We at Amana Family Office are interested in learning more about the regions we are in touch with – in this section we aim to provide insights as well as food for thoughts.
Financial Inclusion for HNWI in Sub-Saharan Africa
Financial inclusion is essential for individuals and businesses to access financial services and products, manage risk, and achieve economic growth and development. It might be a staple in Switzerland where we live, however, in Sub-Saharan Africa, many individuals face significant challenges in accessing financial services and products, hindering their ability to create and compound wealth effectively and contribute to sustainable economic growth in the region.
It must be said from the outset that the issue of financial inclusion is not a topic unique to this part of the world, unfortunately it is a global problem that needs to be addressed. Access to financial services is a critical aspect of financial inclusion. Individuals as well as small and mid size companies in Sub-Saharan Africa must have access to a range of financial products and services to manage their wealth and businesses effectively, including investment services, payment systems, savings accounts, credit products, and insurance. While the region has made progress in expanding access to financial services, the World Bank estimates that over half of the adult population in Sub-Saharan Africa does not have a bank account, and only 24% of adults have access to a transaction account. Although the unbanked mostly stem from low income and poverty-stricken areas, often it is the case that affluent families, and more specifically the wives, mothers, daughters and granddaughters of the family are left in the financial peripherals, without sufficient knowledge of their family’s financial standing.
Beside being banked, closing the gender gap in financial inclusion is critical for promoting economic growth and development in Sub-Saharan Africa. Women are disproportionately excluded from financial services and products, with only 37% of women in Sub-Saharan Africa having a bank account, compared to 48% of men. Addressing this gap will require targeted efforts to increase women’s access to financial services and products, as well as initiatives to promote financial literacy for women.
Digital financial services have emerged as a key tool in expanding financial inclusion. The growth of mobile phone usage has enabled the development of digital financial services, such as mobile money and mobile banking, that allow users to access financial services and products using their mobile phones. Financial literacy is another critical component of financial inclusion. Individuals in Sub-Saharan Africa must have the knowledge and skills to make informed financial decisions and manage their wealth effectively. However, many individuals, through no fault of their own, lack basic financial literacy, which can lead to poor financial decision-making and increase the risk of financial exclusion. To address this issue, governments, NGOs, and financial institutions in Sub-Saharan Africa have launched financial literacy programs aimed at educating individuals on financial management, investment, budgeting, saving and inheritance laws.
Standard setting bodies also play a vital role in promoting financial inclusion. These bodies, such as the International Organization of Securities Commissions (IOSCO) and the International Accounting Standards Board (IASB), develop standards and guidelines for financial institutions and regulators to ensure that financial products and services are accessible, transparent, and effective for all consumers, starting from retails clients up to High Net Worth individuals (HNWI) and their families.
What is being done to improve the levels of financial inclusion globally? The goal of achieving such a universal financial access, where all individuals and businesses have access to a range of financial services and products, is a key component of the United Nations’ Sustainable Development Goals. Achieving this goal will require coordinated efforts by governments, financial institutions, NGOs, and standard setting bodies to expand access to financial services and products, promote financial literacy, and close the gender gap in financial inclusion.
Financial inclusion is essential for people starting their career up to HNWI and their families in Sub-Saharan Africa to manage their wealth effectively and contribute to sustainable economic growth and development in this rapidly growing region.
