Mastercard launches campaign exploiting Coronavirus fears
On Friday 5th June, Raghav Prasad, Divisional President, in charge of Mastercard's sub-Saharan activities, announced the organisation’s plan to “connect 1bn people, 50m small businesses, 25m women entrepreneurs to the digital economy by 2025” in the wake of the Coronavirus pandemic. Read more
This follows trends reported from countries within the continent that there has been a rapid increase in users of mobile payment services. The President of Togo, a country which borders Ghana, described the socio-economic impact of the crisis in a piece for the Financial Times. He stated many believed that switching to digital payments “eliminates contact with cash, which many fear may help spread the virus.” This fear is rife within many countries around the world and is due to a widely reported misquoted comment from the World Health Organisation about the safety of cash, which they have since corrected. Read more
The ambition of Mastercard, however, is based on the uptake of digital payments which has been measurably influenced by current events. Many are switching to digital payments due to fear or necessity where banks and ATMs may be inaccessible. While many have speculated that cash is declining in the continent due to the uptake of mobile payment tools during this crisis, statistics from recent years unanimously highlight “Africa appears more reliant on cash.” Read more
With 66% of sub-Saharan Africans listed as ‘unbanked’, studies have highlighted that attention should instead focus on increasing accessibility to banks and ATMs, rather than focus on digitising payments. In their 2018 report, G4S highlighted that accessibility to cash through these means are below the global average, however, is “rising with sufficient room for further growth towards global averages.”
Cash can be expected to remain a very important means of payment for years to come in Africa. The lack of substantial electronic infrastructure and the high number of ‘unbanked’ residents in many African countries are the main reasons for this.
Before the Covid-19 outbreak, cash transactions dominated the informal sector who were often excluded from financial services due to inaccessibility or a lack of personal need for digital payments. Particularly, community sellers and rural SMEs relied on cash transactions to fuel their businesses.
While news outlets are perpetuating the idea that Africa is moving towards digitizing currency and a cashless society, the trends that have led to this forecast are based on the response to a global pandemic. Furthermore, misinformation has fuelled these trends, having a severe impact on the use of cash during this period. However, as a continent, Africa is dependent on cash and lacks the infrastructure for digital payments. Trends that appear during this period are unlikely to have a significant impact on transactional habits of a whole continent that is notably dependent on cash in many areas. Despite promises from Mastercard, trends during this period should not be used in the rhetoric of pro-cashless debates.