On 24 February, AFI and its PPD partner Visa, brought together over 50 AFI members in Accra, Ghana for a training session on ‘Catalyzing Financial Inclusion with Government Payments’. The one day workshop provided participants with an overview of the challenges in promoting a wider adoption of digital payments, a review of current digital payment systems, and an examination of the potential impact of government adoption of digital payments could make on global financial inclusion targets.

In the opening presentation, Visa’s Senior Director for Governments and Partnerships, Amina Tirana, provided an overview of current financial inclusion progress and highlighted the ongoing challenges of the gender gap and the continuing reliance on the use of cash. Ms. Tirana noted that while great progress has been made in reducing the number of unbanked, the gender gap has remained constant. “We need to think of ways to ensure our programs are including women at a faster rate than men in order to close the gap”, said Ms. Tirana.  The other pressing challenge identified included a continuing reliance on the use of cash, particularly in the developing and emerging world. While the public impression is that the use of cash is ‘free’, it is in fact an extremely expensive platform. Ms. Tirana highlighted a recent study that showed how widespread adoption of digital payments could add 3.7 trillion USD to the GDP of the developing world.

In the second session, Majeed Hujair, Senior Director, Visa School of Public Policy, provided an overview of the current payments ecosystem. Mr. Hujair highlighted 4 key pillars upon which successful payment systems must rest. The system must be efficient, secure, economical and future proof. But while these pillars are the practical requirements for success, the other absolutely essential element is trust. The ‘brand’ through which digital payments flow must be a known and trusted player and ideally one that has presence internationally. The example of Visa was used, as payment card that can be used globally without question based on the high level of trust associated with the brand. Further expansion of digital payments will mean reaching out to an audience that is mostly low income, strongly attached to the use of cash and generally suspicious of banks. The challenge is obvious.

The third session, moderated by Stacy Pourfallah, Vice President, Global Financial Inclusion, Visa, had participants taking a close look at government payments and the impact they can have on financial inclusion goals. Ms. Pourfallah noted that government transfers often represent the single largest source of payments in a country. Being able to convert these to digital payments can therefore have an enormous impact on how digital finance platforms are perceived and how they are accepted across the wider economy. While some countries, such as the Dominican Republic, have found success in making this change to digital G2P, there continues to be resistance to widespread adoption due to factors ranging from obvious concerns about fees and security, to the more subtle barriers which come from cultural traditions and local norms. Ms. Pourfallah suggested some potential gateways to help encourage further digital payment adoption, including investing in financial literacy and awareness programs, and working with closely with small merchants.

The afternoon sessions saw participants engage in group work, with breakout meetings on digital finance policy, infrastructure and implementation issues, followed by an in-depth case study on current digital financial progress and ongoing activities taking place in Egypt.

At the conclusion of the day, participants were left with a solid overview of challenges and opportunities that come with government payments and financial inclusion. There was plenty of debate and discussion, but also many common areas of agreement. In final comments participants agreed on the need for further study on managing barriers to acceptance, the importance of a comprehensive and strategic approach, the need for more specialized education and literacy programs, and the necessity of engaging and expanding on strategic partnerships. Maha Bahou, from the Central Bank of Jordan also noted the importance of commitment saying, ‘Government commitment is the most important factor for success or failure. The moment that government is committed to only taking payments through digital channels, people will be obliged to do it’.

AFI’s next PPD Event will take place in Seychelles on 17 March where Visa will hold a training session on ‘Small Merchant Acceptance: A Path to Financial Inclusion’.