For the third year in a row, the UN Capital Development Fund (UNCDF) and the Bank of Sierra Leone (BSL) are pleased to release the State of the Digital Financial Services Market Report for 2019. The report is based on a survey conducted during the first half of 2020, among 10 digital financial service (DFS) providers, including eight banks and two mobile network operators.

This report presents the number of players that offer digital financial services, the number of registered and active customers, as well as the volume and value of transactions conducted monthly and the type of services offered in the market. It indicates that:

• In December 2019, there were over 6.2 million registered DFS accounts and 1.4 million active accounts (over a period of 90 days). This corresponds to a 14 percent growth in the number of registered accounts and a 123 percent growth in the number of active accounts from December 2018.
• The customer activity rate grew from 11 percent in December 2018 to 22 percent in December 2019, the best rate ever attained in Sierra Leone.
• To further improve the activity rates of their customers, providers have been building use cases that can enable customers to transact more regularly. An improved monitoring of socio-demographic information of their customer base, including age, gender and location provides insights on how to tailor products to the specific needs of certain population segments.
• In December 2019, 11 million transactions were conducted totaling Le831 billion ($85 million). This represents a 46 percent growth in the number of transactions and a 23 percent growth in their value compared to December 2018.
• Merchant payments only represent 0.3 percent of the total number of transactions conducted in Sierra Leone in December 2019 and even less of the total value.

In the report, UNCDF and the Bank of Sierra Leone provide recommendations to address certain challenges, examples of good practices and discuss the direction in which the DFS market is moving - and that includes:

• Mobile Network Operators need to develop an agent network for which the density is adjusted to customer demand or invest in increasing the demand through better product awareness and pricing. Mobile network operators would benefit from understanding the underlying challenges and patterns that often affect agents’ activity.
• Agents play a key role in improving availability of services in locations where traditional physical branches are not established and, with the publication of the agency guidelines in January 2020, providers will be figuring out how to best leverage existing agent networks or how to sustainably set up their own agent networks.
• The future launch of the National Switch will solve some of the challenges faced by providers when offering merchant payments, but they will also need to develop attractive merchant payment solutions for their customers. In other markets, successful merchant payment solutions have proven to strongly position a provider in a market.
• To increase accessibility of digital financial services among all population segments, providers will work on the inclusivity aspect of their products offering.

To find out more about the challenges and opportunities faced by the industry and to learn tangible and relevant information that can be used to make informed decisions regarding the growth of the industry, you can access the full report here.