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Financial Inclusion in South Africa: The Rise of Mobile Money [2023]

Financial Inclusion in South Africa: The Challenge and the Solution

Drawing with a hand holding money and written Financial inclusion on top

Table of contents

What is Financial inclusion and why it is important?

Financial inclusion refers to the availability and accessibility of financial services to individuals and businesses, particularly those who are marginalized or excluded from traditional financial systems. It aims to ensure that everyone, regardless of their income level, geographic location, or social status, has access to essential financial services such as banking, credit, insurance, and savings.

Financial inclusion is essential for promoting economic growth, reducing poverty, and improving the overall well-being of people and communities. When people have access to financial services, they can save money, invest in their future, and start or grow a business. This can lead to increased income and employment opportunities, better living standards, and more significant economic development.

However, many people around the world, particularly in developing countries, are excluded from formal financial systems. They may not have access to bank accounts, credit, insurance, or savings services, leaving them vulnerable to financial shocks and limiting their economic opportunities. This exclusion can perpetuate a cycle of poverty, particularly for women and marginalized groups who may face additional barriers to accessing financial services.

The Issue of Financial Exclusion in South Africa

South African poor disctrict township of small shacks
Soweto township in Johannesburg

Banking is a crucial aspect of financial inclusion as it provides individuals with the means to save and access credit. Although it is considered, that already around 85% of South Africans have a bank account, half of those accounts are dormant or used as a mailbox - just to receive money and for cash withdrawal, without understanding or using the benefits or the potential of advanced financial services. This lack of access to banking services can be detrimental to economic growth and development as it limits individuals' ability to save and invest in their future.

The Role of Mobile Money and Mobile Banking

Currently, the most straightforward way to promote financial inclusion is through mobile banking and mobile money services. These services allow individuals to conduct financial transactions without the need for traditional branch operations or internet baking services. This can be especially beneficial for individuals living in rural areas where financial access to physical bank branches may be limited.

Mobile banking services in South Africa are provided by various financial institutions, including traditional banks and mobile network operators. These digital financial services enable users to access banking services such as depositing and withdrawing money, paying bills, and transferring money to other accounts or individuals. Mobile banking is convenient and accessible as it can be accessed through a mobile phone, which is widely used in South Africa.

Mobile money is another technology that is being used to improve digital financial inclusion in South Africa. Mobile money allows users to store, send, and receive money through their mobile phones. This service is particularly useful for those who do not have access to formal banking services. In the past mobile money was usually provided by mobile network operators in partnership with financial institutions, but now more Fintech companies are entering that area by providing even better value propositions and a wider selection of services.

Advantages of mobile financial services

Two young African people holding mobile phones and transacting with mobile money
Mobile money transaction between friends

Mobile banking and mobile money services have several advantages over traditional banking services. These advantages include:

  • Convenience: Mobile banking and mobile money services can be accessed from anywhere, at any time, as long as there is a mobile network signal.

  • Affordability: Mobile banking and mobile money services are generally cheaper than traditional banking services, making them more accessible to lower-income individuals.

  • Security: Mobile banking and mobile money services use secure technology to protect users' transactions and personal information.

  • Accessibility: Mobile banking and mobile money digital financial services can be accessed by individuals who may not have access to traditional banking services, such as those living in rural areas or with disabilities.

Challenges to the Adoption

Despite the benefits of mobile banking and mobile money, there are still challenges to their adoption in South Africa. One of the challenges is the lack of awareness and understanding of these services among potential users. Many people may not know how to use these services or may not trust them, which can hinder adoption.

Another challenge is the lack of interoperability between different mobile money and mobile banking services. This means that users may not be able to send money to someone who uses a different mobile money or mobile banking service, which can limit the usefulness of these services.

The Importance of Financial Education

Financial education can play a vital role in promoting financial inclusion in South Africa. Financial education programs can help individuals understand how to use mobile banking and mobile money services and how to manage their finances effectively. Financial education can also help to build trust in these services and increase the adoption of mobile banking and mobile money services. By providing education on financial concepts and skills, individuals can make more informed financial decisions and take advantage of the benefits of these services.

Financial education can also help to address the issue of financial literacy in South Africa. According to a survey by the Organisation for Economic Co-operation and Development (OECD), only 51% of adults in South Africa have a basic level of financial literacy. This lack of financial literacy can lead to individuals making poor financial decisions and being unable to take advantage of financial opportunities.

By providing financial education, individuals can learn how to budget, save, and invest in their future. They can also learn about financial products and services, including mobile banking and mobile money, and how to use them effectively. Financial education can be provided through various channels, including schools, community organizations, and financial institutions.

The interesting part is that the common literacy percentage is quite high. It's considered that more than 95% of South Africans have at least a basic literacy understanding.

We have already covered some questions about Financial literacy in our Blog post.

Financial Education Programs in South Africa

The South African government has recognized the importance of financial education in promoting financial inclusion and has implemented various programs to increase financial literacy among the population. These programs aim to provide individuals with the knowledge and skills necessary to effectively manage their finances, use financial services, and make informed financial decisions.

One such program is the National Strategy for Financial Literacy (NSFL) developed by the Financial Sector Conduct Authority (FSCA). The NSFL aims to improve financial literacy in South Africa by providing education and awareness programs to individuals, especially those who are financially excluded.

Another program is the Financial Sector Charter (FSC), which promotes financial inclusion and access to financial services for historically disadvantaged individuals. The FSC also requires financial institutions to provide financial education programs to their clients.

Impact on Economic Growth and Development

Financial inclusion can have a significant impact on economic growth and development in South Africa. By providing individuals with access to financial services, financial inclusion can help to reduce poverty and inequality, increase savings and investment, and promote entrepreneurship and job creation.

In addition, financial inclusion can also have positive effects on financial stability and consumer protection. By ensuring that individuals have access to secure and regulated financial services, financial inclusion can help to prevent financial crises and protect consumers from fraud and other forms of financial exploitation.


Financial inclusion is an essential tool for reducing poverty and inequality and promoting economic growth and development in South Africa. Mobile banking and mobile money services have the potential to expand access to basic financial services, especially for individuals living in rural areas or who are financially excluded.

However, the adoption of these services still faces challenges such as a lack of awareness and interoperability between different services. Financial education programs can help to address these challenges and increase the adoption of these services.

Overall, the South African government and financial institutions must continue to work towards expanding access to financial services and promoting financial inclusion to realize the full potential of a financially inclusive society.



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