Leveraging data for financial inclusion in developing economies

By Cynthia Olga Kiconco Muheki

IEEE Internet Policy Newsletter, September 2018

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It is undeniable that over the past decade, the proliferation of the internet and ubiquity of mobile technology have drastically led to the socio-economic transformation of the African continent. Innovative business models have improved service delivery, such as solar pay as you go solutions[1] and lifted the rural poor out of abject poverty as mobile money has been used as a conduit to drive financial inclusion. Global System for Mobile Communications Association (GSMA), argues that for every 10 percent increase in phone penetration in poor countries, productivity improves by more than four percentage points, and that a doubling in mobile-data usage increases annual growth in gross domestic product (GDP) per person by half a percentage point[1].

Socio-economic challenges

As the financial sector continues to take shape, there are a still a number of challenges to be addressed such poor infrastructure; social services such as education, energy access; the cultural setup; a significant informal or shadow economy that is neither taxed nor monitored by the government; low financial literacy and the digital divide.

  • Limited access to formal financial services: Agriculture is primarily the backbone of most African economies but still remains the least invested sector for financial institutions. The sector is almost entirely dependent on smallholder famers, of whom the majority are women and youth, living in rural areas and are “unbanked.”  Over 90 percent of sub-Saharan Africa’s 48 million smallholder farmers lack access to formal credit[2]. The outstanding reasons for this low uptake are lack of available data or credit history and collateral security to assess one’s credit worthiness. The ‘one-size-fits-all’ Know Your Customer (KYC) requirements for a new account has stagnated the inclusion of last mile customers as they do not reflect their reality. This further reinforces the vicious cycle of poverty as without credit the productivity and income levels of the farmers will remain
  • Heavy dependence on the informal sector: According to the Global Partnership for Financial Inclusion, the standard measure of financial inclusion is having an account for payments and savings at a formal financial institution or through a mobile money provider. However, the absence of formal financial services customized to the rural poor’s needs has led to heavy dependence on the informal sector which has proven to be extremely inefficient and often dangerous. For example, the National Financial Inclusion Strategy of Uganda reported that in 2015, 16 percent of the Ugandan population had access to a bank point whereas 54 percent had a mobile money point of service within a kilometre from home and in rural areas, the penetration rate of commercial banks stands at 30 percent[4].
  • The gender gap: Despite being the financial managers of the home, women are still held back by the deep patriarchal composition and discriminatory laws of African societies. The men primarily own assets and property that would be used as collateral to access credit from formal financial institutions, and in most circumstances the women need permission from their husbands to partake in any such activities. Even though research shows that women are more likely to pay back loans [5], a lack of credit history and collateral result in continuous denial of basic financial services. 
  • Low levels of financial literacy: Knowledge is power. Unfortunately, most Micro, Small and Medium Enterprises (MSMEs), women, youth, and rural populations present significantly low proficiency of financial literacy, essential business management skills, and business records as well as awareness of existing financial products due to lower levels of education and work experience.

An increasing number of social innovators have identified some of these mentioned challenges as opportunities to change the lives of the greater African population and create new value for incumbent actors. According to a McKinsey report, an additional $300 billion can be supplemented to the continent’s GDP by 2025, if industry and governments can fully leverage the power of the internet[6].

Data driven innovations
The number of mobile phone subscribers within Sub Saharan Africa in 2012 stood at 650 million—more than half the total population in the continent— and it has exponentially grown since then[7]. Currently, there is an emerging trend of applying big data analytics and behavioural economics to create alternative credit scoring models to lessen the barriers of access to formal financial services. “Big data” generated by an individual’s digital footprint from mobile activities, such as mobile money transactions, frequency of loading airtime and duration of phone calls, show behavioral patterns to assess one’s creditworthiness and ability to pay back loans.

In Uganda, SMEs make up over 70 percent of the economy and contribute a sizable portion to national GDP but are still stagnated by limited access to credit. Swipe2Pay uses mobile phone data and business performance tools to help MSMEs access these facilities from banks and Microfinances (MFIs) as well as transforms the former into a point of sale register (POS) in real time[8].

In the agriculture sector, FarmDrive in Kenya is helping farmers create feasible credit profiles from satellite images, weather forecasts, produce buyers, agricultural dealers, and the farmers themselves. These are used to access a number of services from service providers within the agriculture value chain, such as loans from banks, insurance for protection against risks affiliated to the sector, and quality farm inputs e.g., machinery, tools, and pesticides from suppliers[9].

Furthermore, massive pools of ‘gender disaggregated data’ has enabled financial institutions and service providers to better understand the unique barriers faced by their customers, especially women and youth, and how to customize product and service offerings to best suit their needs. For example, in Nigeria, only 38 percent of adult women have access to formal financial services compared to 47 percent of the men. Diamond Bank has recognized the market potential of increasing its female client base who tend to be younger, less educated, and generally have lower levels of income than men. The bank used consumer insights to design a new and innovative savings product “BETA” that incorporates the convenience of informal financial services with the security of formal saving—instant account opening and omitting the tedious KYC requirements. BETA has no minimum balance requirement and customers’ biodata is captured through a mobile phone application, allowing clients to receive their account information via text messages and starter packs with credit or debit cards.

In conclusion, financial technology start-ups commonly referred to as fintechs have given the traditional banking and financial services sector ‘a run for their money’ by addressing some of these limitations through extending their offerings to the underserved markets on the continent while offering a myriad of low cost amenities at their customers’ convenience. Additionally, these agile fintechs are creating new value for some incumbent actors—financial institutions to remain relevant in the digital age by co-creating solutions for better service delivery, improving internal operational efficiency as they provide compliance and regulatory support for the innovators. California-based mobile-banking innovator and executive chairman of Obopay, Carol Realini says, “Africa is the Silicon Valley of banking. The future of banking is being defined here… It’s going to change the world.”[11]


[1] LLP, Deloitte, “What is the impact of mobile telephony on economic growth?, ” November 2012. [Online]. Available: https://www.gsma.com/publicpolicy/wp-content/uploads/2012/11/gsma-deloitte-impact-mobile-telephony-economic-growth.pdf.

[2] E. w. borders, “How data analytics is closing a $450 billion finance gap for smallholder Kenyan farmers, ” [Online]. Available: https://www.ewb.ca/en/venture/farmdrive/.

[3] African Development Bank Group, “Credit constraints and farm productivity: Micro-level evidence from smallholder farmers in Ethiopia, ” January 2017. [Online]. Available: https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/WPS_No_247_Credit_constraints_and_farm_productivity_in_Ethiopia.pdf.

[4] Bank of Uganda, “National Financial Inclusion Strategy (2017 - 2022), ” October 2017. [Online]. Available: https://www.bou.or.ug/bou/bou-downloads/publications/special_pubs/2017/National-Financial-Inclusion-Strategy.pdf.

[5] P. Katharine Esty, “5 Reasons Why Muhammad Yunus Focuses on Lending to Women, ” 10 January 2014. [Online]. Available: https://www.impatientoptimists.org/Posts/2014/01/5-Reasons-Why-Muhammad-Yunus-Focuses-on-Lending-to-Women#.W0hMnNIza00.

[6] McKinsey & Company, “Lions go digital: The internet’s transformative potential in Africa, ” November 2013. [Online]. Available: https://www.mckinsey.com/~/media/McKinsey/Industries/High%20Tech/Our%20Insights/Lions%20go%20digital%20The%20Internets%20transformative%20potential%20in%20Africa/MGI_Lions_go_digital_Full_report_Nov2013.ashx.

[7] The World Bank, “ICTs Delivering Home-Grown Development Solutions in Africa, ” 2012 December 2012. [Online]. Available: http://www.worldbank.org/en/news/feature/2012/12/10/ict-home-grown-development-solutions-in-africa.

[8] [Online]. Available: http://www.swipe2payug.com/.

[9] [Online]. Available: https://farmdrive.co.ke/.

[10] A. Koning, “Banking on Including Women in Nigeria, ” 20 December 2013. [Online]. Available: http://www.cgap.org/blog/banking-including-women-nigeria.

[11] K. Fox, “Africa’s mobile economic revolution, ” 24 Jul 2011. [Online]. Available: https://www.theguardian.com/technology/2011/jul/24/mobile-phones-africa-microfinance-farming.

Olga KiconcoOlga Kiconco

Olga Kiconco is the Lead, R&D at the Innovation Village Uganda where she works closely with the Team Lead to identify key market trends to deliver value for various stakeholders in the innovation ecosystem across different sectors such as Agriculture, Health, Education, Finance and Energy/ Climate. The Innovation Village aims to bring players together such as the government, academia, entrepreneurs, development agencies and private sector to drive Uganda's socio-economic transformation, and the region at large. 

Olga is ardent about using her strong business acumen, technology background and international exposure to help the start-up community thrive in today’s competitive innovation and entrepreneurship landscape. She has rich experience working with diverse teams traversing various sectors on short term consulting and business development projects in Strategy, Management and Business models for emerging markets in the Asia Pacific region. 

She holds a Master’s Degree in International Business from Hult International Business School (Shanghai campus) and a Bachelors of Electronics Engineering majoring in Telecommunications (Malaysia). She is part of the IEEE Ethics and Policy in Technology Editorial Board, enrolled in the Tony Elemulu Foundation Entreprenuership Program 2018 and a Cherie Blair Foundation Mentee. She holds certifications in Certified Ethical Hacking (CEH) and EC Council Certified Security Analyst (ECSA).

She is also the Chief Strategy Officer of Milima Technologies, a cybersecurity start-up that assists organisations understand the various risks they are exposed to while online and how to best mitigate them through training and awareness programs.



Stephan S. Jones, Ph.D. Stephan S. Jones, Ph.D.

Stephan S. Jones, Ph.D., Director, Center for Information and Communication Sciences, Ball State University joined the Center for Information and Communication Sciences faculty in August of 1998. He came to Ball State University (BSU) from completing his doctoral studies at Bowling Green State University where he served the Dean of Continuing Education developing a distance-learning program for the College of Technology’s undergraduate Technology Education program. Dr. Jones was instrumental in bringing the new program on board because of his technical background and extensive research in the distance-learning field. Prior to coming to higher education, Dr. Jones spent over sixteen and a half years in the communication technology industry. He owned his own teleconnect, providing high-end commercial voice and data networks to a broad range of end users. Dr. Jones provided all the engineering and technical support for his organization that grew to over twenty employees and two and a half million dollars per year revenue. Selling his portion of the organization in December of 1994, Dr. Jones worked briefly for Panasonic Communications and Systems Company as a district sales manager providing application engineering and product support to distributors in a five-state area prior to starting doctoral studies.


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Dr. Syed Hassan Ahmed
Dr. Mudassar Ahmad
Dr. Onur Alparslan
Dr. Muhammad Bilal
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Dr. Mohammad Saud Khan
Olga Kiconco
Dr. Jay Ramesh Merja
Dr. Mubashir Husain Rehmani
Dr. Hafiz Maher Ali Zeeshan

About: This newsletter features technical, policy, social, governmental, but not political commentary related to the internet. Its contents reflect the viewpoints of the authors and do not necessarily reflect the positions and views of IEEE. It is published by the IEEE Internet Initiative to enhance knowledge and promote discussion of the issues addressed.