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New Report Studies the Link Between Africa’s Digital Financial Services and Financial Inclusion

Africa demonstrates a clear-cut case for how digital financial services are being applied to achieve financial inclusion; but what could be the next transformation of its payments network?

This transformational effect is the key point of focus for a new report by the Interledger Foundation and DFS Lab.

The report examines how the adoption of digital financial services has become a driving force for achieving financial inclusion across the continent.

Over the last decade, Africa has made significant progress in the adoption of digital payments and that has increased dramatically since the onset of the pandemic.

According to the data of the report, only 43 per cent of adults in sub-Saharan Africa had a bank account in 2017.

But in the five years since, and with the push to digital services accelerated by the pandemic, this figure increased to 55 per cent by 2021.

Reflecting on this figure, the report analyses the role of the continent’s payment systems in advocating financial inclusion.

It takes a closer look at the status of payment systems in Africa, the barriers to developing them and what is required for open and instant payment initiatives to succeed.

It identifies the dilemmas incurring Africa’s highly-fragmented payments infrastructure that are working in tandem with the continent’s patchwork-like regulations and policies to inadvertently stall the development of a beneficial open payments network.

Elaborating on this, the report reads: ‘The clearing and settlement functions of a national payment scheme often run through the infrastructure of real-time gross settlement (RTGS), an instantaneous funds transfer system.

‘RTGS systems enable economies of scale, which can significantly reduce transaction costs. They also reduce the need for payment service providers to set up bilateral connections, which can be expensive and fragmented’.

Without cross-border consolidation, the hurdles to financial inclusion outlined in the report are likely to remain.

Although it identifies the many challenges currently at play in Africa’s payment network, the report also does well to offer a suitable solution, which it puts forward with Interledger Protocol (ILP) payments.

According to the Interledger Foundation’s own website, ILP is a payments network without boundaries, operating independently of a specific ledger or payment network.

Its definition reads: ‘Interledger makes it easy to transact in whatever currency or payment network you choose because Interledger is not tied to any one company, blockchain, or currency’.

Continuing its definition, the Foundation says, ‘Using Interledger, you can send XRP to someone who wants to receive ETH, or you can send USD to someone who wants to receive EUR’.

It’s clear that an infrastructure with the capabilities of ILP would be perfect for remedying the challenges that Africa’s payment ecosystem currently faces.

Briana Marbury, executive director of Interledger Foundation
Briana Marbury, executive director, Interledger Foundation

“We see an opportunity to build new pathways to financial access that will connect humanity in a new way, ” said Briana Marbury, executive director of Interledger Foundation.

“This research paper is a major milestone towards understanding how open payment technologies, such as ILP, can advance digital financial participation and economic development throughout the world,” she continues.

Interledger’s mission is to continue to increase that number in Africa and across the globe over the next couple of years in areas underserved by traditional banking services.


  • Tyler is a fintech journalist with specific interests in online banking and emerging AI technologies. He began his career writing with a plethora of national and international publications.

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