West Africa unifying legal framework for financial inclusion, digital economy

West Africa is at the precipice of a digital economy shift, with efforts spearheaded by governments and organizations across the region to create a unified legal and regulatory framework. These efforts are critical to advancing financial inclusion and supporting the transition to digital payments and a cashless economy, which promises to unlock enormous economic potential. By standardizing the regulatory environment, the region seeks to harmonize and strengthen its digital economy, enabling broader access to financial services and promoting sustainable development.

The Economic Community of West African States (ECOWAS) is driving this initiative after recently announcing a call for expressions of interest from eligible consulting firms to assist in finalizing a legal and regulatory framework for governing the digital economy sector in West Africa. This effort is part of the Western Africa Regional Digital Integration Program (WARDIP), which is funded by the World Bank under grant number E264-3W.

The consulting services aim to develop and complete a unified legal framework that will regulate the digital economy in West Africa. This involves incorporating feedback from ECOWAS member states and ensuring that the legislation reflects the latest developments and innovations in the digital sector.

The ECOWAS commission is looking for consulting firms with specific qualifications and relevant experience. Firms are required to have at least five years of experience in conducting studies related to digital economy policy, strategy development, or regulatory framework formulation. Additionally, firms must have successfully completed at least two similar assignments at the national or regional level within the last five years, with at least one of those assignments completed in Africa.

Unified ecosystem needed too

The move aligns with broader continental goals to expand digital financial services, as highlighted by leading financial experts and institutions. For instance, TBD, Block’s decentralized digital identity subsidiary, is championing Africa’s digital future by promoting financial inclusion through blockchain and decentralized finance technologies, according to reports from Business Insider Africa. The push comes as the company seeks to build a new financial ecosystem where previously underserved populations gain access to banking services via mobile technology.

Angie Jones, global vice president of developer relations at TBD mentions that there needs to be an engaged community comprising digital wallet providers, financial institutions, and individuals that grows.

The company’s goal is to integrate digital tools into an ecosystem that combines traditional financial systems with technology, to make financial services accessible to everyone.

As discussions around financial inclusion continue, various nations are grappling with the question of whether to move toward a cashless society. In countries like Nigeria and Ghana, digital payments are on the rise, and a future without physical cash seems increasingly possible.

The debate, however, revolves around whether infrastructure, consumer readiness, and regulation are sufficient to support such a transition. Countries with digital payment networks are already reaping the benefits, but questions remain about rural areas and those without digital literacy.

This vision for a cashless, financially inclusive Africa was recently underscored during discussions on the Lagos-Abidjan Corridor, which connects some of the continent’s economic centers. According to the World Economic Forum, the corridor is part of a regional effort to facilitate cross-border digital payments, a critical component of the ECOWAS framework. By standardizing these transactions, the West African region aims to ease trade, reduce transaction costs, and encourage the broader use of digital financial services.

In Southern Africa, despite infrastructural challenges, there have been significant strides in improving financial inclusion, ECA reports. The adoption of mobile banking and digital wallets has helped millions gain access to financial services. Southern Africa’s progress highlights the potential that could be unlocked if West Africa’s regulatory framework is successfully implemented. Standardized digital payments systems could accelerate financial inclusion across borders, reducing the region’s reliance on traditional banking and cash-based economies.

Article Topics

Africa  |  biometrics  |  Block  |  decentralized finance  |  digital economy  |  digital identity  |  ECOWAS  |  financial inclusion  |  TBD