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Fintech Ecosystems Lending Middle East & Africa

How Pay-on-Demand Could Free Millions From Financial Hardship Across Africa: CloudPay

Pay-on-demand, which utilises digital wallets and enables workers to access their accrued earnings through mobile devices, continues to grow in popularity across the globe. But the most positive impact could be seen in Africa, according to payroll specialist, CloudPay.

In fact, Cloudpay suggests that payroll models could help millions of unbanked citizens across Africa. As the global leader in mobile money, accounting for 70 per cent of the global $1.26trillion market, Africa poses a huge opportunity to deliver pay via mobile technology to those who need it.

Pay-on-demand, sometimes referred to as Earned-Wage-Access (EWA), is a concept that is taking off across the globe. In 2020, EY found that 80 per cent of 4,000 workers based across the 38 Organisation for Economic Co-operation and Development (OECD) countries would use on-demand pay if it was offered to them.

JP Morgan also revealed that EWA could positively impact the South African market. Because its informal transportation sector is largely cash-based, many individuals require cash upfront to travel to work to fulfil their duties. The multinational financial services firm found that EWA enabled employees to take a taxi to work – supporting business continuity in the area.

According to market analysis by CloudPay, there are approximately 370 million unbanked people on the continent. However, there are also 763 million registered mobile phones. With this in mind, adopting innovative payroll processes like pay-on-demand, could potentially free millions of people from financial hardship.

Empowering Africa with financial freedom

As Ferdinand Dragtstra, strategy director of new markets at CloudPay, explains, Africa’s existing position regarding mobile money presents a great opportunity: “Africa already leads the way when it comes to mobile money. However, millions of people often have to wait for extended periods to receive their pay – meaning they are essentially restricted by their employers when it comes to everyday needs like food, healthcare and education.

Ferdinand Dragtstra, strategy director of new markets at CloudPay
Ferdinand Dragtstra, strategy director of new markets at CloudPay

“If more businesses and public bodies look to adopt innovative payment models, that are mobile-enabled, it could empower people across the continent and provide them with more financial freedom, inclusion and flexibility. This is particularly vital for more vulnerable groups, especially women.

“In rural areas, formal financial services only reach around 10 per cent of communities. It’s common knowledge that if females had access to the same resources as men in Africa, up to 150 million people would be lifted out of hunger.”

“We are already seeing growing demand for these solutions, and increasing momentum of adoption. In 2022, there were 45 billion transactions made in Africa, for a total value of $832billion, and mobile money bulk disbursements, including salary payments, grew by 23 per cent to over $80billion.

“Mobile technology could provide the platform for change, however, that’s only one half of the puzzle. To truly free workers, employers must financially empower them by granting access to pay when it’s needed.”

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