The South African Reserve Bank published a Working Paper assessing whether agency banking can deepen financial inclusion in South Africa, using survey-based econometric analysis. The paper finds agency banking is positively associated with greater use of credit and savings products and more frequent bank transactions, although the overall effect appears to have weakened between 2015 and 2023. Using three-stage least squares and logistic models on adult samples from the 2015 and 2023 FinScope surveys and the 2021 Global Findex, the analysis links the strongest inclusion effects to cash-in services via retail agents, with cash-out effects weaker. Demand for agency banking is driven by demographic, geographic and behavioural factors, with poverty, know-your-customer documentation restrictions and low trust in financial institutions identified as key influences; proximity to financial institution outlets, shared accounts and KYC requirements emerge as major predictors in the demand modelling. The paper profiles a typical excluded user as a single black woman aged 25–51 with matric education and monthly income of ZAR 6,000–10,000, more likely to live in urban areas of Gauteng, North West, Mpumalanga, Eastern Cape or KwaZulu-Natal, and points to policy options including expanding licensed agents beyond typical retail formats and addressing the barriers that keep users at the fringe of the mainstream banking system. As part of the South African Reserve Bank Working Paper Series, the research is presented as preliminary analysis intended to elicit comments and stimulate debate.
South African Reserve Bank 2025-01-13
South African Reserve Bank working paper finds agency banking boosts use of credit and savings but inclusion impact is waning
The South African Reserve Bank's Working Paper evaluates agency banking's impact on financial inclusion, noting its positive link to increased credit and savings use. Using econometric models and surveys, it identifies demographic and geographic factors affecting demand, with barriers like poverty and low trust in financial institutions. The paper suggests expanding licensed agents and addressing barriers to mainstream banking access.