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Africa Policy Journal

Topic / Health

COVID-19 Pandemic: Digital Financial Inclusion as Public Health Tool in Africa

Financial inclusion is a particularly serious issue in Africa.  In 2018, only 43 percent of the population in Sub-Saharan Africa was financially included.1 The rate of financial exclusion is highest among the most marginalized communities: women, young people, and those with low levels of education, low-income and rural populations.  

The 2019 novel coronavirus disease (henceforth, Covid-19) has exposed social inequalities in Africa, with its disproportionate impact on most vulnerable groups such as the poor, elderly, forcibly displaced persons, women, and other marginalized communities. The pandemic has also negatively impacted informal businesses, gig economy workers, and micro, small and medium enterprises (MSMEs). 

As the COVID-19 pandemic continued to exact a toll on lives and livelihoods, African countries joined the international community to implement restrictive containment measures such as border closure, curfews, stay-at-home advisories, and social distancing rules to slow down the spread of the virus.  These quarantine measures negatively impacted access to finance and financial services, as it led to the widespread closure of bank branches and halted the operations of digital financial service agents (who facilitate cash-in/cash-out services). These challenges have further elevated the issue of financial inclusion – access to formal financial products and services in an appropriate form – atop intellectual and policy discourses amid the raging pandemic.  

After the 2007–08 global financial crisis, entrepreneurs started to embrace innovations in digital technology and business models to disrupt the old, analog financial system to increase speed, lower costs, expand scale, improve security and transparency of transactions to deepen the reach of financial services. The Alliance for Financial Inclusion2 defines digital financial services as a broad range of financial services accessed and delivered through digital channels, including payments, credit, savings, remittances and insurance. According to the body, the term “digital channels” refers to the internet, mobile phones (both smartphones and digital feature phones), ATMs, POS terminals, NFC-enabled devices, chips, electronically enabled cards, biometric devices, tablets, phablets, and any other digital system. 

Africa is home to more digital financial services deployments than any other region in the world, with almost half of the nearly 700 million individual users worldwide.3 This is driven by mobile money built on mobile technology which has evolved from its basic telecommunications utility to take on a new enhanced role as a ubiquitous payment and value transfer instrument on the continent. The penetration of mobile money is substantially higher in Africa than in other regions4, with 21 percent of the adult population having a mobile money account.5 

Expectedly, digital financial service has emerged as an innovative way to deepen financial inclusion in Africa.  Digital financial services, which alleviate long-standing demand and supply side constraints, are more tailored than the traditional delivery of financial services to reach vulnerable population and small- and medium-sized enterprises (SMEs), thereby impacting financial inclusion. 

Digital financial inclusion varies by region and country on the continent. While East Africa has long been the star performer in terms of the evolution of digital financial services, West Africa is the new growth market.6 The West African Economic and Monetary Union (WAEMU) countries are laggards, compared to other regions.7 South Africa launched mobile money services in 2004, Kenya followed in 2007 and Uganda in 2009.8 In West Africa, Nigeria recently approved guidelines for licensing and regulation of payment service banks to enhance financial inclusion as defined in the country’s National Financial Inclusion Strategy (NFIS). Ghana also launched a digital financial services (DFS) policy amidst the COVID-19 pandemic to support the nation’s financial inclusion goals, as detailed in the country’s National Financial Inclusion and Development Strategy (NFIDS).

Public health officials have warned that the coronavirus could be transmitted by cash – bank notes and coins.  In addition to having fewer health risks than cash-based ones, digital financial service supports social distancing measures aimed at reducing the potential spread of COVID-19, allowing payment transactions to continue and financial support to reach those in need, when other forms of disbursement become cumbersome due to health guidelines. Furthermore, it provides wide-reaching policy support to Government-to-People (G2P) programs and payments on a scale that would not have been remotely feasible without them. It enables governments to identify potential beneficiaries, communicate with them, and transfer funds electronically, promptly, and without physical contact.9 

The COVID-19 pandemic has amplified the importance of digital financial inclusion in Africa. Over 80% of measures announced on the continent since the beginning of the pandemic are in the form of cash assistance.10  Digital systems have facilitated the processing and payment of unprecedented amounts of relief grants to the most vulnerable groups and small businesses to mitigate the impact of the pandemic. 

Countries like South Africa, Togo, Namibia, and Nigeria were able to draw on existing integrated social registries to drive their COVID-19 emergency support programs. South Africa increased child allowances, partly to offset the loss of school meals due to the shutdown and augmented its unemployment benefits. Togo was able to quickly distribute emergency financial support to half a million people, mostly women, in less than two weeks using mobile phones.  Namibia used e-wallets very successfully, with 98 percent of transfers cashed out within a short time period.1112 The Nigerian national governmentFederal Government of Nigeria has approved a 12-month, 23 tTrillion Nigerian Naira (approximately 5.9 billion US Dollar) Nigerian Economic Sustainability Plan in response to challenges posed by the COVID-19 Pandemic. Chief among the plan is to strengthen the country’s social safety net to increase the number of cash transfer beneficiaries and sundry traders enjoying small and micro loans.13 

Digital financial inclusion is also enabling governments of Tunisia, Morocco, Ghana, and Nigeria to provide quick and secure financial support to hard-to-reach- people and businesses amidst the COVID-19 pandemic.  Tunisia launched a digital wallet solution, enabling individuals to create virtual wallets on their mobile phones to distribute social support from around 4,000 distributing points.14 Informal workers in Morocco are also receiving government help through their phones quickly and efficiently.15  Mobilization efforts through established funds like Ghana’s COVID-19 Fund and Nigeria’s Solidarity Support Fund are making extensive use of digital channels.16 

Several measures have been taken by governments and policymakers to facilitate and support the use of digital financial inclusion as public health tool to curb the spread of COVID-19 in Africa.  These measures include communications drive, designating cash-in/cash-out networks as essential services, working with service providers to reduce or waive transition fee on digital channels, increased transaction limits on the channels, and regulatory easing of Know-Your-Customer (KYC) and due diligence requirement procedures to facilitate remote onboarding and use of digital channels.17

Uganda has cut mobile money transfer fees, Egypt and Liberia have increased transaction size limits, while authorities in Cameroon, the Democratic Republic of Congo, Ghana, Kenya, Mozambique, Pakistan, Rwanda, Senegal, and Zambia have taken both sets of measures (cutting mobile transfer fees and raising transaction size limits) in response to the pandemic.18

Specifically, National Bank of Rwanda  instructed mobile network operators (MNOs) to waive charges on all transfers and payments for contactless mobile and online transactions.  The Central Bank of Kenya required that mobile money providers offer free services for low-value transactions of less than 1,000 Kenyan Shilling (around 9 US Dollar) triggering an immediate upswing in the median transaction value. Fees for facilitating transfers between mobile money wallets and bank accounts were also waived. Bank of Ghana announced that all transactions below 100 Ghanaian Cedi (around 17 US Dollar) would be free of charge, with restrictions on transactions to withdraw cash from mobile-wallets. Central Bank of Kenya raised mobile money transaction limits, triggering an immediate upswing in the median transaction value. In addition to launching the new eKYC framework to let customers open bank accounts electronically without visiting a bank branch or agent location, Central Bank of Egypt also increased transaction limits for mobile financial services, as part of its response to Covid-19. Elsewhere, Namibia permitted up to ten emergency relief applications to be submitted through a single subscriber identification module (SIM), with each application distinguished by its unique ID number.

Digital financial service providers are also deploying innovations, and new relationships to bolster public health guidelines in the wake of the COVID-19 pandemic. Safaricom, Kenya’s largest mobile network operator, implemented a fee-waiver on East Africa’s leading mobile-money product, M-Pesa, to reduce the physical exchange of currency in response to COVID-19. MTN’s Y’ello Digital Financial Services waived user fees for Cash2Cash – a local money transfer service offered by its MoMo Agent Network. Nigeria based mobile payment company, Paga, made fee adjustments, allowing merchants to accept payments from Paga customers for free. PalmPay waived fees for transfers from its account holders to Nigerian banks. In Senegal, mobile money operator Orange, waived fees for utility bill payments, while T-Cell of Togo waived all fees on its payments platform. Flutterwave, in partnership with Visa Incorporated, designed a new e-commerce platform, Flutterwave Store, to enable African MSMEs sell online. Wholly Ghanaian owned fintech, Zeepay, in partnership with the global fintech company Clear Junction, launched a platform for collecting remittances from Europe in Africa.  19

The COVID-19 pandemic has put a spotlight on digital financial inclusion as an essential bedrock in building a resilient African society.  Despite the gains achieved in deploying digital finance payment to mitigate the effect of COVID-19, we have not crossed the finish line. Far too many people are still excluded from financial services in Africa. Experience to date has revealed the importance of countries’ levels of financial inclusion, widely held national ID, and robust telecommunications utilities in facilitating national response to reach out to vulnerable groups in the wake of the pandemic. Further lessons should be drawn from the 2003-2004 Severe Acute Respiratory Syndrome (SARS) outbreaks which expedited Chinese digital payment and e-commerce revolution to deepen digital financial inclusion in Africa. 

The Africa Digital Financial Inclusion Facility (AFDI), established  in June 2019 by the African Development Bank (AfDB) in partnership with the Bill and Melinda Gates Foundation, Agence Francaise de Dévelopment and the Government of Luxembourg, aims to catalyse digital financial inclusion to impact a total addressable market (TAM) of 332 million financially excluded adults on the continent. The blended finance vehicle, with a target envelope of USD 100 million, provides opportunity for infrastructural development -, including payment systems development and payment systems interoperability, digital products and innovation, policy and regulatory reform and harmonization, and capacity building to scale innovative digital financial inclusion throughout the continent.

The difference in the degree and nature of financial inclusion challenges in African countries demand tailored digital financial service research, program and policies geared towards better emergency preparedness and response. Efforts to build on the capabilities developed during the pandemic should include trust building among the users and operators, peer-learning and adaption of global best practices, robust regulation to establish operational standards, consumer protection against fraud and data breaches, development of fair and competitive pricing regime, and comprehensive data integration. Moving forward, it is pertinent for African countries to make financial inclusion an integral part of their national social investment programme to achieve an inclusive, sustainable, and resilient welfare system that can withstand future shocks.


  1. International Finance Corporation. 2018. “Digital Access: The Future of Financial Inclusion in Africa.” Washington DC: International Finance Corporation.
  2. Alliance for Financial Inclusion. 2016. “Digital Financial Services: Basic Terminology.” Kuala Lumpur: Alliance for Financial Inclusion
  3. International Finance Corporation, Digital Access, 7. 
  4. Ahmad, Ahmad H., Christopher Green, and Fei Jiang. 2020. “Mobile Money, Financial Inclusion and Development: a Review with Reference to African Experience.” Journal of Economic Surveys 34 (4): 753-792.
  5. Ceyla Pazarbasioglu, Alfonso G. Mora, Mahesh Uttamchandani, Harish Natarajan, Erik Feyen, and Mathew Saal. 2020.  “Digital Financial Services.” Washington DC: World Bank Group.
  6. International Finance Corporation, Digital Access, 15.
  7. Senou, Melain M., Wautabouna Ouattara, and Denis A. Houensou. 2019.  “Financial Inclusion Dynamics in WAEMU: Was Digital Technology the Missing Piece?” Cogent Economics & Finance 7 (1), 1665432.
  8. International Telecommunication Union. 2016. “Digital Financial Services: Regulating for Financial Inclusion – an ICT Perspective” Geneva: International Telecommunication Union.
  9. Gelb, Alan, and Anit Mukherjee. 2020. “Digital Technology in Social Assistance Transfers for COVID-19 Relief: Lessons from Selected Cases.”  Washington DC: Center for Global Development. 
  10. Davidovic, Sonja, Delphine Prady, and Herve Tourpe. 2020. “You’ve Got Money: Mobile Payments Help People during the Pandemic.” IMF Blog online, 22 June. Accessed November 10, 2020.
  11. Ibid
  12. Gelb and Mukherjee, Digital Technology in Social Assistance Transfers for COVID-19 Relief, 8-9.
  13. Federal Government of Nigeria. 2020. “Nigeria Economic Sustainability Plan.” Abuja: State House.
  14. Ayadi, Rym , and Shaban, Mais. 2020. “Digital Financial Inclusion:  a Pillar of Resilience amidst COVID-19 in the Mediterranean and Africa.” Barcelona: Euro-Mediterranean Economists Association.  
  15. Sonja Davidovic et al., You’ve Got Money: Mobile Payments Help People during the Pandemic.
  16. Commodore, Richmond. 2020. “Financial Inclusion in the COVID-19 Era: Policy Responses in West Africa.” Washington, DC: Wilson Center. 
  17. Boakye-Adjei, Nana Y. 2020.  “Covid-19: Boon and Bane for Digital Payments and Financial Inclusion.” Basel: Bank for International Settlements. 
  18. Agur, Itai, Soledad M. Peria, and Celine Rochon. 2020. “Digital Financial Services and the Pandemic: Opportunities and Risks for Emerging and Developing Economies.” Washington DC: IMF Research.
  19. Commodore, Financial inclusion in the COVID-19 era: Policy responses in West Africa.