Over the past decade, economic growth in the SADC region has been more sluggish than leaders have hoped for. In 2018, the region set a GDP growth target of 7%, but only achieved 3.1%. Given the region’s high youth unemployment rate, the need for the kind of growth that creates wealth and jobs is an urgent one. The SADC countries’ greatest asset are their people. So where can we make the biggest difference, quickly? 

The solution could be in our hands – quite literally. The mobile phones that so many SADC region citizens use to connect with friends and family and to keep up with what’s happening in the world, could also be a tool to increase participation in the formal money economy. A region wide mobile payments scheme with pan-African and international interoperability owned and managed by local and regional financial institutions could be a game changer.  The Bluecode platform offers just that.

A locally owned and managed scheme with global interoperable capabilities, offers SADC a real alternative to foreign legacy card schemes.  Mobile payments offer a real alternative to cash, cards and P2P, giving consumers convenience and offering from tier 1 retail to MSMEs a friction free lower cost payment with the kind of value that is needed to grow their business.  Moreover a digital payment provides digital transparency and opens the opportunity for banks to collateralize cash flow and customer data to reduce dependency on more tangible collateral traditionally used to mitigate credit risk.  A mobile scheme could be an economic catalyst that helps lift millions out of poverty.   Here’s why.

Financial inclusion

Central banks across the region have prioritized the promotion of financial inclusion though increasing the availability of relevant products, channels and services adapted to local market conditions. Simply, more citizens need to be able to make and receive payments for goods and services, and to create wealth, jobs and the prosperity that results from having access to quality financial services. Every farmer, trader, artisan and entrepreneur needs the ability to be able to pay suppliers and receive payments by customers without expensive infrastructure and unaffordable overheads, or the challenges of handling cash. 

But historically, there have been barriers to this. Card payments are expensive, dependent legacy systems, foreign rules and cumbersome point of sale systems.  Getting cards, pay points ATMs in the right place and time is a very large investment in time, money and effort.  Many fintech start-ups claim to address these challenges but they rely on a link to a card, are restricted to particular provider or depend on smartphones that will remain out of reach of the majority for some for years to come.  
Now new threats are arising in the form of global Bigtech corporates whose interests serve their shareholders, not African national and regional development goals. Governments and financial institutions have spent decades growing their businesses in local communities, investing in understanding their clients, and deepening access to finance are now risk serious disruption from Bigtech and other Fintech who aim to capture the consumer’s transactional banking and harvesting data, which results in in the disintermediation of consumers from their financial institutions.  
Consumer credit and transactional banking is the profitable target of fintech and Bigtech, not intermediation.  Low cost internet based transitional banking and consumer micro-credit is a contribution, but can have unintended consequences.  Financial markets need to have both the capacity to meet transactional banking consumer demand, but also the capacity to mobilize domestic savings and intermediate these assets by investing in small enterprise.  
The solution is already here
Fortunately, the solution is already available. It’s a mobile payment scheme that is simple, low cost and works across both smartphones and feature phones. 
The overarching objective of a mobile payment scheme is to facilitate the clearing and settlement of mobile payments – a scheme, to offer banks and their customers secure affordable and accessible merchant payments and services to promote competition for business in the mass market. The Bluecode platform provides for a mobile payment scheme to support consumer payments and MSMES for trading, artisanal and agricultural enterprise.  This is essential support to financial stability and deepening of financial inclusion for local economic development.
The scheme participants determine the interbank rules.  No customer data is involved in the transaction.  Instead, the system relies on authentication codes and all customer data stays with the bank. The platform is interoperable and can move across all types of devices. 
In particular, this scheme can: 
Promote financial-sector development with an efficient transaction payment that will increase consumer confidence in electronic payments as an alternative to cash.
Facilitate a more equitable distribution of financial services for urban, peri-urban and rural business and consumers.
Support financial stability by mitigating settlement risk and including more financial institutions in the payments ecosystem, facilitating the smooth flow of liquidity.
Promote higher value, quality and diverse financial products and services through transaction accounts as to make and receive payments and store value.
Increase the availability of products, channels and other enablers of financial inclusion.

Including every citizen in the formal economy by making it easy to make and receive payments is possible using the phones that people are already relying on for so many other aspects of their lives. The citizens of the SADC region are smart and resourceful. Giving them one simple tool could be the catalyst for the prosperity we envision for the future. 

Murray Gardiner is director of Bluecode Africa.  He has been at the forefront of financial inclusion in Africa for more than 30 years. 
For more information, please visit: https://bluecodeafrica.com/en/