Geographical Information System (GIS) significantly promotes financial inclusion in Africa by mapping and analysing financial access. In essence, GIS can help identify unserved or underserved areas and understand the demographics and characteristics of these populations to inform targeted financial services. Subsequently, it increases access to financial assistance for the unbanked and underbanked people while fostering financial literacy and stability.
Furthermore, GIS can also monitor and help evaluate the progress and impact of financial inclusion initiatives. Thus, this article will highlight how GIS is harnessed to promote financial inclusivity in Africa.
GIS-Based Solution for Economic and Financial Inclusion in Africa
Financial Inclusion for Smallholder Farmers
For these smallholder farmers, agricultural growth affects their financial gain, empowering further reinvestment and cultivation of lands for both present and future generations. One of the biggest challenges, thus, is access to financial resources and services to foster investment needs. To solve this issue, the United States Agency for International Development (USAID) launched the Financing Ghanaian Agriculture Project (USAID FinGAP) from 2013 -2018.
The project’s objective was to establish various pay-for-results methodologies and intensive technical assistance to advance the commercialisation of agriculture in Ghana by providing financial access vital to enabling investment in the sector. To further the project’s goal, USAID collaborated with over 50 business advisory services and financial institutions (commercial banks, investors, rural banks, etc.) dedicated to the agriculture sector to ensure smallholder farmers and agribusinesses secure, cost-effective alternatives to finances and investments.
CARANA, a corporation that designs economic growth strategies for countries and businesses, implemented the project. CARANA invented the Investment Mapping System (IMS), a web-based GIS platform, to allow investors and companies to take stock of business opportunities and make strategic investment decisions. The system is utilised alongside satellite imagery and publicly available data to examine a region’s geographical makeup, ensuring investors obtain a better view of farms and buildings.
In addition, the system enables agribusinesses to access partners based on geographical locations and highlight future agricultural business investments, amongst others. The result of the project includes financing almost 3,000 agribusinesses in maize, rice, and soy by leveraging USD 168 million as opposed to the projected initial USD 75 million and securing an additional USD 91.1 million for a further assistantship.
GIS for Bank Upgrade and Strategy
In Africa, the unbanked and underbanked Africans battle various financial blocks. According to a release by This Day news channel, complaints from nine banks in Nigeria rose from 2.5 million in 2020 to 5.39 million in 2021, leaving customers dissatisfied. According to the bank operators, the protests were due to the complexity of financial transactions. Nonetheless, GIS can enhance financial inclusivity by analysing geographic locations of unmet demands of certain products and services. Locating the geographic distribution of unsatisfied customers ensures that bank operators can deeply dive into the root cause of the problems.
GIS integration aims to give financial institutions insights into how to serve their customers better and reach areas without banking services (including loans, interests, aids, risk management, etc.). To this end, banks and financial institutions can make informed decisions against their competitors, creating a healthy financial industry focused on pleasing customers.
In addition, financial organisations could make personalised recommendations and packages for specific customers or geographical locations. For instance, the United Bank of Africa (UBA), Nigeria, employed the services of Spatial Technologies Limited (STL), a Nigerian geospatial company creating geospatial data for the Nigerian market.
The partnership’s primary aim is to enhance financial services and establish a data-driven, cost-effective solution for expansion. Other objectives include setting a scientifically backed method to locate ATMs for remuneration, creating techniques that find shadowed smaller branches across Lagos (the project’s starting point), and analysing the bank’s competitiveness and geographical distribution of customers to offer better services and products.
To this end, STL utilised MapInfo, a GIS software and provided months of on-site training for the bank’s staff, expected to further its uses. In addition, UBA has made strategic business decisions to satisfy its customer base with this technology.
In a demonstrated project, Adeyemi Adeboboye, a Lecturer at the Department of Surveying and Geoinformatics, Nnamdi Azikwe University, Akwa, indicated how GiS and data analysis helps banks upgrade and point position locations, gather data for bank selection to provide detailed business descriptions and gain strategic insights. The result of the project was the creation of the geographical topography of the area, the banks distribution, the number of staff, the number of customers attended to per day, the geographical distances between banks, and streets where banks are located, amongst others.
With access to this information, banks can appropriately adjust where needed and gain intelligent business data; they can gain an overview of shortages, non-functioning bank branches, and unreached areas. In addition, they can strategically plan how to open in areas without financial services, beyond infographics but also in terms of landscape and terrains. For instance, if demography is majorly water-bodies, banks can collaborate with NGOs, raise donations, or create projects to bring financial services and products to these people. It could be software applications dedicated to only that specific area due to their unique needs.
In another project, a group of researchers from the Department of Geomatic Engineering and Geospatial Information Science, Kimathi University College of Technology and the Department of Geomatic Engineering and Geospatial Information Systems, Jomo Kenyatta University of Agriculture and Technology, aimed to devise a recommended secured banking system that lay out the Cooperative Bank of Kenya’s holdings. In addition, the project would enable a better process of granting loans, reduce human errors during data entry tasks, mitigate fraud, and show the locations of the bank’s holdings and values attached.
Thus, the project concluded by devising a GIS-backed platform to detect fraudulent customers and institutions involved in improper loan acquisition and pictorial locations and identifications of collateral properties, including values and transportation access to the collateral properties. In addition, the platform also showed the customers loaning services from the day of authorisation to the pay-off day, all holdings of interests for the bank, and generated documents of interests vital for bank expansion and growth.
Nonetheless, financial institutions in urban areas like Lagos tend to focus on serving urban customers more than rural customers due to low financial literacy, minimum digital skill sets and low-income occupations. However, rural customers need access to financial services to purchase agricultural tools (smallholder farmers), make and receive money transfers, access loans to expand businesses, increase financial stability and access insurance to mitigate risks.
Africa needs help accessing sufficient and home-grown data for meaningful infrastructural growth. GIS management and efficiency run heavily on accessing the correct data to further a cause. Africa needs to invest in creating data-saturated centres, organisations and applications to fully reap the benefits of GIS for financial inclusivity (and other sectors).
The continent must partner with institutions and organisations to create home-grown data to properly organise a data system that is regularly updated and maintained. While there are data centres like Africa Data Centres, MainOne, Raxio Data Centre, Teraco Data Environments, Ersi, the Global Monitoring for Environment and Security (GMES) and Africa, amongst others, more of these organisations need to spring up. Africa has 87 data centres across 15 of the 55 countries on the continent compared to Europe, with 2,880 data centres across 44 countries of 44 countries (according to the UN). This data shows a significant disparity in the amount of sufficient data the continent can access. Having adequate data is the first step to bridging financial differences on the continent.
Governments and organisations on the continent must increase efforts in organising data upskilling and skilling workshops to facilitate data analysis, GIS adoption, and integration. Furthermore, with sufficient and efficient databases and data centres, African governments can identify vulnerability hotspots and create initiatives, workshops, training centres, conferences and organisations to bridge the continent’s wide financial gaps. Although it will be unwise to romanticise data and GIS as the perfect solution, these tools create a starting point for bridging the gap.
Deborah loves reading and enjoys philosophical discussions.