‘Africa needs to grow a system that enables smooth electronic money’

Ondieki

Isaac Ondieki is the Regional Managing Director, Microsave Africa, an international financial inclusion consulting firm functioning in 40 developing countries. Ondieki was recently in Lagos to deliver a paper at a conference. The Guardian’s MARGARET MWANTOK caught up with him and he spoke on the importance, risks of digital financial service, such as Internet and mobile money, as well as his company’s intend to launch in the Nigerian market.

I know Kenya has recorded huge success with mobile money, but we have not had much success in Nigeria, why is that?
In Kenya, the mobile money addresses an existing need; there is the need to move money from point A to point B. The mobile money reduces risks and pain of carrying money about. It also addresses the needs of the upper middle class, who need to send money to relations in rural areas. To draw a parallel with Nigeria, there are people who currently have children in schools and pay fees in hard currencies, if the schools could give them the chance and the banks allow it, they could pay the fees from the comfort of their homes. For pensioners, government could borrow what is obtainable in other East African countries, like Government-to-Person (G2P) payment through digital platforms to send the money through mobile wallet. If someone is sick in the hospital, the medical bills can be settled from whatever part of the world. Most of the low income population say when they go to banks, they are mistreated, and that the banks are so big and far from where they are, and they have to queue for two hours to be attended to. We want customers to have the same feeling they get when they listen to news from their homes without going to where the news is being broadcasting, with financial services.

How can we replicate Kenyan success in Nigeria?
The first thing is to identify the true need of the Nigerian people, through Client Centric Services, then address the real need. They may not need to be told to open a bank account, because all they need is to move money from point A to point B. Nigeria also need to partner with firms from East Africa, and share from their wealth of experience, and learn not to repeat their own mistakes. A supportive regulatory body is key in this. They need to allow you to sometimes experiment. In Nigeria, there are chances of collaborations between the banking sector and telecommunications to bring a unified service to the customer.

Which of these innovations is most impactful to the African financial system?
The most impactful would be the one that enables ease of banking. For example in Nigeria, 40 per cent of the adult population, which is about 39 million people, are not banked. That is the population of Kenya where I come from, you can imagine leaving out the entire country out of the banking sector. All Africa needs is ease of access. In Nigeria, it cost longer for customers to get into the bank than the service they are going to get in the bank. Current advances in digital services have enabled customers to have the bank at the palm of their hand through the mobile phone, and I think that is going to be the key advancement for the most of the adult population that has been unbanked for a very long time. A good number of them have access to a phone, which is all it takes to have access to a financial service.

What do you mean by financial inclusion in Africa?
An estimated two billion working-age adults globally have no access to the types of formal financial services delivered by regulated financial institutions. For example, in Sub-Saharan Africa, only 24% of adults have a bank account even though Africa’s formal financial sector has grown in recent years. It is the way the banks and government regulators work together to enable Africans access banking services; access money and save hard currencies. The availability of financial services that meet the specific needs of users without discrimination is key objective of financial inclusion.

In Africa, telecommunication has advanced, but the same cannot be said about mobile money, which seems to be growing very slow, why?
I don’t think the mobile money has been growing slowly as the media has been reporting. Sometimes customer education is lacking. We also need to grow a system that allows this electronic money function smoothly first.
Haven worked with Delloitte and other financial bodies, how would you describe the African accounting system?
The African accounting system mimics the United Kingdom system in one part of Africa and the United States in another part. I said mimic in the sense that we have local hybrid of those systems but their foundations are laid to suit ‘big brother’ so to speak in business. I can say it is well developed, highly regulated, which sometimes it stifles innovation. We need to have pragmatic garment appealing to the big entities to see value and start seeing these bottom of the pyramid customers as normal and as customers of tomorrow.

How can platforms, such as your firm come together to strengthen the capacity of Africa to deliver some of these killable services?
We seek opportunity to work with regulators and the government to expose them through the acquisition of what we call sound boxes, where the innovators can come and experiment the innovations to the comfort of regulators to see that the perceived risks or negative effects of that technology, how to mitigate and help to reduce the level of risks associated with these new innovations.

In terms of e-business, South Africa is ahead of Kenya and Nigeria. How would you rate Nigeria and Kenya penetration in e-business?
In Kenya, e-business is a matured business. For example, you can go to any village and be able to transact business electronically through the mobile or electronic, through a normal shop or merchant. In Nigeria, I would say it is a margin market, I see a lot of learning from what we have done in East Africa, especially with the advent of the acceptance of the bank ID.

What are some of the risks that come with these new innovations?
One of the risks involved is that the money is electronic and the services occur very fast. So, if a fraudster intercepts your account, you need to move very fast to rescue yourself. Secondly, people can hack into the system from anywhere in the world. There is also the risk in telecoms and banks keeping people’s data. Some of these fraudsters access these data and sell it to use it in other services. What is required to tackle this is the right technologies, the right watchdogs to the porting place to ensure this does not happen without effort, with the right protection in place, we are able to slow down these fraudsters.

I know your company, Microsave has the intention to launch in Nigeria soon, what is the attraction?
Our mandate is to be market centric and provide for the masses. We see Nigeria as a big market, which is untapped. We believe that majority of the country’s population has not come to the private sector; she needs to take her place as the financial hub of Africa.



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