In Senegal, 8 out of 10 workers are paid in cash with the most being temporary workers that are excluded from health insurance.
According to a recent survey, 77 per cent out of temporary workers would be willing to receive their wages digitally if given access to health insurance.
This has made the Senegalese government launch this initiative with the support from United Nations’ Better Than Cash Alliance, the World Bank and the National Agency of Statistics and Demography of Senegal to combine digital payments with health insurance benefits that offers an excellent opportunity for social inclusion, formalization, and financial innovation.
Digital payments stimulate domestic production and consumption. If 50% of temporary workers in Senegal received payments digitally, 45 billion CFA francs would be added to GDP per year (around $80 million).
Paying workers digitally speeds up the financial inclusion for the population, boost business competitiveness and increases financial system liquidity.
Digitizing payments and advancing universal health care coverage
According to the International Labour Organization (ILO) “For employers, the benefits of digitizing payments include avoiding the constraints of managing large amounts of cash, and all the risks that distribution can involve”
While receiving a salary is often linked to health care contributions, globally at least 61% of workers operate in the informal sector.
To meet this challenge of inclusion, the National Agency for Universal Health Coverage in Senegal has launched an ambitious digital payments platform by partnering with fintech and private companies to link access to universal health coverage and digital payments – specifically targeting women.
More than 200,000 workers will now have access to quality, government-subsidized health care.
While 81% of national companies have fewer than 20 employees, on average hundreds or even thousands of temporary workers are employed in their supply chains. Employees are generally banked, but 93% of employees on temporary contracts are paid in cash. The latter are systematically excluded from the formal health system.
The successful transition towards digital payments
Three obstacles have limited the growth of payment digitization in Africa this includes the size of the informal sector which is approximately 90 per cent of the economy, the historically low financial inclusion rate; and most importantly, 21% of African workers receive a wage keeping them below the poverty line.
