the erosion of client
trust in the financial system, giving the unbanked 80% of the
population more access to new models.
Clients
Because client requirements were designed for developed
countries, they don't suit the majority of the Sub-Saharan African
population. They often form a major roadblock to faster
implementation of mobile and agent banking models. Many lowincome,
rural populations don't have official ID or physical
confirmation of a residential address needed to fulfill "know your
customer" and anti-money laundering regulations. Regulators
must lower this bar to enable more Africans to take advantage of
innovative new banking models and access basic financial
services. African regulators can look to other emerging markets
like Mexico, where pragmatic solutions that don't compromise the
security of the financial system or favor criminal organizations
have been successfully applied.