Digital financial inclusion key for Comesa's growth
Opinion
By
George Odhiambo
| May 26, 2024
In Africa, the Common Market for Eastern and Southern Africa (Comesa) stands out as a beacon of economic opportunity, encompassing a population of over 560 million people.
As the largest trade bloc on the continent, Comesa holds immense potential for driving economic growth, fostering regional integration, and lifting millions out of poverty.
Its trade statistics paint a picture of immense opportunity coupled with significant challenges. While the region exported goods worth $205 billion (Sh27 trillion) and imported goods valued at $272 billion (Sh36 trillion) in 2022, it also faced a trade deficit of $67.5 billion (Sh8.8 trillion).
Furthermore, intra-Comesa trade, though substantial, remains below its true potential, with its exports and imports standing at $14.1 billion (Sh1.84 trillion) and $14.2 billion (Sh1.86 trillion), respectively.
Despite the region's economic potential, challenges persist in strengthening trade facilitation mechanisms to ensure sustainable value chains and seamless supply chains across borders. As such, the Comesa Business Council (CBC) has embarked on a mission to implement the Digital Financial Inclusion programme aimed at designing, developing, and deploying an integrated digital financial services infrastructure.
One crucial step in this journey is the development and deployment of a Digital Retail Payment Platform. This initiative is further aimed at offering a transformative solution to enhance economic resilience and sustainability within Comesa.
Leveraging digital technologies to expand access to financial services, particularly among micro, small and medium-sized enterprises (MSMEs), women and youth will catalyse inclusive growth and empower marginalised communities across the region.
At its core, the programme addresses fundamental barriers that hinder economic participation and impede the flow of goods and services within Comesa. It seeks to provide low-cost, interoperable, real-time, and fraud-resistant financial services to enable MSMEs, often the backbone of Comesa's economy, to access formal financial channels, manage their finances more effectively, and seize new business opportunities.
Moreover, by targeting women and youth who are disproportionately excluded from traditional financial systems, the programme seeks to promote gender equality and youth empowerment, unlocking untapped reservoirs of talent and innovation.
The benefits of digital financial inclusion extend far beyond individual entrepreneurs and businesses; they have the potential to drive broader economic transformation.
A robust digital financial infrastructure will facilitate seamless cross-border transactions, reducing transaction costs and enhancing the efficiency of supply chains, thereby promoting regional integration and boosting intra-Comesa trade.
In addition, by fostering a conducive environment for entrepreneurship and innovation, digital financial inclusion nurtures a thriving ecosystem of startups and SMEs, driving job creation, economic diversification, and sustainable development across the region.
In the context of the Africa Continental Free Trade Area (AfCFTA), of which Comesa is a vital part, digital financial inclusion assumes even greater significance. As member states strive to harmonise trade policies and eliminate barriers to trade, a resilient digital financial infrastructure serves as a linchpin for facilitating the smooth flow of goods, services, and capital across borders.
Therefore, by bridging the gap between informal and formal economies, the Digital Financial Inclusion programme will promote transparency, accountability, and good governance, laying the foundation for a thriving regional economy built on trust and cooperation.
As part of the deployment process, CBC is also working to develop robust regulatory frameworks and policy guidelines to govern the operation of the Digital Retail Payment platform. These frameworks ensure compliance with international standards, protect consumers' rights, and promote trust and confidence in digital financial services.
As CBC embarks on this transformative journey, collaboration and partnership will be key to overcoming challenges and maximising the socioeconomic impact of this initiative. Financial institutions and technology providers must collaborate to develop tailored solutions that address the unique needs and preferences of Comesa's diverse population.
As Comesa embarks on this transformative journey, let us seize this opportunity to actualise prosperity for all member states and build a brighter tomorrow for generations to come.
- The writer is the MD at National Bank of Kenya and an Advisory Committee Member of the Digital Financial Inclusion Programme at Comesa Business Council