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Development of the Digital Financial Services Ecosystem in Madagascar

  • June 09, 2020

  • Antananarivo, Madagascar

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UNCDF is well positioned to address the challenges facing the Digital Financial Services (DFS) ecosystem in Madagascar. The results achieved over the past 5 years in Benin, Senegal and Zambia reflect the expertise the team has built to lead the development of these services.

The team's approach to developing market systems is based on market state analysis. This analysis was synthesized and presented in a report: the Diagnosis of the Ecosystem of DFS in Madagascar. This diagnosis includes recommendations that will help increase the market from approximately 12% to more than 20% of active DFS users by 2024.

In a webinar held on 4 June, the day of the launch of the report, UNCDF presented a synthesis of the figures and recommendations of the diagnosis with representatives of UNDP and the National Coordination of Inclusive Finance (CNFI). After introducing key industry figures and key products, the team presented its recommendations, including the establishment of a working group bringing together all the players in the DFS.

Among the figures shared, the mobile phone penetration rate of around 40% was put in perspective with the 12% mobile money user rate. These two figures, together with the evolving supply of services, demonstrate the potential for development of the market. During the panel, which followed the presentation of the diagnosis, the panellists discussed the various measures that involve DFS and the opportunities offered by digital in general in responding to the crisis created by COVID-19.

Through its activities in the DFS, UNCDF is a neutral intermediary and respected facilitator that brings together all public and private actors in the sector. UNCDF aims to encourage these actors to work in areas considered to be at risk and to serve segments of the population that are generally left behind.

It is on the basis of this expertise and the recognition that digital technology is a powerful tool, beyond finance, that UNCDF adopted in 2019 and for 5 years, a new strategy of “Leave no one behind in the digital era”. This strategy and its expertise are able to implement the recommendations of the diagnosis of DFS in Madagascar:

Proper public policies and better equipped decision-makers, especially to develop proportionate regulations adapted to the context and evolution of the sector in Madagascar.

  1. A policy of incentives, such as tax incentives, to allow operators to invest in better network coverage, particularly in rural areas of the Grande Île.
  2. Support, both by public authorities and technical and financial partners, to innovators in the digital space for the creation of new services.
  3. The development of new business models (bank-centred model, blockchain technology, etc.) and partnerships between service providers, which can reduce the cost of services.
  4. Customers who are better informed and equipped to use innovative digital services.

UNCDF's strategy aims to build inclusive digital economies by going beyond DFS to develop services for agriculture, energy access, education, health and transportation. A range of services that are consistent with sustainable development goals and contribute to the economic resilience of the most vulnerable populations.