However, there is technology that can - with limited infrastructure - help overcome this problem.
Smart card technology has been around for several years, but is more likely to be associated with high-tech applications in first-world countries, than with a merchant trading fruit in rural Africa.
Several successful projects have proved, however, that smart card technology could be the key to unlocking Africa's business potential - if people start doing business the 'smart' way.
If one takes the same scenario as above, but with smart card technology available to the merchant, as well as the local market and shops where he deals, the story could read very different.
The merchant once again travels to the market, but instead of being paid cash for the fruit, the money is paid onto a smart card, which can only be accessed with one of the merchant's fingerprints. The merchant then returns to his home village, without the threat of loosing his entire income, where he can either buy goods or draw cash from the local shop. His smart card therefor becomes a savings account to which he, and he alone has access.
This might sound far-fetched - but it is not. In South Africa close on two million pensioners are already being paid with a smart card, and many small shop owners in rural areas have realised the benefits of acquiring smart card readers and doing business the smart way. Smart card readers are these days so small - and can be carried in the pocket of the shop owner. They also don't cost an arm and a leg. Read more about different applications and the possibilities of implementing this technology in rural Africa on page 26.
Apart from the banking potential these cards offer, they have many potential uses. One of the most popular being for identification purposes.
Many countries across the world are investigating the option of changing conventional identity books to smart cards, in an effort to limit fraud and corruption. Although smart card technology is definitely suited for this, the question is on how the information on these cards will be managed. Read more about this issue on page 32.
Smart cards not only make banking possible to rural Africa, but it is expected to make banking across the board much safer and with less fraud.
All bank cards around the world issued by either Europay, MasterCard or Visa (EMV), will be changed from magnetic stripe to smart cards by the beginning of 2006. Ben Duminy of the South African EMV Forum explains on page 30 what this project is all about.
Banking the un-banked
Staying with the topic of banking. More than 80 percent of Africans do not make use of banking services and are therefor called 'un-banked'. Many banks have realised the potential the African continent poses, and are now accessing the market. South Africa's banks might not have been the first to enter markets in other countries, but several have had huge successes moving their business outside the South African borders.
Africa's banking industry unfortunately still has a long way to go to become really competitive in world terms since it is faced by many challenges such as central banks being part of government, no proper governance policies being in place, or being hampered to develop because of the political situation in a specific country. Read more about Absa bank's experience on page 42, while renowned US consultancy - McKinsey ft Company makes some suggestions of how to bank the un- banked in more unconventional ways on page 48.
NEPAD will work
The eyes of Africa's economic world was focused on South Africa in June with the World Economic Forum's Africa Summit taking place in Durban. Leaders from across the African continent, as well as further afield, discussed the challenges and opportunities facing Africa. The question is - will they be able to achieve the major targets they set for themselves and will Nepad become a practical reality as has been promised by South African president Thabo Mbeki? Only time will tell.
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