Madagascar’s Banking Industry Sees Regulatory Updates Amid Fintech Growth
The banking industry in Madagascar is undergoing significant changes as regulatory updates aim to support fintech growth and promote financial inclusion. According to data from the World Bank, only 18% of Malagasy adults accessed formal financial services in 2017, with disparities between men and women, urban and rural areas.
Low Rate of Financial Inclusion
Despite this low rate of financial inclusion, mobile money adoption has grown significantly, with over 10 million people opening accounts. Financial institutions are digitizing transactions to meet urgent needs such as paying for health services and receiving wages and social benefits.
Regulatory Updates
The Malagasy government has developed a system allowing small and medium-sized enterprises to pay taxes digitally across four regions, resulting in an estimated $18 million value of tax collected by the end of 2021. The pandemic has accelerated the development of several e-commerce platforms in Madagascar, such as e-sakafo, MyTsena.mg, and Mbike Express Delivery.
Supporting Fintech Growth
The World Bank’s Madagascar Financial Inclusion Project has supported the government in developing a system for digital financial services, including fintech start-ups. Local fintech players have formed an association to learn about regulatory requirements and raise awareness of their activities.
Approaches to Accelerate Fintech Development
Experts suggest five approaches to accelerate the development of fintech and digital financial services in Madagascar:
- Adapting regulatory frameworks
- Adopting digital identification
- Providing market incentives
- Building inclusive digital economies
- Establishing robust credit infrastructure
National Strategy for Financial Inclusion
The government aims to increase financial inclusion to 45% by 2022 through its National Strategy for Financial Inclusion. The World Bank’s technical assistance has helped develop a favorable legal framework for fintech start-ups, with new regulations underway to ensure proportionate “know-your-customer” procedures and anti-corruption guidelines.
Improving Financial Literacy
Improved financial literacy and education in the use of digital tools are also crucial to boost adoption by the Malagasy population. With these regulatory updates and innovations, Madagascar’s banking industry is poised to drive economic recovery and inclusion in the island nation.
Overall, the regulatory updates aimed at supporting fintech growth and promoting financial inclusion have the potential to transform the banking industry in Madagascar, driving economic recovery and inclusion for the country’s citizens.