Technology Advancing Financial Inclusion in Africa
| date: June 10th, 2019
Technology is playing a transformative role in achieving greater financial inclusion on the continent and providing opportunities for the poor to access insurance
According to World Bank, since 2011 financial inclusivity, increased worldwide by 69% with 1.2billion adults gaining access to an account. The concept, considered to be one of the most important building blocks for achieving the 2030 UN Sustainable Development Goals (SDGs) prioritizes access to financial tools by historically marginalized groups around the globe.
Financial inclusivity is one of the key topics slated for discussion at the 46th Annual AIO Conference and Annual General Assembly where over 1000 African insurance executives and decision-makers are have gathering this June. The event aptly themed ‘Insurance Penetration in Africa: Insuring the Uninsured will be held in Johannesburg, South Africa from 9th to 12th June 2019.
Insurance is a key pillar of financial inclusion as it not only helps in poverty reduction but provides the risk management mechanisms to keep that poverty at bay. Insurance helps families mitigate shocks and manage their expenses related to unexpected incidents such as death, sickness and natural disasters.
As investment firm Leapfrog’s Raghu Kolli points out, “Emerging consumers work hard to achieve their dreams…but they need access to the right springboards and safety nets – tools like insurance, education, healthcare.”
Africa is the world’s second fastest growing region with its real GDP projected to grow at 3.9% annually for the five-year period until 2022. Investments in infrastructure have soared accounting for over half of the recent improvement in economic growth and the WEF predicts that by 2030, one in five people on the planet, will be African with the continent producing more than half of the 2.4billion global population growth.
Despite all these, Africa’s insurance gap still persists with its insurance penetration still at a paltry 3%. This is unfortunate, as a continental micro-insurance firm MicroEnsure observed, “Uninsured people in emerging markets are often only one or two disasters away from slipping back into poverty. Insurance acts as a safety net to stop that from happening.”
Many however believe that Africa financial sector is at a turning point. In recent years, the number of people on the continent enjoying access to formal financial services has increased exponentially. This is due in large part to technological advancement as according to the World Bank, technology adoption in Sub-Saharan Africa has been pivotal in financial inclusion increase in the region to 43% in 2017 from 23% in 2011.
Technology is playing a transformative role in achieving greater financial inclusion on the continent and providing opportunities for the poor to access insurance. Through mobile financial services and the internet, individuals from even the remotest areas now have access to instant and affordable savings, credit and insurance products.
Insurers across the continent are also leveraging technology to innovate around their products and distribution channels and build new products and services that are better targeted to the market.
Many are exploring new technologies like cloud-based solutions, chat bots, and drones to lower not only the costs but also the time and number of resources required to create, sell and service insurance products. This in turn lowers the cost of premiums making products more affordable and accessible to all – a key catalyst for financial inclusion.
We at Turnkey Africa are committed to our vision/ mission of helping insurance companies evolve, work smarter and win in this ever changing landscape. Our investment in developing and delivering innovative technology solutions enables our insurance partners, not only meet their customer’s demands and expectations, but contribute positively to the growth of the African insurance landscape.
Along with inclusivity the AIO Conference is expected to tackle other issues pertinent to the African continent including Insurance distribution, micro-insurance, and the effects of climatic events on the industry and the economy in general.