Digital payments vital for SME growth & financial inclusion in East Africa

East Africa's mobile money transactions have experienced a slight decline by approximately 0.61 per cent, from $491 billion in 2022 to $488 billion in 2023. In a bid to explore the impact of digital payments in supporting and boosting SMEs in the region, CNBC Africa brought in Rachel Balsham, the Managing Director for Southern & East Africa at Onafriq, a leading digital payment solutions provider. Rachel shed light on the landscape of mobile money transactions, emphasizing the role of digital payments in enhancing financial inclusion for SMEs in East Africa. The growth in mobile money transactions has been steady, driven by the evolution of an ecosystem around mobile money systems and the integration of value-added services on top of them. This expansion has made accessibility and ease of doing business much easier for SMEs in the region. To address the challenges faced by SMEs, Rachel highlighted the role of digital lenders, who rely on digital payment infrastructure to scale their operations. These digital lenders are pivotal in providing liquidity and access to credit for small businesses, leveraging the data obtained from digital payment systems to make refined lending decisions. Furthermore, the importance of protecting SMEs' data and collaborating with regulators to ensure friendly lending policies were discussed. Rachel emphasized the blurred lines between individual and SME accounts, advocating for a unified regulatory framework that supports accessibility and ease of account management. As an enabler of SMEs' service providers, Onafriq focuses on empowering SMEs by partnering with mobile money providers and local aggregators to facilitate seamless digital payment transactions. Several sectors were identified as key drivers of growth in mobile money transactions, including transport, agriculture, and microfinance. SMEs in transport, such as boda-boda drivers and small restaurants, leverage digital payment systems to reach customers efficiently. Agriculture and microfinance sectors also play a significant role in driving mobile money transactions. Onafriq's collaboration with SMEs aims to enhance their capabilities and scale their operations through innovative digital payment solutions, fostering growth and financial inclusion in East Africa.