Digital Mobile Wallets (DMW) as a Catalyst for Financial Inclusion?

A UNDP Accelerator Lab Multi-Country Team (Cameroon, South Sudan, and Zambia) Adventure!

January 17, 2025
an ai image of an African woman texting on a cell phone

Blog by: Salome Nakazwe, Head of Solutions Mapping, UNDP Zambia, Anna Ojong, Head of Solutions Mapping, UNDP Cameroon, Jacqueline Aringu, Head of Experimentation, UNDP South Sudan

Adobe Stock

In diverse and dynamic countries like Cameroon, South Sudan and Zambia, financial inclusion has been a long pressing need. Many residents lack access to standard financial services because of inadequate, poor infrastructure, pervasive poverty or ongoing violence, especially in rural regions. However, the emergence of digital mobile wallets is opening new avenues for bridging this divide, providing a workable remedy for the financial exclusion that has for so long impeded personal financial empowerment and economic progress, particularly in underserved communities and amongst marginalized populations.

Under the Accelerator Labs (AccLabs) operating in 90 UNDP country offices, 23 Labs implemented Research and Development (R&D) actions on Digital Financial Inclusions (DFI). As financial inclusion opportunities arise, it is a niche for UNDP to efficiently support communities in need and bridge inequality gaps. The 23 Labs have taken the lead to explore how digital mobile wallets (DMW) could be enhanced to increase inclusion particularly for the left-behind communities as an initiative under the Lab’s R&D activities. DMW commonly referred to as “Mobile Money” have been globally recognized for the capability to build stronger and more resilient economies across the world. Financial inclusion is a term commonly used in development context today to mean “access to and effective use of a range of appropriate financial services.” As the world continues to navigate the uncertainties caused by complex 21st century development challenges, terms such as inclusion, digitalization and innovation have become common expressions for development actors and governments. These concepts are integrated into development programming and country development strategies to help communities address diverse forms and levels of vulnerability.

The use of DMW today has taken over the financial landscape, enhancing accessibility and convenience in the exchange of goods and services, as well as carrying out other financial transactions. Paying for services, bills and goods, including savings and loan opportunities are now facilitated by the digital wallet technologies. This change in dynamic within the financial space has brought about a ripple effect, with a huge impact on lives and livelihoods. In sub-Saharan Africa, mobile money contributions to the continent’s GDP by the end of 2022 had reached more than US$150 billion, equivalent to an increase in GDP of about 3.7%. As financial inclusion opportunities arise, it is a niche for UNDP to efficiently support communities in need and bridge inequality gaps. 

a group of people standing around large papers on the floor - group work

Digital Financial Inclusion Rave Workshop

UNDP Kenya

Three UNDP Accelerator Lab team members from CameroonSouth Sudan and Zambia teamed up to explore the impact of DMWs on financial inclusion, with a focus on informal small businesses. The team set out to define the purpose and scope to understand financial inclusion from different perspectives such as mobile phone ownership, usage of mobile wallets, access to mobile networks, internet access, geographic location, age and gender. 

 

The who, what and why of digital mobile wallets in Cameroon, South Sudan and Zambia

Taking a deep dive into our specific Country realities, we were triggered by the learning question: financial inclusion for who and why? We looked back at the story of Imelda, a cross- border trader in Zambia, who owned a thriving grocery store in the border town of Livingstone. However, when COVID-19 hit, her business was threatened. Saving became a nightmare, as cash flow was limited, movement of goods and services were affected and almost impossible to sustain the business. In such a situation, what kind of solution helped Imelda build back better? What would have become of Imelda if her business shut down completely? Let’s imagine such a scenario: how would Imelda deal with family emergencies and other necessities? What would you do if you were in her shoes? 

a woman and man standing in front of a store

Cross-border grocery store owners in Zambia

Vanessa Wematu Akibate/UNDP Zambia

It was at that point where our learning journey unpacked the relevance of DMW as a pivotal tool for bridging the gap between underserved populations and traditional banking systems. This was particularly visible as we discussed some of our previous UNDP Accelerator Labs’ specific initiatives: 

  • village Savers App developed by a Zambian start-up, to digitize the operations of self-help saving groups. The initiative was tested with cross-border traders like Imelda helping them to recoup their resources to keep their businesses running. The App demonstrated the ability of a mobile application to improve saving efficiency and how groups managed their finances. For the cross-border traders struggling to recover from the impact of COVID-19, such a solution was life-changing.  It created the platform for them to bounce back as the access to digital mobile wallets enhanced saving opportunities for group members and provided them an opportunity to access micro credits easily.
  • In Cameroon, thanks to UNDP’s partnership in 2021 with the YUP mobile payment solution, 500 women and youth whose businesses and SMEs had been affected by COVID-19 received financial support through a cash for work intervention, to help them build back better. This intervention brought about a positive impact on livelihoods, with opportunities to create self-help saving groups, the emergence of cooperative businesses, and strengthened social cohesion particularly amongst women groups who used the intervention as an opportunity to come together, share ideas and learn from each other’s experiences. 
  • On the other hand, in South Sudan, an experiment which digitized the process of the analog traditional savings box - “the sanduk” - proved significant, in terms of money safety, accessing credit, reduced interest rates, and enhancing financial inclusion. The experiment demonstrated that DMW could play a critical role in improving financial services in the hard to access rural areas. 

Meet Bakhita Ghedai, a dynamic cross-border trader who operates a tea kiosk and provides lodging services to cross border traders and one of the contributors to the sanduk experiment: 

“The experiment has been a game-changer for me in many ways. First, I am now able to order for my goods at the comfort of my house, this has not only reduced on my transport cost but also the safety of my money because the road we use to Aweil is sometimes not safe when moving with cash. Secondly, it has enabled me to access loans at lower interest, which I used to increase my hotel capacity. I now have more rooms, which means more business for me. My fellow traders can now have a comfortable and affordable place to stay while conducting their business here at Warawar Peace Market.”

So, to say, digital mobile wallets have remained a game changer for impacting the lives of persons in vulnerable communities. Its accessibility, ease of use, time management opportunities, and other advantages DMW bring, have only positioned the mobile payment solution as an opportunity to enhance financial support and financial inclusion interventions, particularly for development and humanitarian actors. 

two women standing by a tomato stand

An informal business owner selling her produce

Tchoffo Serge/UNDP Cameroon Accelerator Lab

Exploring the impact of DMW on informal businesses in Cameroon, South Sudan and Zambia revealed the advantage created by the introduction of digitized money systems. The team set out to develop insights and learnings on how digital mobile wallet (DMW) usage catalyses financial inclusion in Cameroon, South Sudan and Zambia. The R&D focused on assessing the current state of mobile wallet usage and financial inclusion, identifying key regional and demographic differences in adoption rates, highlighting successful strategies in promoting mobile financial inclusion — particularly regarding rural-urban divides and gender disparities — and proposing policy recommendations to further financial inclusion in all three countries. 

To accomplish this task, a rigorous exercise to select 10 UN Online Volunteers was conducted. The who helped identify a team of 10 online volunteers living in different parts of the world that included Canada, Cameroon, France, Iran, South Sudan, Zambia, and Zimbabwe each bringing in unique perspectives to the learning. Each team member came with a diverse set of specializations that helped with the assignment that included data science, statistics, computer science, communications, and research skills. For a systematic understanding of how DMW connects to financial inclusion for the target countries, a baseline data was developed, leveraging local intelligence on key areas of interest from 316 survey respondents out of which 42% were female and 57% male. 

Variations were noted across age groups, rural and urban regions, levels of education as well as a those in formal or informal employment. One key factor that came up was how availability of internet services affected respondents’ access to digital services. For instance, Zambia, with a high internet penetration had more respondents (45.9%) using different digital services, while South Sudan had less (16.1%), particularly women who accounted for only 23% of the country’s total respondents. The countries’ level of infrastructure development was noted as a contributing factor. Cameroon with a response rate of 38% was found to have an established financial service sector, and Zambia had a diversified market that saw mobile companies and banks competing for the market share, while South Sudan, identified as being in the early stages of mobile money penetration, required substantial investment and concerted efforts to increase literacy and accessibility. 

However, across the three countries, similar challenges resonated among the respondents, such as network issues. This was seen to discourage users from fully integrating mobile money into their daily financial activities, which could be a hindrance to widespread adoption. It is worthwhile to note observations raised by respondents on the areas of improvement which was the need for infrastructure development. Other proposed improvements included internet and transaction cost reductions, security enhancements and service improvements.

Key takeaways from the learning journey

This joint country team effort was an eye opener, not just for policy and decision makers, but for all development actors. The interesting and innovative trends such as the emergence of new and unusual partnerships within the DMW space, new actors flooding the financial landscape, development and humanitarian actors leveraging local fit-for-purpose designed solutions for the benefit of the consumer and vulnerable communities are truly an indication that the world is moving so fast, and we need to move as fast as possible to catch up with today’s uncertainties.

We invite you to consult  our presentation during this year’s financial inclusion week 10th anniversary, and also read our report to find some insights, triggers and trends on how digital mobile wallets relate or connect to financial inclusion for Cameroon, South Sudan and Zambia. 

Maintaining the usability of DMW is essential for promoting financial inclusion, but they are just one of many digital solutions addressing today’s complex challenges. To ensure the sustainability of these solutions, we must consider their adaptability and suitability for consumers, alongside the necessary infrastructure like electricity and internet. Financial inclusion also requires financial education and the development of tailored solutions, programs, and strategies to meet diverse needs.

We would be happy to hear how you are designing solutions that suit the needs of vulnerable populations or hard to reach communities for a sustainable future where no one is left behind!