In Africa, a massive 370 million people have no access to formal banking services. Traditional banks in Africa have worked hard to increase their user base in the past years but faced various challenges such as deficient infrastructure and financial illiteracy etc.
The people who are excluded from the formal economy rely on informal channels such as savings groups and microfinance institutions to avail their financial needs. These informal financial groups (IFGs) play a critical part in providing loans and savings facilities in the African countries, including Tanzania, South Africa, Kenya and more. They are called as Savings and Credit Cooperatives (SACCOs) in Tanzania, Stokvels in South Africa, and different names in different countries.
Financial inclusion remains a persistent concern in Africa. As per an article by Beck and Cull (2015), African banking systems are less inclusive than those outside Africa. To boost financial inclusion in Africa and enable collaboration with formal finance, Wakandi has introduced a unique financial inclusion system called Credit Association Management System (CAMS) aimed at thousands of IFGs in Africa which still depend on cash and manual processes for their daily operations. CAMS can help solve the problem of financial inclusion by connecting millions of people in Africa to the formal banking services with the help of technology.
How CAMS can boost financial inclusion?
CAMS aims to connect the informal financial sector with the banking sector by creating a hub of accurate, traceable, and shareable data. Now, what does that mean? When people in Africa will put their savings into a savings group or avail a loan for business through CAMS, the system will create a record of transactions which will be handled by the group admins. This way, every transaction made by a member will be captured in a digital record, which was very difficult with cash. This record can be easily shared with banks and financial institutions. It will bring immense benefits and innovation opportunities to banks, financial institutions and savings groups.
Better data sharing – Savings groups can easily manage their records and accounts. Every transaction will be digitally recorded and those records will be created automatically. They can easily be shared with banks and financial institutions for better innovation. Moreover, the records will also be safe from human errors and no transaction will be missed out.
The convenience of savings and loans – As most financial groups still rely on cash as the mode of transaction, CAMS can help you keep savings and avail loans digitally with the help of your mobile money account. Any member can use their wallet to transfer money and avail loans through their mobile in seconds, taking a step towards financial inclusion.
Newer products and services – This shared record combined with better analysis will also help banks to create products and services that can help millions of people in Africa, right from buying a bike or building a business from scratch.
Availability of banking services – A digital record shared with banks can help them gain better information about you and offer relevant services when required. In a situation when you need a big loan, a bank can easily perform a credit check based on the information they have and grant you a loan.
Less risk of frauds and thefts – Using digital channels to make transactions instead of cash comes with a benefit of reduced risk of fraud and thefts.
CAMS is developed with the local community
We, at Wakandi, aim to reduce financial exclusion in African societies by providing digital solutions to make daily payments. To achieve our aim, we have developed CAMS as a product that can provide solutions to the real-world problems of the people in Africa.
We conducted feasibility studies in South Africa. The feasibility studies included telephonic sessions and personal interviews that helped us to understand how savings groups in South Africa operate and what challenges they face in daily operations.
Read more about the feasibility study here.
We conducted field trips to meet regulatory authorities and SACCOs in Tanzania. The Wakandi team conducted field trips in Tanzania to meet regulatory authorities like Tanzania Cooperative Development Commission (TCDC), Co-operative Audit And Supervision Corporation (COASCO), and various SACCOs in the town. The aim of the trip was to promote financial inclusion and demonstrate the capabilities of their innovative solution.
Read more about our field trip in Tanzania.
Enabling better collaboration
With CAMS, we can create an all-included economy where formal and informal financial organizations can collaborate and build financial services. The economy will be driven by technology, financial data, cashless transactions, and most importantly, innovation.