How Africa’s Airtime Currency Traders Birthed A Fintech Innovation Playbook

This is a story of how informal airtime currency resellers of Africa birthed mPesa, mobile money, and an innovation playbook for Africa’s emerging economy.

Not everyone can see it.

If you are keen though, you’ll realize Africa’s informal economy is an open playbook on how to innovate, build and scale successful products and services for the emerging African consumers. Ask me how I know, and I’ll point you to the little known story of prepaid airtime currency re-sellers in Africa who, by cobbling up a rudimentary hack, were able to model a country-wide money transfer network, that would later be adopted by Africa’s telecommunication companies (Telco), spun off into a massive revenue generating business to eventually dethrone the monopoly of banks in East Africa.

But the real story is neither about airtime, nor Telcos. What it is really about are the lessons we can draw upon Africa’s informal economy on how to approach innovation in Africa.

This is a story of how the prepaid airtime re-sellers of Africa not only birthed mPesa, and mobile money, but an innovation playbook for Africa’s emerging economy.

Continue reading “How Africa’s Airtime Currency Traders Birthed A Fintech Innovation Playbook”

Why African Fintech Wants To Digitize Chamas, But Can’t Seem To Get It Right

Why is the digitization of Chama groups so valuable for Fintechs and Telcos and Banks? And more interestingly, why is it such a tough nut to crack?

 

A group of high profile organizations including Facebook, Mastercard, FSD Kenya, Safaricom, Fintech startups,  and even the World Bank have convened in Nairobi for a one day workshop to try figure out how to digitize the chama groups of East Africa. While it has been over a decade of digital financial inclusion estimated at 80%, none of them have figured out how to successfully digitize chama groups.

Just so we’re on the same page, I use chamas as a catchall for any group of people who come together with a shared goal, agree on a self governing mechanism and pool together resources such as time, labour or capital to achieve their shared aspirations. This simple form of self organization, self governance and chama identity makes it a highly flexible people-structure and why it exists in different forms across the world and Africa as Paare in Chad, Asusu in Nigeria or Chilemba in Zambia.

So why is the digitization of Chama groups so valuable for Fintechs and Telcos and Banks? And more interestingly, why is it such a tough nut to crack?

I found the answers to these questions from Toffene Karma, the one person who successfully digitized the social savings group of Chad West Africa known as Paare using a mobile product known as TigoPaare.

Continue reading “Why African Fintech Wants To Digitize Chamas, But Can’t Seem To Get It Right”

How the Central Bank Of Kenya Plans To Regulate Bitcoin and Cryptocurrencies

Rather than fight change, the Central Bank of Kenya now seems to be reconsidering its stance on cryptocurrencies as a radically new way of high-speed, low-cost value transfer independent of traditional financial intermediaries.

Bitcoin and cryptocurrencies are a puzzle especially for regulators. Over the last 4 years our dear Central Bank Governor, Dr. Patrick Njoroge has consistently been opposed to the idea of cryptocurrencies. He issued 2 damning public notices warning the public to stay away and another circular expressly requesting banks to choke any value transfer activity related to cryptocurrencies.

As per the Central Bank of Kenya Act, he is well within his right. A bank is a regulated private business. You cannot compel a bank to take you as a customer or take your business. Thus, every once in a while, the governor pulls out his trump card to remind us who is boss.

But mounting pressure has pinned the old man against the wall, forcing him to revisit his dogmatism. An article from the Standard dated May 23rd titled “CBK Warms Up to Cryptocurrencies”  read

“CBK Governor Patrick Njoroge said the regulator was open to introducing cryptocurrencies such as bitcoin as alternative payment vehicles with the opportunity to reduce fraud.”

While in the past, all the the financial instruments that intermediary companies use for fund transfers were based on fiat currencies, in the forms of cash, bank deposits and electronic money – it is no longer the case with the advent of Bitcoin.

Rather than fight change, the Central Bank of Kenya now seems to be reconsidering its stance on cryptocurrencies as a radically new way of high-speed, low-cost value transfer independent of traditional financial intermediaries.

Continue reading “How the Central Bank Of Kenya Plans To Regulate Bitcoin and Cryptocurrencies”

Is Financial Inclusion in Africa Overrated?

People in Africa do not sleep and dream of having bank accounts. What they want is income to put in a bank account. Simply having a bank account gets you nowhere. Simply being cashless gets you nowhere.

Prepaid economy
Logo designed for The Prepaid Economy by Jennifer Mwaogwugwu 3/16/13

 This week I was honored be part of #WhatsNextFinclusion, a series put together by Metta on the state of the Fintech industry in Kenya and more importantly, the future. I was there on behalf of ChamaPesa – a ledger keeping app for social savings groups in Africa. Check out #ChamaPesa on twitter.

This year’s edition was sponsored by Mastercard and the moderator threw some pertinent questions at the panel. I, of course, have my own opinions from my own experience over the past 4 years – what i have observed as an analyst, user researcher, blogger and now co-founder of a startup in the space.

But, I thought it better to pose the same questions to some of the more experienced, brilliant minds from the continent that I have had the privilege to interact with, learn from and exchange ideas.  

What follows is a response from Mwalimu Nyerere – my friend and mentor – on the state of the financial inclusion industry in Kenya and Africa in the raw.  Nothing has been alter-rated so as to preserve the original thought and tone, only polished to give it flow.

Continue reading “Is Financial Inclusion in Africa Overrated?”

5 Types of Pesa We Use in Kenya Today

Pesa is dynamic. We need look no further than Nairobi for 5 types of pesa in Kenya you’re likely to have come across.

Pesa is dynamic.

One of my favorite projects in Kenya is Bangla Pesa. Besides being greatly underappreciated as an example of how to empower rural and informal communities, its perception is a great example of the miseducation of pesa. Back in 2013 the members of this community currency project were arrested and paraded in the media as secessionists out to overthrow the national government.

Of course it was but a clear case of misunderstanding, like so many out-of-the-box ideas in Kenya.

When thinking about pesa, you gotta loosen up. We need look no further than Nairobi for 5 types of pesa in Kenya you’re likely to have come across.

Continue reading “5 Types of Pesa We Use in Kenya Today”

Why Bitcoin ATMs in Kenya are Dead on Arrival

Bitcoin ATMs in Nairobi are only a great idea on paper. Electronic ATMs have lost to human agents in Kenya

I get it. Bitcoin ATMs are cool. You can walk up to a machine, insert cash and instantly get cryptocurrency. But Bitcoin ATMs in Nairobi are only a great idea on paper.  

For cryptocurrencies to take off – for whatever use cases – people need a way to exchange their regular pesa in and out of the system. There is no way around this. It is the only way to bridge access and grow adoption. Calls for Bitcoin and cryptocurrency ATMs in Kenya and Africa typically stem from this access gap.

Unfortunately, this idea in Kenya and East Africa is dead on arrival.

The evolution of banking in nations, like Hong Kong, the US or the UK, took a vastly different form compared to East Africa’s much talked about mobile banking phenomenon. Any successful models for cryptocurrency adoption in East Africa have to be informed by local contexts. For starters, taking notes from existing digital money systems.

Agent networks – henceforth human ATMs – are the key to unlocking access.

Continue reading “Why Bitcoin ATMs in Kenya are Dead on Arrival”

Why Kenya’s Cryptocurrency Agents of 2017 remind me of airtime p2p networks of 2006

Could Kenya’s cryptocurrency peer to peer networks become agents or exchange points in a future where digital currencies and crypto assets are commonplace ?

The lack of an official or formal bitcoin payment gateway has done little to dampen the adoption rate of cryptocurrencies in Kenya. Quite the opposite in fact. People have adapted to this service gap by forming peer-to-peer networks where anyone can buy or sell cryptocurrency. These informal networks, resemble the airtime currency informal networks of pre-2006, that powered remittance payment networks before Mpesa became a thing.

Let me explain.

Continue reading “Why Kenya’s Cryptocurrency Agents of 2017 remind me of airtime p2p networks of 2006”