JONATHAN HOLDEN: Celebrating 31 years of financial freedom

As SA celebrates Freedom Day, commemorating the nation’s first democratic elections in 1994, it is interesting to examine how economic freedom has evolved alongside political liberation. One of the most significant indicators of economic freedom is access to financial services — a fundamental right that has transformed dramatically over the past three decades.

In a working paper from the SA Reserve Bank, “How can agency banking deepen financial inclusion in SA?”, the authors find that “the socioeconomic implications of extending access to financial services to underserved populations are enormous. The benefits of financial inclusion include reducing poverty, creating jobs, empowering women, and improving people’s savings and investment behaviour.” 

SA has made remarkable strides in financial inclusion over the past three decades. The World Bank Group’s technical note on financial inclusion in SA found that “SA has made significant progress in expanding access to financial services for individuals but active usage of digital financial services remains low. Approximately four in five SA adults report owning a bank account. A broader metric that includes access to regulated, nonbank financial services indicates that 91% of adults are ‘formally included’. Both indicators have risen substantially in the past decade but progress has slowed.”

Before 1994 SA’s financial system primarily served the privileged minority. Banking services, credit facilities and investment opportunities were largely inaccessible to most South Africans, particularly those in townships and rural areas. The democratic transition ushered in a new era of financial inclusion initiatives aimed at correcting these historical imbalances.

The post-apartheid government recognised that true freedom necessitated equal access to economic opportunities and financial services. Early reforms included the establishment of regulatory frameworks that mandated broader service provision and the creation of specialised financial institutions targeting underserved communities.

The first decade of democracy saw the groundwork being laid for financial inclusion through policy development and institutional reforms. The 1996 National Small Business Act recognised the importance of small enterprises and established mechanisms to support their financial needs, while the Financial Sector Charter (2003) committed financial institutions to extend services to previously excluded communities. 

The second decade witnessed significant technological advancements and targeted interventions. The emergence of cellphone banking brought financial services to millions who previously had no access. Low-cost banking products designed specifically for low-income individuals saw widespread adoption, while regulatory reforms strengthened consumer protection in financial services. The Co-operative Banks Act and the development of microfinance initiatives in particular provided new avenues for financial access. 

In the past decade digital transformation and more sophisticated approaches to financial inclusion have seen the advent of mobile money platforms and digital wallets, which have dramatically reduced transaction costs and eliminated geographical barriers. Fintech innovations have created alternatives to traditional banking, making financial services more affordable and accessible, while growing emphasis on financial literacy and consumer education has empowered more South Africans to use financial services.

The rise of mobile technology and internet connectivity has been perhaps the most transformative force in democratising financial services in SA. Today, more than 90% of South Africans have access to a mobile phone, creating unprecedented opportunities for financial inclusion.

Mobile banking applications, USSD services and digital wallets have turned smartphones into virtual bank branches, enabling transactions without the need for physical infrastructure. This has been particularly impactful in rural areas where traditional bank branches are scarce. 

Technological innovation can advance financial inclusion by eliminating geographical barriers to access, reducing barriers to entry with simplified know-your-customer processes while maintaining regulatory compliance, offering cost-effective alternatives to traditional banking fees, providing intuitive interfaces that accommodate varying levels of financial and digital literacy, and creating tailored solutions that address the specific needs of underserved communities.

Through these innovations such platforms are extending the promise of financial inclusion to communities that have remained excluded despite broader policy efforts. Digital wallets and mobile money accounts have brought millions of previously unbanked citizens into the formal financial system. Credit access has expanded significantly, though challenges remain in ensuring responsible lending.  

Digital wallets represent one of the most promising tools for advancing financial inclusion in SA. Beyond basic payment functionality, modern digital wallets are evolving into comprehensive financial platforms that can facilitate small-scale savings through automated tools and goal-setting features, support community-based financial models like digital stokvels that blend traditional mutual aid concepts with modern technology, and create on-ramps to more sophisticated financial services as users’ needs evolve.  

Despite significant progress, challenges persist in achieving universal financial inclusion in SA. The country remains one of the most unequal societies globally, with extreme wealth disparities creating very different financial service needs across income segments. The formal financial system continues to better serve higher-income groups, while innovation is still needed to make services truly accessible to all. 

High unemployment rates and irregular income patterns make traditional financial products less suitable for many South Africans. Financial services designed around regular salary deposits often fail to accommodate the realities of informal employment and irregular income streams. Finally, access to financial services alone is insufficient without the knowledge to use them effectively. Significant gaps in financial literacy continue to limit the impact of expanded access, highlighting the need for concurrent education initiatives. 

As SA reflects on 31 years of democracy this Freedom Day, the evolution of financial inclusion represents an important dimension of the freedom struggle. True liberation requires not just political rights but also economic opportunity and the access to the financial tools that support it. 

• Holden is COO of digital wallet provider SOLmate.