Digital Financial Inclusion Is Key For Resilient And Sustainable Growth For COMESA

In Africa, the Common Market for Eastern and Southern Africa (COMESA) stands out as a beacon of economic opportunity, encompassing a population of over 560 million people. As the largest trade bloc on the continent, COMESA holds immense potential for driving economic growth, fostering regional integration, and lifting millions out of poverty.

COMESA’s trade statistics paint a picture of immense opportunity coupled with significant challenges. While the region exported goods worth USD 205 billion and imported goods valued at USD 272 billion in 2022, it also faced a trade deficit of USD 67.5 billion. Furthermore, intra-COMESA trade, though substantial, remains below its true potential, with its exports and imports standing at USD 14.1 billion and USD 14.2 billion, respectively.

Despite the region’s economic potential, challenges persist in strengthening trade facilitation mechanisms to ensure sustainable value chains and seamless supply chains across borders.

As such, the COMESA Business Council (CBC) has embarked on a mission to implement the Digital Financial Inclusion program aimed at designing, developing, and deploying an integrated digital financial services infrastructure. One crucial step in this journey is the development and deployment of a Digital Retail Payment Platform by the COMESA Business Council (CBC). This initiative is further aimed at offering a transformative solution to enhance economic resilience and sustainability within COMESA. Leveraging digital technologies to expand access to financial services, particularly among Micro, Small, and Medium-sized Enterprises (MSMEs), women, and youth, will catalyze inclusive growth and empower marginalized communities across the region.

At its core, the Digital Financial Inclusion program addresses fundamental barriers that hinder economic participation and impede the flow of goods and services within COMESA. It seeks to provide low-cost, interoperable, real-time, and fraud-resistant financial services to enable MSMEs, often the backbone of COMESA’s economy, to access formal financial channels, manage their finances more effectively, and seize new business opportunities.

Moreover, by targeting women and youth who are disproportionately excluded from traditional financial systems, the Digital Financial Inclusion program seeks to promote gender equality and youth empowerment, unlocking untapped reservoirs of talent and innovation.

The benefits of digital financial inclusion extend far beyond individual entrepreneurs and businesses; they have the potential to drive broader economic transformation within COMESA. A robust digital financial infrastructure will facilitate seamless cross-border transactions, reducing transaction costs and enhancing the efficiency of supply chains, thereby promoting regional integration and boosting intra-COMESA trade.

Moreover, by fostering a conducive environment for entrepreneurship and innovation, digital financial inclusion nurtures a thriving ecosystem of startups and SMEs, driving job creation, economic diversification, and sustainable development across the region.

In the context of the Continental Free Trade Area (CFTA), of which COMESA is a vital part, digital financial inclusion assumes even greater significance. As Member States strive to harmonize trade policies and eliminate barriers to trade, a resilient digital financial infrastructure serves as a linchpin for facilitating the smooth flow of goods, services, and capital across borders. Therefore, by bridging the gap between informal and formal economies, the Digital Financial Inclusion program will promote transparency, accountability, and good governance, laying the foundation for a thriving regional economy built on trust and cooperation.

As part of the deployment process, CBC is also working to develop robust regulatory frameworks and policy guidelines to govern the operation of the Digital Retail Payment platform. These frameworks ensure compliance with international standards, protect consumers’ rights, and promote trust and confidence in digital financial services.

However, as CBC embarks on this transformative journey, collaboration and partnership will be key to overcoming challenges and maximizing the socioeconomic impact of this initiative. Stakeholders, including governments, must enact conducive regulatory frameworks that foster innovation, protect consumer rights, and ensure the integrity of digital financial systems. Financial institutions and technology providers must collaborate to develop tailored solutions that address the unique needs and preferences of COMESA’s diverse population. Civil society organizations and development partners must advocate for inclusive policies and provide support to vulnerable communities, ensuring that no one is left behind in the digital transformation.

As COMESA embarks on this transformative journey, let us seize this opportunity to actualize prosperity for all Member States and build a brighter tomorrow for generations to come.

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George Odhiambo is the Managing Director at National Bank and an Advisory Committee Member of the Digital Financial Inclusion Program at COMESA Business Council (CBC)