Financial services for inclusive platform economies in Africa - PowerPoint PPT Presentation

Financial services for inclusive platform economies in Africa March 2019

About insight2impact Launched in 2015, insight2impact is a global resource centre jointly hosted by Cenfri and FinMark Trust that harnesses the power of data to advance financial-sector development and generate better financial inclusion and welfare outcomes. Client research Measurement Data quality Open data portal Application Lab Deepening Advancing survey Improving relevance and Partnering to Enabling access to measurement and geospatial quality of client data and advance the use of pioneering client data in financial data for financial research for financial client data and bring and research service providers inclusion inclusion innovations to market insight2impact initiatives to achieve impact: • Researching how data can drive both client and firm value in the financial sector • Offering technical assistance to financial service providers who wish to translate data into insights • Improving data quality by sharing practical information and best practices on data collection and analysis • Making relevant datasets and tools publicly available through our data portal • Changing the way that financial inclusion is traditionally measured by developing and piloting new measurement frameworks • Inspiring young entrepreneurs and developers to harness the power of data

As platform ecosystems evolve, so should the financial services that serve them “ A multi-sided digital platform (MSP) is a company or organisation that derives value primarily from enabling and facilitating observable, direct interactions ” between two or more distinct groups of users affiliated with the platform. Research ICT Africa: JP Morgan Chase: 1% of adult population in 1.6% of accounts in the US Africa* JP Morgan Chase Institute (2018) “The Online Platform Economy in 2018”. Research ICT Africa (2017), “What is the state of microwork in Africa? A view from seven countries.” * Aggregated across Ghana, Kenya, Nigeria, Rwanda, South Africa, Tanzania and Uganda

The rise of Africa’s digital platforms and growth in financial technology 55% 300 Fintech industry to 50% contribute $150 billion to 268 SSA economy by 2022, 250 249 45% according to FSDA 40% 200 195 35% 30% 150 25% 132 20% 101 100 15% 81 64 10% 50 49 35 29 5% 19 14 12 9 0% 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Internet usage (% of population) in our focus countries Platforms active in 2018, cumulatively displayed by year of launch Insurtechs active in 2018 in Africa, Asia and Latin America Financial inclusion (% of adult population) in our focus countries

What makes Africa’s digital platforms different? Informal sector dominant • Low levels of formal employment • Large number of micro-enterprises with low production capacity • Production standards for goods and services not enforceable • Underdeveloped supply-chains • Low tax base Sources: BFA, ILO (2018)

The landscape of Africa’s digital platforms

Online shopping and freelancing platforms most prevalent Online shopping the most prevalent type of digital 91 platform in Africa, followed closely by freelancing 75 53 37 27 26

Large proportion of Africa's digital platforms are homegrown 14 19 97% of online shopping platforms in focus countries 22 originate in Africa 16% of freelance platforms originate outside of either 222 Africa, Europe or the USA Africa USA Europe Other

Digital payments in the e-commerce market 50 Used internet for online shopping or to pay bills China 45 Africa’s B2C e-commerce market valued at 40 US$ 5.7 billion (0.5% of GDP in 2017) 35 (% of population) 30 Kenya 25 20 15 South Africa Zambia Tanzania Zimbabwe Mozambique 10 Uganda Botswana Ghana 5 Nigeria Rwanda 0 25 35 45 55 65 75 85 Made or received digital payments in the past year (% of population) Sources: UNCTAD (2018), World Bank Global Findex (2017)

Africa’s digital platforms accept a variety of payment methods Opportunities to close financial barriers to platform usage 100% 80% 75% 41% 41% 40% 38% 36% 30% 29% 22% 21% 18% 18% 9% 7% Cash Bank transfer Mobile payments Card PayPal Digital wallet Consumer payment methods utilised by % of platforms Provider payment methods utilised by % of platforms Accessed by % of adult population in focus countries

Financial services distributed by Africa’s digital platforms 60 50 40 30 20 10 0 All Online shopping e-hailing Logistics/courier Freelance Rental Other Online Shopping (only goods) (only restaurants) Digital wallet Insurance Credit Savings

Partnerships between digital platforms and financial service providers enable distribution Asia Sub-Saharan Africa (SSA)

Incentives for digital platforms and financial service providers to partner Build trust Leverage Cost effective Lean on network through brand platforms’ scale distribution data association

How to find us Get involved. Contact us. Chernay Johnson (Engagement Manager) chernay@i2ifacility.org Matthew Dunn (Senior Researcher) matthewd@i2ifacility.org @i2ifacility /insight2impact /insight2impact /i2ifacility i2ifacility.org Established by Sponsored by