Cash has been a primary mode of payment in Africa. It accounts for more than 80% of retail transactions conducted in African countries. One study shows that more than 90 percent of retail transactions in parts of Kenya remain cash-based. However, the cash situation in Africa has witnessed substantial changes in recent years owing to the emergence of mobile money. In Tanzania, the mobile money penetration reached 53% with more than 29M mobile money subscriptions in the year 2020.
With the power of innovation, payments in Africa are becoming more secure and hassle-free. People across the continent have started using mobile wallets to send and receive money online. Today, mobile money has become an integral part of everything we do, be it payments, loans, or investments.
SACCOS have been playing a prominent role in mobilizing savings and loans for millions of people, especially the unbanked. In Kenya, they contribute significantly to various needs such as housing security and agriculture. Moreover, a notable percentage of women rely on cooperative societies to meet their financial needs. They have shown themselves to be highly innovative and responsive to the changing market needs. However, innovation is still a key area that poses challenges for them. According to a Financial Sector Deepening Trust (FSDT) survey report, people consider skills gap and innovation as the main areas that pose a challenge for them.
Lack of innovation and challenges for SACCOS
The lack of innovation can bring a plethora of challenges to members and admins. These challenges can hinder the overall growth of SACCOS in this rapidly rising market.
Many SACCOS still rely on cash and manual efforts in day-to-day operations. Paper-based documents and physical meetings are still the norm. Lacking innovation and expertise are cited as amongst the top reasons why financial institutions fail to offer better services to their consumers. This may prevent them from meeting the growth levels they aim to achieve.
Another outcome of lack of innovation for SACCOS could be ‘lost competitive advantage’. With the rising dependence on technology, they must adopt new technologies quickly or they may lose their growth prospects. Today, it is quite important for SACCOS to identify the changing needs and innovate their products to meet them. Innovation in service delivery, offerings, and overall processes can help them meet user demands and maintain a strong competitive advantage in the market.
Innovation is the way forward for any business seeking to live a longer life in the market. For SACCOS, it can help them to offer better services and reduce costs. Moreover, it will enable them to explore newer technologies and digital systems for better growth.