Ideas & Updates

Senegal shifts to digital payments to promote economic growth

© UN Photo/ Evan Schneider

The Government of Senegal has joined the Better Than Cash Alliance, signaling its commitment to growing the economy and improving security and transparency through the shift to electronic payment systems.

Senegal UN Photo

The shift to electronic payments will facilitate cost reduction in government programmes while also help promote financial inclusion by allowing previously excluded people, especially in low-income communities, to access bank accounts for the first time.

Senegal has already begun its shift to electronic payment systems for services like university scholarships, pensions and food support. A recent World Bank report shows that a transition to electronic payments can save governments up to 75 percent of their costs.

Commenting on Senegal’s BTCA membership, Minister of the Economy, Finance and Planning, Mr. Amadou Ba, said: “The objectives of the Better Than Cash Alliance are perfectly aligned with the vision of the President of the Republic, Mr. Macky Sall, and his government’s strategy, that decided to shift to electronic payments systems and promote the financial inclusion of low income people, as indicated in Chapter 4 of Senegal’s Emergence Plan (Plan Sénegal Emérgent – PSE). Already, salaries of civil servants above 100 000 CFA (200 USD), and students scholarships are distributed through bank accounts. It would be appropriate to improve and generalize these measures.”

Lack of financial access leaves families with few options for growing and supporting their businesses, for protecting themselves in times of emergency, and for saving for the future to educate their children and care for their elders. Instead they depend on informal mechanisms that often subject them to even more risk and expense and extend the cycle of poverty.

A bank account not only helps poor people access electronic payments for government services, but can also help them build savings and access loans, insurance and other financial services. In turn, the financial institutions that serve them are able to tap a previously un-reached market – a win-win for the economy and the people.

Dr. Ruth Goodwin-Groen, Managing Director of the Better Than Cash Alliance commended the government of Senegal for joining the Alliance and said: “Electronic payments are, in many ways, an essential component of promoting economic growth and social inclusion, especially for those without prior access to a bank account at a formal financial institution. This shift requires resources and a technical expertise that we are pleased to support thanks to this partnership with Senegal.”

Senegal joins four other African countries in the Better Than Cash Alliance – Kenya, Malawi, Rwanda and Ghana – all pioneering the use of electronic payment systems to bring security, transparency, and financial inclusion opportunities to their citizens.