On LinkedIn, I recently uploaded a post that had a graphic recording themed on the discussion of mobile banking unpacking challenges, opportunities, the pillars of the ecosystems and the key stakeholders in the markets. It was a piece of art and knowledge that was created about 4- 5 years ago, and however powerful the discussions in the room, the micro-themes still echo the non-silver bullet industry that’s catapulted Africa’s invitation to the global seat of innovation, and particularly financially inclusion. Although the hotbed of the financial inclusion conversation is mobile money in Africa, in this article we’ll explore and propose ways to continue enhancing the distribution mechanism of mobile to employ an economically inclusive society.
Exploring Mobile Money Mission
It was not so long ago when MPESA launched in Kenya, and successfully so that not only did it grant Africa the opportunity to drive the mobile money conversation and allow the unbanked to access financial products but, for some, create and enhance digital footprint, and a chance to be economically active.
Traditional banks notoriously have, for a long time created financial products that were only accessible to the middle class and above, those who were already economically empowered. In the exclusivity of these financial products, the role of startups, data (open or big) and technology became important in leapfrogging the traditional banking industry and getting credit right. The rise of the living standard in emerging markets also created an opportunity for the mobile economy to continue to thrive, whether with an Android phone or if you’re living in the townships.
Who Gets to Participate?
According to research by the PEW Research Center, in emerging economies, the population in some of the poorest communities do have access to a mobile phone, even though the ownership is not of a smartphone. What this does, is that it gives rise to Opening Demand so that the non-digitally savvy citizens may participate, and Supply Inclusion for manufactures, such as now, the new smartphone manufacturer in Africa with the Mara Phone Project.
Mobile money products bank on the vision of a society where the individuals are economically active and visible, from women owned businesses who in some economies didn’t have access to credit to spaza shop owners and the super paranoid cashless user. And in doing this, it is also giving them a digital footprint, and an identity that is tailored for edifying their lifestyles as well as their businesses and financial products.
However, the cost of this inclusion also comes with its own price for the service providers, which includes finding ways to enhance the user and experience centric for the customer.
The Cost of Digitisation, for the Supplier
The high level of customisation to operate in data-lite countries, where data is not enriched and infrastructure is needed to augment results is quite costly. At this moment, this is where the call to government to participate in the market is quite loud in knowledge sharing spaces like conferences and roundtable discussions – an opportunity to serve its citizens better, create more competitive markets and empower lessening the digital divide.
Looking at creating cheaper solutions will cost spend of engineering and predictions analytics, investing in more talent, having the processes to refine the data in order to have more value, the urgency to transform through infrastructure and the list goes on to be an enabler. The return on investment in this cost is not in just the adoption of more products, but also in customers being better informed and better buying customers.
What’s In It For Me, the Consumer?
For a customer like myself, I’m constantly looking for ways to continue leaving my credit and debit cards at home and having my own money market on my phone. The question of “What’s In It For Me?” is what’s constantly at the back of a consumer’s head, whether one has a mobile phone that’s a smart or feature phone – all phones matter.
For the smartphone user, products like Whatsapp, Google Suite, UBER, Booking.Com and BiNu or Facebook which states that 94% of its 170 million African users access the platform via mobile, and with even 100% of the Nigeria population accessing it through mobile. And for feature phone users, products like Mobile Banking, Bwenzi Lathu, JUMO, Kopah Doh or Telecommunications Services are also what make this particular phone a market of the present and future.
While we wait on the digital divide to close and for an all inclusive society, let’s be mobile and invite stakeholders to continue creating enabling ecosystems and environments to innovate for a thriving present and future mobile market.
I believe Kofi Annan put it best when he delivered a speech to the World Summit on the Information Society in 2013 when he broke down how multi-layered the digital divide is. South Africa, as one of the most developing countries on the continent is quite the emerging player in the age of the digital, as industry honours the emergence of the Fourth Industrial Revolution (4IR). However, to even compete on a global stage with other 4IR economies, we need to focus on how to continue to participate in a digital world with profound inequalities that impedes social equality. And, in order to do that, these are the issues that I believe the nation can, and should prioritise:
February 11 is the date that the United Nations and its key partners and stakeholders worldwide marked for International Day of Women and Girls in Science. This day is important as it highlights the matter in question that sees less women in Science Technology Engineering Mathematics (STEM) fields, and to promote and empower more young women to take a role in the industry, especially as we’re in both the Digital and Fourth Industrial Revolutions. In South, the numbers aren’t inspiring either, as United Nations Educational, Scientific and Cultural Organization (UNESCO) reported that South Africa has approximately 40% of women scientists. Gender and cultural inequality has played a major role in the lack of adoption of women in this field as from a young age. The content that’s desired for young girls when it comes to aspirations (this from the toys played to gender specific assignments) is also culturally rooted. It’s no surprise that South Africa (and the rest of the world) is seeing a rise in programmes particularly tailored for young women who code like GirlHype and GirlCode to mention a few; it goes beyond the content of technology, but also what the community of other women coders can do to impact the psychological output inspired and having role models to look up to.
Tied to gender inequality is the cultural inequality that exists that enables the digital divide to thrive. South Africa is a country with much diversity, and in this diversity is many languages even though English is predominantly the teaching language of the country across all stages of learning across institutions. Can teaching in one’s native language impact the adoption and remove the intimation barrier of entering the market? Dr Mmaki Jantjies who is the Head of Information Systems and Lecturer at the University of the Western Cape (UWC) and lecturer definitely believes so.
“I dedicate much of my research to seeing how can develop mobile learning software systems, accessible in South African languages in STEM subjects, that support teaching and learning in this area. In developing various adaptive mobile systems, I hope to address the existing contextual challenges in these sectors.” – Dr Mmaki Jantjies, who has worked with organisations like Mozilla and has, at present as a Google grant to develop curricula in native tongues and teach teachers how to navigate digital classrooms, and has had success.
Needing the language to decode the science is the argument. In a country where assessment is only majorly assessed in two languages (namely Afrikaans and English), and where Section 29(2) of the Constitution of South Africa is conditional on teaching in a learner’s language, more can be done to remove the veil of language intimidation. If leading economies like in Europe, North America, USSR and China have seen success with such and with it, seen students acquiring education and participating in the knowledge economy, then through political and societal will, it can be possible too for this nation.
South Africa has one of the most expensive data costs globally. According to research conducted by the Independent Communications Authority of South Africa (ICASA), the country has the 3rd most expensive costs across BRICS countries. The country’s market is not a monopolistic one in telecommunications, there are a number of service providers including Vodacom, MTN, Telkom, Cell C and newly launched Rain which is a mobile data-only service at 5c per meg (R50 per gig), of which was introduced to the market as a call to action and gap to the high data costs. As costs continue to rise, for both consumer and producer, the market requires more competition, which as a result will offer us as consumers an opportunity to participate in the digital economy. As briefly mentioned, the cost of operating in the digital age is costly not only the consumer but also the telecommunication companies due to lack of availability of spectrum because of the delay in the government-led process of digital migration. According to Vodacom CEO Shameel Joosub, because South Africa has not had access to spectrum of data for nearly over 14 years, this has caused the continuous hikes in prices and this needs and can be reduced by almost half if its introduced. At the end of the day, in as much as projects like Project Isizwe and Broadband Game Changer are implemented, the quality and speed of data of these public wifi hotspots are limited and for a long term play, could impede the stride that the strategy’s goal has.
The president of South Africa, in his recent State of the Nation address highlighted 4IR and mentioned that “…over the next six years, we will provide every school child in South Africa with digital workbooks and textbooks on a tablet device.”. This is inspired, and through the pipelines of education and infrastructure, government has a major role to play as an enabler of attempting to close the gap of the digital divide that exists. The reliance on aided development from the private sector and creating development policies that are only inclusive and benefit certain players in the industry is not wise, engagement with other strategic and key ecosystem players like universities, startups, STEM-focused NPCs are going to play a major role in pivoting acceleration at the matter at hand. On infrastructure, while it has taken over a decade for the spectrum issue to be resolved between the Ministry of Telecommunications and Postal Services and ICASA for digital migration to take place, President Cyril Ramaphosa cemented confidence in that a new deadline for the completion of digital migration had been placed and that is was July 2020. As Ramaphosa mentioned, that this solution could provide “ …unlock significant value in the telecommunications sector, increase competition, promote investment and reduce data costs." , which in turn, will enable many more South Africans to access data, and access it cheaply, if only government plays its role in enabling.
Development comes in many perspectives and is no silver bullet, especially because its an answer framework that invites and honours practices from diverse disciplines like academia and culture and not just politics. What’s needed before access to tools and capital distribution by key stakeholders, is a policy that focuses on the strategy of ICTD and serves it as a precondition to the strategy, this is one of the key ways that we can continue our efforts in bridging the digital divide.
One of the most archaic, traditional systems in the world is getting a facelift, it’s being disrupted from the outside in at a pace that is necessary for the sector to grow. Banking is being turned on its head through the agility and prowess of fintech startups across the globe, and interesting to me is the revolution of partnerships with startups that’s making the threat a sweetened growth hack opportunity.
More and more, we’re beginning to see the quite intentional innovation through large corporates, particularly banks with the agenda of strategic partnering with fintech startups to not only tell a good story but innovating with the intent of incrementally and radically transforming products within the bank’s objectives.
In Africa, we’ve seen successful partnerships like ABSA through their RISE signing POC deal with Peach Payments to test their product and Nigeria’s GT Bank investment in Accounteer with live integration to enable the bank’s financial services are prime examples of how the fintech dream team has mutual benefits for both entities.
Leverage the Open Innovation Agenda (Data, Infrastructure and Technology)
Innovation is expensive, and as disruptive as the process is and as sexy of a story it is to tell, the selling of innovation is nothing compared to the sweat equity involved to successfully take a product to market from ideation. One of the most heartbreaking cycles is witnessing a startup working with an entity, be it an accelerator or a bank with the intention to scale or prove a concept, and the innovation agendas are not aligned. Once the alignment is recognised and relevant, for the bank be it to incrementally or radically innovate their products which has an impact on their systems, or a growth hack opportunity for revenue and having more customers, and adding value to their data and technology. Whereas, the opportunity for startups usually comes in at acceleration of proof of concepts, going to market faster through capital investments and other capabilities and the chance to build on top of the infratrsucture of the bank through open integration.
Access to Capital, Network and Domain Expertise
As I mentioned in the previous paragraph, the opportunity to support startups from the bank’s perspective comes in at monetary investment capital, access to the network that of the bank and the knowledge sharing through domain expertise. In 2017, Merrill Lynch South Africa and Royal Bafokeng Holdings in partnership with Rand Merchant Bank’s Alphacode invested over R4 million in 4 fintech startups for the development of these high impact startups. Through Alphacode, fintech startups like Bankymoon, Livestock Wealth, Slide and Commuscore to name a few have to had access to resources such as an advisory network and a co-working space available.
The Opportunity to be a (First) Customer and The Acquisition
One of the most celebrated bank(able) fintech dream team partnerships is between startup Firepay and Africa’s biggest bank, Standard Bank to launch Snapscan. This partnership worked because of the aligned innovation agendas, and provided Standard Bank the opportunity to provide a solution to and grow their customers and supported the bank’s emerging payments strategy, and for Firepay, to have Africa’s biggest bank not only as a customer but now also as an investor in the business, and the opportunity for their product to scale beyond borders.
The dream team partnership doesn’t not come with its challenges, it’s not all rosy, after all, financial innovation and startups are competing with an archaic system with inertia to change from the security policy to the production management process. Partnering with banks is no walk in the park – especially given the early stages of these kind of collaborations.
As the ecosystem embarks on the journey, it’s key for both banks and startups to recognise that the bankable partnerships are not innovating not against legacy, but with legacy systems because of the valuable intelligence of failure’s patterns and the combination of new models, science and data through which both entities have the capabilities to impact.
And as a final word, ensure that your core values, and not just your technology and data talks to each other.
On the 2nd of May, Thomson Reuters Labs – Cape Town, in partnership with The Durban Innovation Hub and The Makerspace, and supported by the World Economic Forum Global Shapers hosted an Africa 4.0 Innovation Breakfast Experience with a focus on The Power of Co-creation and Africa 4.0 as a pre-cursor to The World Economic Forum (WEF) Africa 2017.
Unpacking Africa 4.0
The breakfast brought together corporate innovation panellists from Grinrod, Thomson Reuters and Kusini Water to unpack Africa 4.0 and provide insights into Africa’s data scarcity gap, how corporate innovation has its role to growing the continent and exploring where Africa is going. Thought leader of industry and founder of WEF, Klaus Schwab describes the Fourth Industrial Revolution as a revolution that is empowering and human centred that is driven by the convergence of new technologies with the physical, digital and biological worlds. It is a revolution that will impact economies and industries, and will stretch itself to challenge ideas in how we communicate, consume and produce.
What does investing in the Fourth industrial revolution mean for Africa - dubbed Africa 4.0?
In understanding what Africa 4.0 is and its impact, Thomson Reuters’ SVP, Head of Innovation for Africa, Saidah Nash Carter kickstarted the discussion by unraveling what was at the centre of the Fourth Industrial Revolution. “Humanity and the impact that technology has on people is the ultimately the heart of the latest revolution, and our role as Thomson Reuters can be to leverage its proven strength in data innovation to convene and empower the increasingly interconnected ecosystem.” Nash Carter expanded on the concept, talking to the opportunity that Africa 4.0 presents for inclusive growth for developing markets.
Tapping the opportunity of Shared Business Value creation through Africa 4.0
“It is possible to do good business, profit and social impact are not mutually exclusive.” Using the Port Maputo in Mozambique as a case study, panelist Cathie Lewis, Group Company Secretary of Grinrod, expressed the concern about shared business value creation when engaging in the commercial value of corporate innovation. Grinrod is a global holding company that operates in the freight logistics, shipping and financial services, and does so with the unique objective of servicing Africa trade flows.
Speaking to the company’s customer relationship with Maputo Port, Lewis expressed the opportunity to create a shared business value chain in Mozambique since the aid-reliant country’s financial aid cut by a couple of donors in 2016 meant unstable economic growth and activity. The opportunity in shared business value creation is in the World Bank’s Mozambique’s strategy in reinvesting the natural wealth and the country’s build environment asset of the Port and decentralize it for human and institutional capital and do good business.
The value created from solutions of such challenges lies at the intersection of Africa 4.0 and its technologies and recognizing that value add needs to come from the corner of multi-stakeholder engagement. This ecosystem is one that recognises the stakeholders at Port Maputo, the Mozambican government to workers, and immediate communities. The objective of Africa 4.0 should aim to look at how we can harness these new technologies to share business value creation for all stakeholders involved
Investing in multi-stakeholder cooperation across all industry
Bringing the conversation to multi-stakeholder investments, Nash Carter recognised the value of entrepreneurs in empowering communities and economies, just as Murendeni Mafumo is with Kusini Water. Using nano-technology and solar power to produce water, Kusini Water thrives on sustainable business models of lease agreements, pay per litre of water used and sale of the systems. A passionate water scientist and entrepreneur, Mafumo echoed his conviction of decentralization of resources in industries, and using the opportunity of collaboration as a tool of accelerating innovation, and shared business value.
Collaboration of startups, private and public sectors is at the heart of innovation, this value creation should not only be empowering, but be built on self-sustaining models like Mafuno's business.
Harnessing the power of Africa 4.0
With a defined term of Africa 4.0 for us to understand, how do we leverage the potential of this revolution of humanity to achieve SDGs, Vision 2030 and the agendas of all stakeholders involved? This can be enabled with disruptive leadership that is both responsive and responsible, and continued investments in push strategies of partnerships that share the same purpose in value creation and empowerment for everyone involved in the Fourth Industrial Revolution.
Data from the 2015/16 Global Entrepreneurship Monitor (GEM) survey reported that South Africa’s rate of established businesses was at 3.4% (more than below Africa’s average of 8%), while necessity-driven entrepreneurship was up 18%. To complement this statistic was the Total Early-stage Activity (TEA) which had increased, while the rates of these phases of TEA remained relatively low. With 62% of businesses closed South Africans and only between the ages of 25 and 44 are the most entrepreneurially active, why would current societal pressure blur the opportunity of being employed (and educated)? After all, is that not one of the values and impact of entrepreneurship, social or not?
It seems the greater cause of entrepreneurship is being totally missed at present with the aspirations to make it the latest trend without consequence to its opportunity of job creation. Starting a startup is no glamorous venture. It’s beyond scheduling Instagram posts with #MotivationMonday captions, uploading a picture of a “Meeting well done, can’t wait for what’s to come” when in actual fact you got a call a day later and lost the deal you thought was putty in your hands. Beyond the glamour frenzy, downplaying the aspirations of an employed peer because entrepreneurship is the only way to actualise one’s dreams and monetize passions, is what has been irking me for some time. Are we ever going to recognise and introduce the opportunity of Intrapreneurship to aspirant workers and entrepreneurs without the worry of being an entrepreneur with a lack of resources? So what is this concept of Intrapreneurship all about?
Intrapreneurship is a fairly recent concept that has a key focus on employees who are drivers of innovation in the company and have grand appetites for risk and return on investment. Intrapreneurs are more than in it for the paycheck, it’s innovating and crafting business value with the bigger idea of advancing not only their growth in the company, but the vision of the entity and adding value to the culture and employees of the company aswell.
For the aspirational entrepreneur, intrapreneurship is a platform to hone your entrepreneurial skills with all the resources at your disposal and the opportunity to fail fast and build and grow a business or product within the company. Intrapreneurship is the opportune playground to kickstart your entrepreneurial journey. And should one have no aspirations of being an entrepreneur, is intrapreneurship still for them? Absolutely! The concept is ideally about leadership, recognising and fostering growth to become a truly innovative leader. Entrepreneur or not, everyone with a role and responsibilities expectant to be remunerated for their services needs these skills.
With the high income inequality, underemployed, unemployment, weak job creating capacity in this country and the GEM highlighting that the job growth aspirations of entrepreneurs likely declined 4 times in 2015, the opportunity to intrapreneur has never been more ripe.
The rise of the entrepreneur does not have to equivocally bring shame to the employed, or a salary be seen as a bribe to pay off one’s dreams. Believe it or not, you can actually be both, an intra- and entrepreneur. If you are of the opinion that a salary is a pay off of one’s dreams and you’re pursing entrepreneurship, whose dream will you be paying off?