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South Africa’s informal economy switches away from cash

JOHANNESBURG – THE informal sector in South Africa is showing signs of movement away from cash.

This according to a study global technology company in the payments industry, Mastercard, which aimed to establish factors that would democratise and widen financial access and enable equitable financial inclusion.

In a white paper titled “Driving Financial Inclusion In South Africa’s Informal Economy: The Landscape At The Bottom Of The Pyramid”, Mastercard interviewed underserved consumers and small, medium and micro enterprises (SMMEs) in the informal sector.

“As the digital economy becomes a more connected place where commerce thrives due to the safe, simple, and secure exchange of value, it’s essential that everyone has access to it,” said Gabriel Swanepoel, Country Manager for Mastercard in Southern Africa.

He believes when consumers and micro enterprises could digitise their commercial exchanges – and eventually switch from cash – they could be included and empowered, in a formal financial ecosystem.

South Africa, the continent’s second biggest economy but its most diversified, with a population of over 61 million, has a large informal sector with an estimated at 3,3 million micro and informal businesses.

This sector accommodates marginalized communities such as women, youth and the previously disadvantaged.

More than 60 percent of the people who started an informal business did so because they were unemployed and had no alternative source of income.

The Mastercard study showed that there seemed to be a strong movement to switch from cash with 65 percent of respondents claiming they were likely to start paying with methods other than cash in the year ahead.

Coincidentally, the country introduced new banknotes and coins this week.

– CAJ News

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