Published On: Wed, Apr 12th, 2017

SA falls behind in addressing financial inclusion

financial inclusionJOHANNESBURG, (CAJ News) – A LACK of trust on financial service providers has been cited as an impediment to enhancing financial inclusion in South Africa.
This is among “serious and stubborn gaps” impacting on such goals, a consulting group said.
“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, “Improving Financial Inclusion in South Africa.”
Ikdal is the head of The Boston Consulting Group (BCG) South Africa’s Johannesburg office.
He said for example, financial institutions will need to work with telecom operators and others to create digital banking channels.
The consultant said given the importance of financial inclusion in promoting socio-economic development and well-being, 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.
According to the report, on the surface, South Africa appears to be financially inclusive compared with other emerging markets.
It noted 70 percent of adults,have a transaction account. However, the country is not nearly as inclusive as most mature markets.
Only 24 percent make more than three monthly transactions such as withdrawals, transfers, or card swipes, through their account.
Moderate numbers of South Africans have opened savings accounts but the nation’s overall savings rate is among the lowest in the world.
“Developing a savings culture is a critical element of creating a strong economy and reducing dependence on foreign capital,” said Klaus Kessler, a co-author who is a BCG senior partner.
CAJ News

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