The business council of the Common Market for Eastern and Southern Africa (COMESA) has partnered with the Trade and Development Bank to further develop affordable solutions that will increase intra-trade and financial flows for Micro Small and Medium-sized Enterprises (MSMEs). The development was announced during a financial services regulators meeting, in Kigali, last week. The institution represents the interest of the private sector at a regional level. CBC’s Digital Financial Inclusion programme, piloted in nine countries, including Rwanda, is expected to catalyse the transition of MSMEs from a cash-dominant to a cash-lite economy, where they have access to affordable, interoperable, secure, and real-time digital financial transactions. Other countries include Egypt, Ethiopia, Kenya, Malawi, Mauritius, Tanzania, Uganda and Zambia. “The establishment of a digital low-value common payment policy for MSMEs will result in streamlining predominantly cash-based small-scale enterprises into digital economies that enjoy accessible, affordable, interoperable, transparent and real-time cross-border retail payments,” said Sandra Uwera, the Chief Executive Officer at CBC, during the meeting. “This digital financial inclusion drive is expected to boost volumes of cross-border transactions, the formalization of SMEs and their participation in intra-regional trade,” Uwera added. Admassu Tadesse, President of TDB noted that the development will among other things, “Ensure that an open and enabling environment for financial services, from predictable laws and regulations to sound and accessible physical digital infrastructure, is in place while protecting consumers.” During the meeting, officials reiterated that facilitating and promoting MSMEs’ participation in Digital Financial Inclusion can accrue benefits such as economic growth, macroeconomic policy effectiveness, and job creation. Speaking at the sidelines of the event, Michel Sebera, Permanent Secretary of the Ministry of Trade and Industry explained that previously there have been a number of key challenges holding back the potential of MSMEs. “They include high collateral requirements by formal financial institutions; difficulties in making and receiving payments within the COMESA region; unsecured digital financial services platforms; and many others,’ he added. Addressing the challenges, according to Robert Bafakulera, Chairman of the Rwanda Private Sector Federation, is critical given the prevailing economic conditions brought by the Covid-19 pandemic. “While the Covid-19 pandemic is set to increase use of these services, it has also posed challenges for the growth of the industry’s smaller players like SMEs and highlighted unequal access to digital infrastructure. Several actions will need to be taken to ensure maximum inclusion going forward,” Bafakulera asserted. Improved interoperability, partnerships, regulatory dialogue and consumer protection are some of the key factors that will result from an operational digital financial inclusion of MSMEs, he added. “We’ve seen a willingness from competitive forces in industry to prepare a strong pathway that will facilitate eased digital payments across markets. This policy will be the foundation of an infrastructure that supports African SMEs to grow into prosperous businesses over the coming years,” Kipyego Cheluget, COMESA’s Assistant Secretary General-Programmes added. COMESA, the largest trade bloc on the continent, is a market with a population of 583 million people, covering a geographical area of 12 million square kilometers. Data from the bloc indicates that MSMEs employ 70 per cent of the total population, with a large proportion of these not connected to online e-commerce platforms and lacking the technical skills to use digital infrastructure.
