Africa Digital Financial Inclusion Facility (ADFI) is a financing vehicle designed to accelerate digital financial inclusion across Africa, with a goal of ensuring 332 million more Africans, of which, 60% are women, have access to the formal economy.
Digital financial services are emerging as a powerful force for financial inclusion, gender equality and inclusive economic growth. For consumers in low and middle-income countries, digital financial tools, such as mobile payment systems, provide a gateway to greater economic security, empowerment, and opportunity. The McKinsey Global Institute estimates that widespread adoption and use of digital payments and financial services could increase the GDP of all emerging markets by six percent, or a total of USD 3.7 trillion, by 2025. This additional GDP could create up to 95 million new jobs across all sectors of the economy, raise overall productivity and investment levels, and reduce leakage in government spending.
African governments need to be at the forefront of efforts to harness digital technologies to build economies that are more inclusive. While double-digit growth in mobile phone ownership in the first half of this decade has triggered a surge of innovative digital tools and services across the continent, the benefits of the digital age are not being shared equally. Moreover, with the advance of the fourth industrial revolution that is premised on technology, Africa risks losing out on the next developmental wave if it does not embrace increased digitisation of its economies.
ADFI Frontrunner: The BCEAO Interoperability Project
As a precursor to the launch of ADFI, the AfDB, through USD 11.3 million in grant funding from the Bill and Melinda Gates Foundation, is supporting the Central Bank of West African States (BCEAO) with an upgrade and interoperability of the digital payment systems of the eight West African countries belonging to the West African Economic and Monetary Union (WAEMU). This project will see mobile network operators and eventually, microfinance institutions and FinTechs, become part of the payments ecosystem in the eight countries and will support micropayments over mobile phones on the shared system. On completion this project will not only foster increased financial inclusion in the WAEMU region but also increased trade and cross border transactions.