New payment digitization agenda for Africa launched

• Report suggests direct correlation between workers payment digitization and  increase in economic recovery
• African leaders advocate complete digitization of workers’ payment

Wale Ameen
Online Editor

Digital payment for workers speeds up financial inclusion for the population, stimulates domestic production and boosts business competitiveness while increasing financial system liquidity. So says a new report on digitization in Africa launched by the Senegalese government with support from the Better Than Cash Alliance (United Nations), the World Bank and the National Agency of Statistics and Demography of Senegal.

The report also advocates that digital payments with health insurance benefits offers an excellent opportunity for social inclusion, formalization and financial innovation with a survey revealing that as much as 77% of temporary workers would be willing to receive their wages digitally if this gives them access to health insurance.

According to the report, three obstacles have been found to limit the growth of payment digitization in Africa: the size of the informal sector, which sometimes comes to as much as 90% of the economy; the historically low financial inclusion rate, and most importantly, the fact that as much as 21% of African workers receive a wage which keeps them below the poverty level. So says a new report on the digitization of payments in Africa.

The report however notes that financial inclusion has surged significantly since 2010 with the arrival of electronic money issuers and fintech. According to the report, an example is Senegal’s largest employer,  Compagnie Sucrière Sénégalaise, that has successfully  digitized payment of about 8,000 of its workers via a partnership with local fintech.

“We wanted to digitize payments without using the banking system, which isn’t suited to some populations,” noted Claude Fizaine, the company’s Secretary General, in an interview with an African media outlet.

“For employers, the benefits of digitizing payments include avoiding the constraints of managing large amounts of cash, and all the risks that distribution can involve. It also makes it possible to offer employees tools tailored to their financial and family situations, which can only have a positive impact on their personal and professional lives,” he added.

Championing this move in support of digital payments for workers  are the duo of Senegalese President Macky Sall and H.M. Queen Maxima of the Netherlands who also serves as UN Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA).

Both have launched an appeal to fellow leaders, the private sector and civil society to:  “use this report to ensure digital payments are at the center of a sustainable and fair economic recovery. We look forward to jointly providing leadership on this agenda to achieve an inclusive and digitally enabled recovery,” the two leaders added.

In support of the digitization of workers payment, the President of Burkina Faso, Roch Marc Christian Kabore also decreed, in late 2020, the digitization of payments for workers in the administration of Burkina Faso.

The report notes that when the COVID crisis emerged, the West African Economic and Monetary Union (WAEMU) and the Central Bank of West African States (BCEAO) took decisions aimed at reducing the circulation of cash in 8 countries. These actions have had tangible impacts which are beginning to change the lives of workers and companies.

The report concludes that the efforts of WAEMU towards the digitization of African states should therefore be an inspiration for the rest of Africa with the examples of Senegal and its neighbours reinforcing the ILO’s global agenda that advocates payments for workers as a new global standard for promoting decent work.