The African Development Bank (AfDB) and its partners have launched the Africa Digital Financial Inclusion (ADFI) facility, designed to aid safety and expansion of digital financial transactions in Africa.

A regional multilateral development bank that aims to combat poverty and improve living conditions, the AfDB was set up in 1964 and has 80 member countries. It is made up of three entities: The African Development Bank, the African Development Fund and the Nigeria Trust Fund.

The new fund, launched at the bank’s annual meetings in Malabo, Equatorial Guinea, is supported by the Bill & Melinda Gates Foundation, the Agence Française de Développement (AFD) and the Government of Luxembourg, as initial contributors.

Four pillars

The ADFI’s goal is to ensure that at least 320 million more Africans, of which nearly 60% are women, have access to digital financial services. The fund will deploy US$100 million in grants and US$300 million in the form of debt from the Bank’s ordinary capital resources by 2030, to scale up electronic financial services for low-income communities.

“We believe that with the right investments in innovation and smart digital growth, the obstacles to achieving financial inclusion and greater economic opportunity for all will be overcome,” said AfDB president Akinwunmi Adesina.

The initiative is aligned to four pillars; infrastructure, including digital and interoperable payment systems; digital products and innovation; policy and regulatory reform and harmonisation; and capacity building. It will help to close the transaction gender gap between men and women.

Between 2010 and 2015 Africa saw double-digit growth in mobile phone ownership, triggering a surge in innovative digital tools and services across the continent. Yet, the benefits are not shared equally and only an estimated 43% of adults across Africa have a banking account.

“Financial inclusion, achieved through digital financial service models, is simultaneously a powerful anti-poverty strategy and a catalyst of sustainable economic development for national and regional economies,” said Michael Wiegand, director of the financial services for the poor programme at the Bill & Melinda Gates Foundation.

First project

ADFI’s opening project, which will be a pilot for the facility, is a $11.3 million grant from the Bill & Melinda Gates Foundation to the Bank and the Central Bank of West African States, which serve eight countries: Benin, Burkina Faso, Guinea-Bissau, Ivory Coast (Côte d’Ivoire), Mali, Niger, Senegal and Togo.

The grant will create an interoperable digital payment system for consumers to send and receive money between mobile wallets, and from these wallets to other digital and bank accounts.

“With ADFI, we are convinced that our joint efforts can contribute efficiently to bring down the barriers that still undermine the full potential of digital finance in Africa. said Sébastien Minot, AFD’s deputy head for Africa.

“It will enhance the delivery of quality and responsible digital financial services to the underserved, a cornerstone to inclusive and sustainable financial systems. AFD welcomes the specific attention that will be given to women’s digital financial inclusion in the evaluation of the projects to be supported.”

The ADFI will work with banks and non-bank financial institutions, mobile network operators, remittance and payment service providers, fintech companies, government ministries, regulatory bodies as well as regional economic organisations.