An Expanding DFS Footprint in Benin
It is no secret that digital financial services are driving increased access to finance in Benin. According to Global Findex, the adult population (aged 15+) with a mobile money account increased from 2 percent in 2014 to 18 percent in 2017, far outpacing many countries in sub-Saharan Africa (excluding high income countries). In a previous article – “Mobile Money Grows in Benin” – we noted that mobile money access points grew by 118 percent from 2015 to 2016. Though Benin’s digital financial services (DFS) footprint still lags behind its neighbors, our most recent analysis shows that financial access in the West African nation continues to improve. Supported by UNCDF MM4P, we were able to analyze financial access point data from December 2017 and make it available through the Interactive Dashboard for Benin.
What is clear from the initial analysis is that mobile money operators continue to predominate the financial services landscape in Benin with over 90 percent of total access points. Notable, however, is that mobile money operators grew their access points by 19 percent from 2016 to 2017; this is strong growth but also represents a significant slowdown from the 118 percent growth recorded from 2015 to 2016. Though commercial banks expanded their footprint slightly, their new access points were opened only in communes where they had an existing presence, limiting the impact on greater inclusion. One primary takeaway from the data is that mobile money operators continue to drive outreach in Benin benefiting from regulations that are “generally” positive, especially when it comes to e-money and related activities, as noted in the UNCDF State of the Market report.
However, not all communes benefited from this growth. In fact, 29 of the 77 communes in Benin saw a contraction in total access points, with 19 experiencing a decrease of more than 20 percent in DFS access points. In Bembéréké, all 56 DFS access points that were present in 2016 disappeared in 2017, leaving the commune with just 13 microfinance and post office access points. Additionally, many financial access points in Benin are concentrated in a few communes, a trend that we also observed in 2016. Three departments – Atlantique, Littoral and Ouémé – account for two-thirds of all financial access points in the country. And, while the median number of access points per 10,000 inhabitants increased slightly from 2016, the ratio in the most served commune is 210 times that of the least served commune.
Furthermore, the top 10 communes with the highest agricultural populations saw the number of access points drop from already insufficient levels, indicating a significant obstacle to reaching financial inclusion goals in Benin. Two of these communes even saw their commercial bank branches withdraw. Data from the 2017 Global Findex indicate that while many people are using mobile money for sending and receiving remittances, few are using it for agri-business. In fact, only 9 percent of individuals receiving payments for agricultural products did so through a mobile phone, compared to 74 percent in cash only. Stakeholders in Benin will need to address the disparity in coverage across the country, most notably between urban and rural areas. And, it seems, there is no shortage of actors with which the government could partner. According to data from CGAP’s most recent funder survey (conducted in partnership with MIX), rural and agricultural finance has remained “one of the most heavily funded project areas for international funders” in recent years.
While new entrants to the market plan to launch DFS offerings, it is important to consider how to encourage a wider array of financial products to meet the various needs of diverse populations. Yet we are glad to see several actors, including policy makers, regulators and financial service providers, utilizing geospatial data to monitor progress and identify underserved areas. And we are excited to see the marketplace for this type of data analytics expand, as new providers develop solutions for understanding the financial inclusion landsca