Grace Ashiru
In South Africa, the World Bank reports that more than 12 million individuals currently do not have access to a bank account. Along this, the country is grappling with a high unemployment rate of 32.9% as of the first quarter of 2023. These figures present a challenging economic landscape.
However, there is a ray of hope on the horizon. Innovative technologies and platforms have the potential to bring about significant transformations and create a more inclusive future by reshaping these numbers.
The Digital Challenge
Financial literacy remains a significant hurdle in South Africa, with only 49% of the population considered financially stable, and a mere 5% can retire comfortably. In a study of more than 3000 customers, the FSCA found that only 16% of respondents could define inflation, and only 46% could correctly respond to a question about basic interest questions.
Banks, fintech companies, and edutech platforms are vital in combating financial exclusion through collaboration and focused programs that promote financial education.
Digital proficiency is key to empowering the younger generation to bridge the unemployment gap. However, challenges such as limited access to financial products and overly complex digital solutions hinder progress. Additionally, inadequate internet infrastructure and costly mobile data further exacerbate the access gap, preventing individuals from effectively utilizing digital financial services.
A GHS survey conducted in 2021 found that only 8.3% of South African households have access to fixed internet in their homes. In contrast, the country boasts 47.8 million mobile internet users. However, airtime and data expenses remain high, limiting widespread accessibility.
Leveraging Technologies and Platforms
Innovative technologies have emerged as powerful tools for overcoming the barriers to financial inclusion in South Africa. Interestingly, it is often the alternative players that are making the most significant impact. Education platforms like Fincheck Academy and Worth Education offer accessible and comprehensive financial education resources, equipping individuals with the knowledge and skills to make informed financial decisions.
These platforms provide educational content tailored to real-life consumer challenges, simplifying financial concepts for easier understanding and practical application. Ean Barnard from Fincheck Academy emphasizes the importance of financial education in driving technology adoption, stating that empowering consumers with knowledge will secure their financial well-being and contribute to a prosperous nation.
South Africans are acutely aware of the financial access gap in the country, with over 50% of consumers expressing a desire for better financial literacy to make informed decisions and gain access to necessary financial products. While the nation places significant emphasis on educating the youth for better employment opportunities, there is also a pressing need to prioritize financial education among them.
Hayley Parry, co-founder and Head of Education at Worth, highlights the dire need for more emphasis on financial management, with over 70% of South Africans spending their monthly salaries on debt. Worth aims to transform the lives of hard-working individuals by providing financial education, enabling them to enhance their money management skills and confidence.
In terms of inclusion, another critical aspect is addressing the current employment challenges in South Africa. A survey conducted by Youth Capital in 2022, titled “Beyond the Cost,” revealed that job seekers in the country spend between R500-R1500 per month on expenses related to job searching, including transportation, data, and printing. It is essential to address hurdles such as complicated manual application processes and limited digital literacy to enhance the prospects of finding employment.
The high transportation costs, printing CVs, and mobile data expenses only compound these challenges. However, recruitment technologies like JOBJACK are vital in bridging the unemployment gap by harnessing digital solutions. JOBJACK’s user-friendly online platform allows job seekers to search for positions, submit applications, and connect with potential employers. Improving access to employment opportunities benefits individuals seeking jobs. It significantly impacts the youth, offering them a crucial connection to potential employers and a pathway toward a more promising future. Co-founder of JOBJACK, Heine Bellingan, emphasizes the importance of having a job as a major determinant of one’s quality of life. Unfortunately, the ability to afford the costs associated with job applications is not the norm. However, initiatives like JOBJACK are working towards changing that reality.
Future Developments
In addition to recruitment technologies and educational platforms, the emergence of embedded finance and super apps will make financial tools and services more accessible to consumers. These platforms will integrate banking, payments, investments, insurance, and other financial services under one roof.
Embedded finance within the super app ecosystem will empower individuals with seamless access to personalized offerings and tools. This will create a superior user experience and assist clients with purchases, insurance, investments, payments, etc. Michael Bowren, the co-founder of Finch Technologies, believes this integration will streamline processes into one seamless flow.
Data analytics and AI tools will also enable alternative credit scoring methods. AI algorithms can assess creditworthiness more accurately by analyzing vast amounts of data, including transaction history, social media activity, and digital footprints. Additionally, biometric technologies will provide a reliable and secure means of verifying a person’s identity, particularly in areas where formal identification documents are scarce, making it challenging for consumers to open bank accounts and access loans.
Although obstacles such as limited physical store accessibility, expensive mobile data, and inadequate internet infrastructure persist, the platforms that will succeed in driving financial inclusion are those that understand and address these challenges. They tailor their products and services to ensure affordability, ease of access, and compatibility with existing limitations. By doing so, they can genuinely empower individuals and bridge the digital divide.
