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South Africa – Financial Sector Assessment Program : Technical Note – Financial Inclusion (English)

South Africa has made significant progress in expanding access to financial services for individuals, but active usage of digital financial services remains low. Approximately four in five South African adults report owning a bank account. A broader metric that includes access to regulated, non-bank financial services indicates that 91 percent of adults are ‘formally included.’ Both indicators have risen substantially in the past decade, but progress has slowed. The more than 3.5 million South African adults that remain financially excluded are disproportionately male, young, and live-in low-income households. Increased uptake of bank accounts has not translated to widespread use of digital financial services: for example, only one in three banked adults report using their account or making digital payments on a daily or weekly basis. Greater competition and innovation can improve the availability, affordability, convenience of digital financial services and facilitate their integration into the daily lives of South Africans. The financial services ecosystem is constrained by the limited role of non-banks in the provision of payment services and limitations on interoperability. The banking sector is investing significant resources in digitization and disruptive innovation has seen several ‘digital banks’ enter the market, although the reach of these new entrants remains relatively limited. However, there is lack of interoperability of mobile payment QR code-based solutions that are finding some traction in the market. Unlike many of its regional peers, South Africa does not currently have a regulatory framework in place for non-bank payment service providers (or e-money issuers). Proposed amendments to the National Payment Systems Act to provide a direct role for non-banks in the provision of payment services can help to address the gaps in usage of digital payments across income segments. International experience from China, India, and Kenya has demonstrated that non-banks can play a key role in addressing barriers to the greater use of digital financial services, including related to costs, physical access, and product design.




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Natarajan,Harish Randall,Douglas Reddy,Rekha

South Africa – Financial Sector Assessment Program : Technical Note – Financial Inclusion (English). Financial Sector Assessment Program (FSAP) Washington, D.C. : World Bank Group.