Vital: Digital payment offers enhanced security  and lower risk and is a vital point to other financial services

By Isaac Moledi

There is no doubt that cash still plays an incredibly important role in Africa’s payment landscape but digital payments is encroaching in that space at higher speed and the countries on the continent are reaping the benefits.

This is according to  Joe Bronkowski of multinational financial technology firm, Payback’s Country Lead forSouth Africa. He was responding to a recent research by McKinsey which shows that 41% of Africans on the continent made a digital payment in 2021, compared with 27% in 2017.

According to McKinsey, although cash still accounts for approximately 90% of payments across the continent, things are however changing with more and more businesses and consumers adopting to digital payments. According to Bronkowski, research released in 2022 for example, shows that 41% of Africans made digital payments in 2021, compared with 27% in 2017.

According to him, the growth of those payments is important for both ordinary Africans and businesses operating on the continent. For the ordinary Africans, Bronkowski believes that digital payment does not just offer enhanced security and lower risk but can also be a vital access point to other formalised financial services. Businesses adopting digital payments, he says, can expect to realise cost savings, faster payment processing, streamlined record keeping, enhanced security and an improved customer experience, among other things.

But the Africans, he argues, are not the only ones to benefit from digital payments. Their increased use and adoption also benefit the countries in which those payments take place. Some of the biggest benefits countries can expect to see are as a direct consequence of those enjoyed by consumers and businesses.

The improved data and record-keeping that digital payments offer businesses, for example, also makes it easier for them to access formal financing from banks and other institutional lenders.

That means they can take advantage of the improved customer experience that digital payments offer to expand and grow. In turn, that means more economic growth, more jobs and increased tax revenue.

“When it comes to consumers meanwhile, there are multiple benefits but the financial inclusion offered by digital payments is especially important.

Encouraging digital payments can help promote financial inclusion by providing access to banking and financial services for underserved populations.

This, in turn, helps in reducing income inequality and supporting economic development and this in turn ultimately results in an even wider tax base,” says Bronkowski.

One of the other positive effects that come with the widespread use of digital payments is that governments have a lot more data available to them. This data can provide valuable insights into economic trends and consumer behaviour. Governments can also use this data for economic planning, policy formulation and decision making.

In addition, governments can also streamline their financial processes by accepting digital payments for services like taxes, fines and fees. This can reduce administrative costs and improve efficiency. Digital payment systems can also be used to improve the delivery of public services, making them more efficient and accessible to citizens.

“Central banks, meanwhile, can benefit from the data generated by digital payments to make more informed decisions about monetary policy, interest rates and inflation targeting, contributing to economic stability.

“Another big benefit that digital payments offer countries is that those with robust security features can help reduce fraud and corruption, which can have a significant impact on government finances and public trust. The growth of digital payments can additionally drive investments in technology infrastructure, including internet access and digital payment processing systems, which can benefit other sectors of the economy,” says Bronkowski.

These benefits all contribute to economic development, financial stability and improved government operations, ultimately fostering overall well-being within a country.

“In order for African countries to reap the full benefits of digital payments, they need to ensure they have the right conditions in place. Governments can, for example, work with the private sector to drive the growth of digital payments. That means working together to provide support, funding and regulatory sandboxes to encourage the growth of FinTech startups that offer innovative digital payment solutions.”

Bronkowski believes that while cash will likely continue playing an important role in the African payments landscape, it should be clear that digital payments will only increase in use and importance in the coming years.

LAWYERS WARN OF DIRE CONSEQUENCES OVER PROPOSED RAF CHANGES

Remove: Bill removes the rights of drivers, passengers and pedestrians to claim compensation

By Isaac Moledi

The Law Society of SA (LSSA) has warned of  dire consequences should the Road Accident Fund (RAF) Amendment Bill 2923 be enacted in its current form, saying the Bill contained a number of significant changes which would have far-reaching consequences.

The draft amendment Bill, published for public comment earlier this month by the transport department, proposes major changes to how the fund will now operate and how it will pay claims. The Bill removes the rights of drivers, passengers and pedestrians to claim compensation for injuries but proposes the fund provide ‘social benefits’ instead.

Persons crossing a highway, injured in a hit and run are not covered and pedestrians, drivers and cyclist who may test over the legal limit for alcohol and their dependents are also not covered.

The Bill also proposes doing away with payments for pain and suffering, loss of amenities of life, disability, disfigurement or shock. It also does away with lump sum payments for loss of earnings or support, replacing them with monthly payments and giving the fund the right to continually reassess its liability to continue to pay.

While at present all medical and other expenses reasonably incurred that arise directly from the accident are covered, these will now be subject to a prescribed tariff. Any future medical expenses have to be pre-authorised. People who are not citizens or permanent residents are also not covered.

“It is of extreme importance that all practitioners, as well as the general public and the relevant civic associations, are made aware of the dire consequences that will follow the enactment of this bill and that they voice their objections so that this Bill can be stopped in its tracks, or at least proceed to a full public participation process,” the LSSA said in a statement.

They called for an urgent mobilization of funds in order to launch and maintain an effective awareness campaign and to rally opposition to the legislation, including litigation, if necessary. It called on all practitioners to contribute whatever they can to the LSSA’s dedicated fund for this purpose. According to LSSA, if the draft Bill becomes law, the rights of all drivers, passengers and pedestrians to claim compensation for injuries they suffer in a motor vehicle accident will be taken away. In its place will be significantly reduced social benefits”.

Despite the fact that only very limited social benefits will be paid, the LSSA says other farreaching consequences include:-

• the innocent injured party is still denied a common law claim against the guilty party for the balance of his or her loss;
• all claimants will still have to prove that their injuries were suffered as a result of the negligence of the driver or owner of a motor vehicle;
• all those using the roads will nevertheless, either directly or indirectly, still have to contribute to the Road Accident Fund (the Fund) by way of the fuel levy which is currently R2.18 per litre. The Fund receives more than R45 billion per year via the fuel levy.

According to the LSSA, the poor and disempowered who make up the vast majority of claimants and who are compelled to use public transport will bear the brunt of the consequences of these amendments. They will be forced into the public health system, as the prescribed tariffs will not cover the actual costs incurred at a private hospital.

Under the present system many receive treatment at dedicated private healthcare facilities. They will not receive any lumpsum payments and it is very likely that, if they are not able to produce a salary slip, they will receive no compensation for loss of earnings. In other words, they will receive no benefit at all, even though they may suffer devastating injuries and are the very people that the Fund should protect.

The LSSA says that the proposed legislation also unfairly discriminates against the working classes who are dependent on public transport to get to work or who are conveyed in motor vehicles during the course of their employment.

Those that can afford will be compelled to take out private accident cover for medical and other expenses as well as accident benefits. “This is likely to be very costly, as there will be no reimbursement of expenses covered from the Fund.” 

Medical aids will more than likely exclude cover or the cost thereof will have to materially increase to preserve the funds in the pool for all members.

Persons who suffer harm from medical negligence or are injured in train or plane or boat accidents or in shopping centres, hotels, construction sites, holiday resorts, private homes or by electrocution or pollution and by a host of other causes, have unfettered rights to seek compensation from the person or entity who caused them harm. Innocent motor vehicle accident victims, alone, do not have this right, despite the fact that they pay premiums to the tune of R45 billion per year.

At present, injuries sustained in a motor car accident anywhere in South Africa by any person are covered by the Fund. The Bill now excludes injuries suffered in motor vehicle accidents in parking areas, sports fields, farm roads, driveways, private estates, game reserves or any other private road.

The LSSA said the Bill also largely ousts the role of the courts in determining contested claims, establishing instead alternative dispute resolution procedures followed by referral to be a yet-to-be established Road Accident Fund Adjudicator.

Some lawyer associations have also raised their objection to the Bill, saying they are presently putting together their formal response to the proposals. Comments and objections can be sent to Lindiwe Twala at twala@dot.gov.za or Trevor Mphahlele at mphahlelet@dot.gov.za

The deadline for comments is 8 October, 2023.