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Financial digitalization is beneficial for Africa and the Middle East in 2025 (study)

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15.11.2018 at 20:18

According to a study by well-known company Mckinsey, financial digitalization will benefit Africa and the Middle East by 2025 because it will promote the entry of 400 million new customers in the financial system, said Thursday in Dakar, Thameur Hemdane, Co-Chair of African and Mediterranean Participatory Financing (FPAM) " Financial digitalization will benefit Africa and the Middle East by 2025 because 400 million people will be included in the new financial system.There will be $ 758 billion in new deposits. $ 448 billion in new loans will be given to SMEs and individuals. Reducing public spending and tax avoidance for the state it will be $ 20 billion per year, "according to the Mckinsey study cited by Thameur Hemdane.

The joint chair of African and Mediterranean Participatory Financing (FPAM) participated in the crowdfunding Forum in Africa which focused on the theme "financial innovation for development".

For its part, Laurent Gonnet, Senior Financial Sector Specialist at the World Bank (WB) reviewed reforms in the pipeline to improve financial digitalization in Africa and the Middle East.

The first reformation concerns interoperability because according to Mr. Gonnet, "someone with an Orange Money account in Senegal must be able to make transactions with someone with a bank account in Cote & Ivoire. Thus, regional integration will be formed and competition will be between cellular operators and banks."

For him, this global market will develop the use of electronic money. This is the reason, "the Central Bank of West African States (BCEAO) has set a 2-year horizon for interoperability. This is a reality," he said.

In addition, Laurent Gonnet talked about regulations on payment instruments that were urged to be modernized to capture the possibilities offered by digitalization. In the opinion of the leading financial sector specialist at the World Bank, the bank's intermediary regime "will probably be at the heart of the small banking revolution".

Indeed, he said, there was a phenomenal expansion of cellular network operators such as Orange and Tigo based on distribution agents to flood the financial markets.

The ban on conventional banks that use this mode of operation may soon become a thing of the past. "Banks have only one possibility: the opening of an agency. We want to offer them the possibility of recruiting agents who can play the role of product distributors. The World Bank and Central Bank are currently working on the bank intermediary regime," Gonnet said.

In his analysis, experts from the World Bank, argued that "digital will take more in the banking sector but banks have not been equipped in this area to reach the masses by opening low-cost accounts in remote areas".

Therefore, to take advantage of digitalization, Laurent Gonnet urged banks to learn "the success story of attracting Banco Postal (Angola) which has benefited from the new regulatory regime to have a distribution agent instead of branches".

There is also talk about Fintech (financial technology company). For its appearance on the continent, Laurent Gonnet hopes that "within 6 months or even 1 year, an agreement on the Fintech regulatory framework" will see that day.

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