Cenfri, on behalf of FinMark Trust, recently commissioned a Mapping of Potential Financial Services Distribution Channels in SADC conducted by Redflank. Access to financial services is a challenge in the Southern African Development Community (SADC) where there is limted infrastructure and a largely rural population. Ordinary distribution channels are not capable of effectively delivering access and it is important to determine what alternative methods can facilitate a wider reach of financial services. Existing studies have documented in part the role that retailers, mobile network operators (MNOs), postal services and gas stations have played in the distribution of financial services and research has been conducted on the use of non-financial sector infrastructure for the distribution of financial services globally. However, there is a need to develop a better understanding of the specific distribution opportunities in SADC.
This study aims to bridge that gap by providing an assessment of the distribution opportunities available for interested parties looking to engage in the region, as well as regulators aiming to better understand the landscape. The study maps and aggregates the footprint of a variety of potential channels across SADC, looking at their geographical spread, and assessing their suitability to distribute financial services.These channels include: agro distributors; gas stations; informal traders; Mobile Network Outlets (MNOs); post offices; and retailers.The objective is to assess the attributes and conclude with recommendations pertaining to these six key non-traditional or alternative distribution channels as potential distribution opportunities to increase access for financial services in the 14 member states of SADC.
Please click here to download the full report (PDF, 9.4MB)
The study categorised the SADC countries into two groupings: (i) the Emerging SADC countries and (ii) the Established SADC countries. Five countries – Botswana, Mauritius, Namibia, Seychelles and South Africa – were considered as established SADC countries due to high levels of financial inclusion (excess of 66%) and urbanisation (surpassing 33%). The remaining SADC countries that have lower levels of infrastructure development and feasibility for delivering financial services fall within the the Emerging SADC countries category.
Within and across these two categories the study revealed the following insights into the potential for distributing financial services in SADC. Reach refers to the extent of the channel’s physical footprint and the size of its client base. Feasibility refers to the appropriateness of a channel for the distribution of financial services:
Emerging and Established SADC countries
- Retailers and MNOs provide the best opportunities for Emerging SADC countries and to a greater extent for Established SADC countries
- Informal traders provide high levels of reach, but are limited by poor feasibility
- Post offices provide opportunities worth exploring, potentially in niche areas
Emerging SADC Countries
- Agro distributors provide reasonable reach, but are limited by low levels of feasibility
- Gas stations are currently not attractive for financial services distribution
Established SADC Countries
- Gas stations provide promising distribution opportunities, based on their link with convenience stores and POS payment point growth
- Agro distributors are not attractive for financial services distribution at this stage, given limited feasibility and reach