Central banks in Africa are responding to COVID-19 by investing in practical solutions that bring disadvantaged groups into formal financial services, accelerating their ability to recover and build resilience against future crises, leaders said on 30 June.

During the first-of-its-kind AFI leaders virtual dialogue, leaders from 19 African central banks, finance ministries and government treasuries discussed the policy interventions and challenges facing their institutions in advancing financial inclusion amid the current pandemic.

AFI Executive Director Dr. Alfred Hannig kicked off deliberations by emphasizing how ongoing uncertainty could provide opportunities that act as a catalyst for financial inclusion, particularly among populations disproportionately impacted such as women, small businesses, youth, migrants and forcibly displaced persons.

“Over the past decade, financial inclusion has emerged as a tested and proven policy tool that has worked to alleviate poverty and reinforce monetary policy implementation in many countries in the world after the global financial crisis, especially in developing countries,” he said.

“Exploiting this opportunity in a smart way, will allow us to aim for a ‘Better Normal’, compared not only to what we see right now at the peak of the crisis but also to what we have been used to before the outbreak”.

Echoing this sentiment was Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO) Deputy Governor Dr. Norbert Toe, who said that the pandemic had “created a situation that no one in our lifetimes have seen, so we have to think outside the box as we collectively go through this situation”.

This, he noted, could yield tangible rewards, citing a five-fold “explosion” in the number of new accounts across various member states in recent months, adding that “for financial inclusion, you cannot do better than that”. BEACO is a central bank comprised of eight member states: Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo.

Adapting to a “better normal”

Also urging his peers to use the downturn to create long-term positive change was Banque Centrale de la République de Guinée Governor Dr. ‎Louncény Nabe who advised regulators to adapt and learn to “live with this virus”.

He noted that the “COVID crisis had given us opportunities for the development of financial services, mobile services, mobile money, virtual meetings,” adding that this also includes leveraging tools and technical support for regulating strategies.

Sharing her experiences in driving digital infrastructure was National Bank of Angola Board Member Beatriz dos Santos, who said that concerted efforts were being made to boost uptake rates for formal financial services, particularly for people working in the informal sector.

Even so, she said that the protractor nature of this crisis was posing “great challenges because a part of our population is in the informal market, and this is the area most in need and is getting worse”.

Underscoring the need for central banks to expand partnerships with various stakeholders, including international organizations, to achieve broad financial inclusion goals was Bank Al-Maghrib General Director Abderrahim Boaza, who noted that the pandemic had exposed sectoral weaknesses as well as the need for Moroccan central bank to make targeted regulatory adjustments.

“We have to re-examine the model of microfinancing in view of COVID-19,” he said.

National Bank of Rwanda Deputy Governor Monique Nsanzabaganwa threw a spotlight of support for micro institutions, saying that while “digital financial services have been an avenue to contain the spread [of COVID-19] and ensure people’s survival, we have seen in savings, cooperatives and even micro savings institutions, a lack of digital channels and those opportunities haven’t been really harnessed.

Amid a jump in the use of digital platforms, she highlighted the importance of consumer protection as well as the analysis of big data to accelerate financial inclusion efforts.

“Data doesn’t tell a story,” she said, adding that “we need the support of AFI to harness big data and other data available in the ecosystem”.

“AFI binds us”

Backing calls for closer ties with AFI was Central Bank of Lesotho Governor Dr. Retselisisoe Matlanyane, saying that “AFI binds us all together”.

She added that the ongoing pandemic had forced regulators to “do much more, with much less, form more synergies to be more effective”, before noting that disadvantaged groups, such as micro and small businesses, were still struggling against limited access to credit.

“We had the luxury of moving at a pace that was normal, not knowing what was ahead. Let us take this COVID-19 to push us to do more,” she said, adding the need to focus on digital infrastructure and interoperable systems so that “people don’t have to go physically to merchants … and transactions are seamless”.

She, who joined the web event with Deputy Governor Mathabo Makenete, also suggested that AFI consider creating digital platforms that enable better communication among regulatory officials to enhance members’ work.

When discussing AFI’s role in facilitating financial inclusion at the regional level, Deputy Governor Central Bank of Kenya Sheila M’Mbijjewe described the network as a “trusted circle of mainly central bankers where we have an opportunity to ask for guidance and also support where we feel it is appropriate”.

“It is this forum where we need to be heard,” she said.

Addressing her peers, she encouraged regulatory responses to be timely but cautioned against jumping to major conclusions as we do not yet have a full picture of the lasting impact of COVID-19.

“The problem that we’re facing is the criticality of the crisis … there is a need for speed in the interventions,” she said, noting that while the pandemic has spread to all corners of the globe, it has hurt many developed nations harder than parts of Africa.

“Looking ahead, is it going to be same journey or is Africa? I don’t see the same footprint when you look at the United States and Europe,” she said, adding that the outcomes of the pandemic were not yet clear. She noted that anti-money laundering and countering the finance of terrorism remain a challenge, particularly in the digital age, citing the popularity of mobile payment services, such as Kenya’s M-Pesa.

Central Bank of Seychelles Deputy Governor Christophe Edmond, who also shared several challenges facing his country, including a lack of risk appetite and limited SME finance. He also highlighted climate change

“There should be increased investment in green technologies,” he said, adding the “best protection” against rising levels of financial fraud was financial education.

AFI Deputy Executive Director Norbert Mumba used the discussions to highlight how AFI network provides in-country implementation (ICI), which provides technical support and grants to members to bolster their financial inclusion efforts on the ground.

“ICI support enables members to put into place interventions and enable the private sector to leverage on policy initiatives in order to develop the downstream services,” he said as he shared more details on AFI’s COVID-19 Policy Response.

He highlighted a survey of members from April 2020 that showed overwhelming interest (84 percent) for the provision of AFI technical support, followed by policy grants, policy guidance and a dashboard of network-side policy responses (56 percent each).

Leaders’ deliberations are designed to steer peer guidance on practical interventions that can be adapted in the network to sustain the gains of financial inclusion. Furthermore, they give AFI leaders  the opportunity to make specify demands for in-country implementation support that mitigates the impact of the COVID-19 crisis, enabling the AFI Management Unit to compile tailored in-country support activities in alignment with member needs and national policy frameworks.

This event was supported by the Mastercard Foundation under AFI’s COVID-19 Policy Response for Africa region. It combines quick, needs-based, highly practical and high-impact interventions that enable the implementation of rapid response policies and regulations in highly affected countries to mitigate the effects of COVID-19.