In Africa, cash is still very much king. According to a 2012 World Bank report, less than a quarter of the African adult population have formal bank accounts, although this varies from 51% in Southern Africa to 11% in Central Africa.
Major reasons cited for this large unbanked population are the cost and fees of opening and maintaining an account, insufficient documentation and shortage of funds. Lack of banking and financial services infrastructure is also a problem. For example, only a few African countries have more than 12 ATMs per 100,000 adults. Only South Africa and Namibia have more than 30 per 100,000 adults.
For this reason, Africa has seen the emergence of innovative technology that has leapfrogged some of the traditional financial services infrastructure, such as the growth in mobile payments.
However, according to Bassem Bouzid – senior vice president for EMEA at global ATM manufacturer and supplier, Diebold – formal banking infrastructure and ATMs still have a strong future in Africa.
“If you look at the buying and consumer behaviour as economies develop, you start seeing similar patterns between Africa and other parts of the world,” he noted, adding the potential lies in the growth of consumer spending power.
While debit and credit card penetration remains low on the continent, it is also seeing growth, led by several initiatives by government organisations, financial services and payments companies. For example, the Nigerian government recently launched, in conjunction with MasterCard, the new National Electronic Identity (eID) card which doubles as a debit card. With plans to roll out over 100m cards, they could have a massive impact on the financial inclusion of Africa’s largest population.
Adapting technology: the solar powered ATM
With banks (such as many of Diebold’s South African clients) expanding across the continent, Bouzid believes the region will become a stronger player for his company’s business over the next few years. And to meet this demand, Diebold is looking to make use of technology suitable for the African environment, such as their solar-powered ATM to combat unreliable power supply across the continent.
“So we are launching a green technology ATM developed for emerging markets,” he noted, adding that they were first rolled out in India and Pakistan. “These are small ATMs but can be placed in a remote area… and with the solar panel it can be self-sustained.”
Diebold is also looking to grow its Africa business in other areas beyond hardware, such as software and services. The company is investing heavily in security software to prevent ATM fraud and have also ventured into the mobile solutions game, with software that can allow users to access ATMs via their mobile phones.
“We will also be looking at developing some services hubs in Africa using young graduates, training them on our technology so they can service IT or payments in Africa, in all key markets, as a way to sustain our growth for the future,” Bouzid concluded.