A US$50million challenge fund aimed at transforming lives by increasing access to financial services for at least one million financially excluded people living in rural and agricultural areas of Africa has been announced in Accra.

To be run for seven years and spearheaded by MasterCard Foundation in broad collaboration with the African Development Bank (AfDB), the Fund will seek to develop solutions that drive inclusive growth in Africa by broadening access and usage of digital financial services.

The Fund will be managed by KPMG International Advisory Services and accept innovation proposals until March 20, 2015 for projects. The project will cover eight countries including Cote d’Ivoire, Ghana, Kenya, Mozambique, Senegal, Tanzania, Uganda and Zambia.

Mr. Roger Morier, Senior Communications Manager, Financial Inclusion, and The MasterCard Foundation speaking in Accra to announce the innovation competition, under the topic “Challenges in Lending to the Agricultural Sector and in Ensuring Financial Inclusion for the Poor”, said we all have a responsibility and stake in the nation’s social prosperity: “We have a responsibility to ensure that we help transform this continent. Over 60 percent of our populace is dependent on the rural agricultural sector".

He added: "Its goal is to support financial services providers or institutions with a financial solution to develop new -- or expand existing -- financial products, services or delivery platforms that will increase financial access for people living in poverty in rural or agricultural areas.

This new Fund, he said, will stimulate private sector organisations to provide affordable and accessible savings, credit and insurance products. These services are essentially to enable African farmers increase productivity and incomes, and ultimately grow rural economies.

Explaining the collaboration, Mr. Morier said MasterCard brings proven expertise to design and scale-inclusive financial services solutions and infrastructure. The AfDB actively promotes sustainable economic growth and poverty reduction in Africa.

Together, they will work with African governments and local private sector companies to develop and deliver affordable services that meet the needs of a wide consumer base, especially the traditionally unbanked.

Specifically, the collaboration will seek to: build cohesive African financial systems that drive inclusion at a country level and enable service delivery to traditionally excluded populations; invest in a curated set of innovative financial services companies and solutions targetted at addressing barriers that hinder financial inclusion; and share knowledge across academic, policy and commercial sectors to create thought-leadership on financial inclusion and economic development.

"Over the last decade, many countries in sub-Saharan Africa have enjoyed substantial economic growth -- but much of this growth has not benefitted the rural poor, especially smallholder farmers who are mostly women and depend on subsistence agriculture for their livelihoods," Morier stated.

Dr. George Manu, Director International Development Advisory Services, West Africa, KPMG, explained that this is an opportunity for the financial sector in Africa to improve the social economy of rural farmers by developing innovative financial inclusive products to reach smallholder farmers.

He indicated that Fund is highly competitive and focuses the capacity to be innovative and ability to help empower rural farmers to ensure prosperity. The Fund will support innovative ideas that have potential for growing to scale and also have a deep social impact on the lives of rural people living in poverty throughout sub-Saharan Africa.

The Fund will operate under two broad categories: Innovation, which will have US$15million that will be used for supporting the development of ideas for new products, services or processes which increase access to finance for the rural poor; and Scaling: will receive US$85million to be used for helping to scale the most promising ideas or pilots that have the potential to drive financial inclusion for smallholder farmers in new geographical areas.

The majority of rural households in sub-Saharan Africa remain financially excluded. Over 70 percent of these families derive a large portion of their income from agricultural activities. Many financial services providers lack the knowledge and capacity to develop appropriate products and services that would enable the rural poor and smallholder farmers to become financially included.

Donald Kaberuka, President of the AfDB, in a statement commented: “Despite the phenomenal economic growth in Africa, this has not translated into shared prosperity and better livelihoods for the majority. Growth has to be inclusive to be socially and politically sustainable.

"One key component of inclusive development is financial inclusion, an area in which Africa has been lagging behind other continents. Broadening access to financial services will mobilise greater household savings, marshal capital for investment, expand the entrepreneur class, and enable more people to invest in themselves and their families.”

Ajay Banga, President and CEO at MasterCard, said: “Less than one adult out of four in Africa has access to an account in a formal financial institution.

“While many of our industry partners have been active in this space, we believe that through our payments expertise and the AfDB’s 50 years of experience in financing Africa’s economic transformation we can achieve scaled impact and lasting transformation.

"This can only be accomplished when the public and private sectors combine resources and act together.”