Financial Inclusion and Social Media
Financial inclusion is the availability and access to financial services and products in to the disadvantaged and low-income earners in society an affordable manner. (Center for Financial Inclusion) The opposite is financial exclusivity which means that only the rich and high income earners access financial services and products. Financial Inclusion drives development in several ways. Meanwhile, Africa is struggling to increase financial inclusion. At what point does social media and financial inclusion meet?
Social media has proven to be a fast means of spreading information. In tapping the unbanked and un-financially included in Africa, social media could prove instrumental. The major target for financial inclusion in Africa is mainly women and youth. Can social media reach them?
Seeking the Answers
The answer to this question lies in demographics that we get from the social media sites that are commonly used in Africa. We look to Twitter, Facebook and LinkedIn. Instagram is on a quick rise, as well as Snapchat. The average user on these platforms is between 16 – 45 years old. Instagram has a much younger age grouping using it. Snapchat shares the same demographic with Instagram, only with less penetration. The sad thing is that some platforms that would be included as social media sites such as WhatsApp cannot feature in this discussion. WhatsApp is a little personal due to the need for individual phone numbers. It is very unlikely that one can push a financial-inclusion-themed message on WhatsApp as it is currently set up. However, were we to make Whatsapp within the reach and ken of knowledge for women, their women groups’ meeting would start being held on Whatsapp.
A second factor that one has to consider is the reach of social media. While mobile telephony has penetrated well into Africa, the Smartphone has not been very much successful. The cost of the Smartphone is a prohibiting factor. It is a gap that needs to be closed. Many people who are low-income earners will not be able to afford a Smartphone, and thus will not be on social media. It means then that the financial inclusion message will not reach them.
Women in sub-Saharan Africa are more likely to not own a smartphone as well. The relative cost of the average mobile phone that falls within the reach of someone who can successfully navigate social media means that; by default, for one to be on social media using smartphone technology, they will most likely be having a bank account already. Already, a project in India quoted by the Omidyar Network has proven that financial inclusion on social media can be curtailed by something as little as hardware penetration and broadband speeds. This is despite Microsoft’s Bill Gates throwing his weight behind the project as opposed to the MPesa success story in Kenya.
However, having a bank account does not mean that you are financially included. In our definition of financial inclusion, we mentioned financial services. You may have a bank account and still not access financial services in a manner that qualifies you to fit into the number that can be called financially included. The services that are taken into factor include access to banking services (including savings and credit), loans and insurance services.
How Social Media comes in
By now, you think that social media is not useful in driving increased financial inclusion in Africa. That is not entirely the case. Social media could find very good use in;
- Assist collection of data in surveys
- Dispersal of information and policy updates
- Assessment of reach within the available demographical context
- Driving the financial inclusion debate
Two critical issues that determine the trend that financial inclusion will take in Africa are the examination of aspects of financial regulatory regime changes and their effects, and the need for Africa to be instrumental in taking the financial inclusion and monetary policy into mainstream consideration. Social media has the right demographic in age, and again has roles that it can play in these two aspects. Dispersal of information and driving discussion.
Financial inclusion is about getting the unbanked and those in informal settings to be in the banking and financial ecosystem. The importance of financial inclusion is that it helps with more data collection, hence better planning. Social media fits into the picture by assisting in some of the functions that need to be carried out for financial inclusion to be realized. We cannot glorify social media as a silver bullet that will solve the problem, but we should not also assume away the roles that it can play.
Additional reading on The AERC (African Economic Research Consortium) website. Article written on the sidelines of the AERC Financial Inclusion conference held in Nairobi, Kenya on 22nd March to 23rd March 2016.