Archive for the ‘Mobile platform’ Category

How informal financial services can lower the barriers to formal financial inclusion

Around 2 and a half years ago, I was on a short visit to Abidjan, the capital of Cote D’Ivoire as a guest of the African Development Bank. They were holding an innovation weekend for young women and men in the Francophone West African region who were interested in becoming entrepreneurs.

David O. Capo Chichi, who used to work back then for MTN, a major telco very kindly took me around the informal markets on his day off and we got to talking to market women about their financial management habits. One interesting behaviour linking the informal with the formal came to light.

An established spice seller told us she had a savings account at the bank, but accessing the bank’s services were a huge barrier – the opening times ate into her business hours and the long wait times meant loss of income from potential customers. At the same time, because she was dependent on cash income from daily sales, it was more convenient for her to put a portion of money aside on a daily basis. So what she was doing was paying a tontine collector for the service of showing up at her shop everyday and collecting her small amount of cash set aside for savings. He would hold it safely for her for a month and then she would take the total saved up amount back from him, take the day off work and go deposit it in her bank account. That was the only way she could have the flexibility and negotiability that budgeting on her irregular cash flow required and still access the benefits of a secure safe interest earning savings account at the bank.

Now today I came across this article describing a pilot program in Benin where the private susu (small small) or tontinier, such as that used by the lady in Cote D’Ivoire, have been formalized into a more secure and insured service for the same demographic of informal market women and traders. There’s even a digital component that updates the accounts via the mobile phone.

“The reality is that we can’t be everywhere, and the Susu collectors are near the population. We have to work with them and find the best business model to get them into the formal system.”

Now, this exact same model being piloted by the MFI in Benin may not apply in exactly the same way elsewhere, depending on the conditions prevalent in the operating environment, but its clear that the structures and systems in place at the formal institution can be made more flexible and negotiable – given a “human face” – by working together with the pre-existing informal financial services already in operation.

This behaviour also resembles that seen among the informal cross border traders at the Uganda/Kenya borderland. Teresia who sells clothes under a tree has established a trusted relationship with her mobile money agent. He shows up at closing time to help her transfer her cash into mPesa, thus securing it for her and saving her both time and effort through this personalized service. Though she said she had an account at the bank, it lies dormant, for the same reasons given by the spice seller in Abidjan – “Who can afford to close shop during the day to spend hours at the bank?”

Innovations aimed at increasing inclusion for financial services need not always contain a digital component for them to make a difference for the customer, and lower the barriers to adoption and usage. All it takes is a deeper understanding of the challenges and constraints of the end user in the context of their day to day life.

Why does the prepaid model work so well and what are the lessons for business model innovation?

Increasingly, employment is becoming ad hoc and flexible. The gig economy and the informal sector share a common characteristic of incomes which are irregular and unpredictable, unlike the timely wages characteristic of formal employment. Both budgeting and planning thus become a challenge when there’s no predictable paycheck to rely on. Expenses are managed against cash flows to minimize volatility, and payments with calender deadlines become a challenge in planning.

It is in this scenario that the prepaid or pay as you go model works so well for the customer, one of the reasons why its ubiquity across the developing world drives the growth of mobile phones. It puts control over timing and amount of money spent in the hands of the user, allowing them juggle voice and data purchases against available cash in hand.

Here are the lessons for business model innovation applicable for a plethora of products and services, drawn from our decade of research into the financial frameworks underlying the operating environment characterized by unpredictability and volatility, and the success of the prepaid model.


The prepaid model is flexible. There is no rigid requirement on the amount that can be spent, beyond the voucher values of each telcom operator, nor are there periodic calender based deadlines such as those in a monthly bill. In Nigeria, traders have been found to top up their phones multiple times a week or even the same day, yet purchasing the smallest denomination of vouchers. High frequency of small amounts is a purchasing pattern that resembles their own cash flow while trading in the informal market. They don’t want to tie up their liquidity in airtime in case cash on hand is required for business, yet their trade is clearly dependent on mobile communication hence the frequent recharges.

This flexibility built into the business model clearly puts control over timing and amounts spent in the hands of the end-user who must manage a volatile cash flow situation.


In addition to the daily or weekly fluctuations in cash flow experienced by gig economy workers or those active in the developing country informal sectors, there are larger variations in income level over the course of the natural year. Unlike the regularity of a monthly salary, irregular incomes rise during peak seasons, such as festivals and holidays, and plunge during low seasons. Developing country economies are more closely linked to the seasonality of agriculture, given the greater proportion of the population’s dependence on farming. Incomes can vary as much as 300% for instance, for tea farmers in western Kenya’s Kisii region. Climatic effects also have greater impact on cash flows, and the current drought in East Africa is expected to depress livestock prices in the coming half year. On the upside, seasonal peaks in consumer durable sales are predictable as the regional harvest timings are a known factor. North India’s post harvest season in late October/November kickstarts an orgy of consumer spending during the festivals and the weddings which take place during this period.

Business models designed to take expected seasonal changes into account can minimize the dropout rate of customers when their income changes.


One of the biggest challenges we have wrapping our heads around when considering more rural or cash intensive economies is that liquidity is not equivalent to wealth, or even purchasing power. While this factor can apply to anyone relying on multiple income streams from a variety of sources, I’ll use the example of a small farmer to explain its importance to the design of business models.

The homestead is managed like an investment portfolio, with different sources of income maturing over different durations of time over the course of the natural year. This is also why control over Timing – frequency, periodicity – of payments, such as possible in the prepaid model, is so critical for the success of payment plans. A smartphone might be purchased after the major harvest of the annual cash crop, but its the daily cash from the sale of milk that would be used for recharges (and other basic necessities). Similarly, a calf may be purchased to fatten against the following year’s school fees.


This leads directly to a factor more relevant to heavily informal economies where variance in systems and structures means transactions are more human centered, depending on face to face communication, trusted references, and mutual compacts rather than legal contracts to enforce agreements. Negotiability of your business model, and its close relation, reciprocity – “the give and take” – is an element missing from faceless institutions that seek to serve this demographic.

This is one reason many prefer to seek solutions outside of formal banking institutions, for example, as their opening hours might not suit the trader’s business hours. In Busia, Uganda, most women traders had established trusted relationships with a mobile money agent, many of whom would show up at the end of the work day to assist the trader in transferring the cash earning safely onto the digital wallet. And, unlike the bank, the telco’s prepaid model allows customers to “negotiate” when and how much they’ll pay within the constraints of far more flexible terms and conditions than most other models.

A farmer has “purchased” this solar panel after coming to an agreement with the shopkeeper. He will pay off the total, over time, as and when he has spare cash, and collect the panel when payment is complete. There is no interest charge. The shopkeeper has put the farmer’s name on the panel but will keep hold of the item.

The greater the span of control over timing and amounts, the greater the success of the payment plan

The prepaid model bridges the critical gap between the predictable formal structures of the large institution and the dynamic challenges of the informal. The bottomline is that the flexibility, negotiability, and reciprocity of the model are more important factors for its success than the conventional understanding of permitting micropayments in advance. Numerous consumer product marketers entering emerging markets experienced this challenge when their micropayment hire purchase models failed customers who might have to miss one or two week’s payments due to illness or other emergencies – their products were repossessed without any recourse to adjustment. Its the rigid calender schedule embedded in a payment plan that is often the barrier to a high ticket purchase than the actual price itself.

None of these factors are insurmountable with today’s technology, and the field for business model innovation for irregular income streams such as those in the gig economy or the informal sector is still wide open for disruption.

Connectivity, Communication, and Commerce: The 3 Cs of Africa’s Smartphone Led Future

Recent headlines touted the decline in marketshare being seen by smartphones on the African continent, and the concurrent increase in sales of basic devices. Yet a closer look shows that this shift might only be numerical due to the opening of new markets in heavily populated DR Congo and Ethiopia – first time buyers are likely to start with entry level phones.

In fact, role of smartphones in Africa is not only likely to grow and evolve over the coming 3 to 5 years but its very likely that it will be connectivity apps driving their adoption. We Are Social’s latest report shows Africa’s internet user numbers have been growing by over 20% year-on-year.

The 4th C – the Challenge of Unquestioned Assumptions and Great Expectations

With connectivity and communication, commerce was expected to take off but anyone tracking the headlines would notice the challenges faced by African e-commerce platforms. Some point fingers to connectivity as the issue, expecting to reap benefits from scale of penetration. Others point to high costs of data and devices, or challenges with completing the transaction online.

Looking at the patterns exposed by all the reports and the articles makes one wonder whether it’s the underlying assumptions and expectations that are the real problem. The untapped market is hyped out of proportion by each new entrant who rush in with their disruption to revolutionize the African consumer, only to rush back out again when the traction fails to succeed. This has been muddying the waters of what could have been a considered thoughtful opportunity to transform the social and economic landscape.

Yet its not all negative. If someone was to ask me about how connectivity and communication are driving commerce in the African context, I’d point to the plethora of informal trade in goods and services being conducted daily across social media platforms. Everyday there’s a new product or service launched with a tweet. Groups on Facebook encourage and support the entrepreneurial journey. Cryptocurrency trading is making Kenya famous as a first mover.

The difference in traction seems to be that which is self organized and organic vs that which is institutionalized and/or introduced from elsewhere. The external pressure to succeed in the same terms as that visible in the Silicon Valleys might actually be a greater barrier to the sustainable development of the African online community led commerce, increasing pressure on founders and startups with every negative headline. Maybe the lesson from the informal organic growth online is that might actually be a matter of throw the technology at them and see what emerges without lifting the lid every other second to check progress?

Maybe all that is needed is more locally relevant content, such as already being seen emerging from Nigerian and Kenyan tech blogs, rather than the imposition of metrics and heuristics from developed nation contexts.

Mobile First Africa: Social Media’s Boost to Rural Productivity in Kenya

Now in business for just six months, he also uses social media pages to sell his products, improving his customer reach.

“Through Facebook posts I receive enquiries and orders from Kenyans in the diaspora living in the US, South Korea, South Sudan, UK, Switzerland and Botswana who want the splits to be delivered to their families in Kenya,” he said.

“I also use the page to educate farmers and friends more about brachiaria grass.” ~ How farmers look for new markets every season

Continuing with yesterday’s theme of business productivity in mobile first Africa, this story caught my attention for the way this farmer leveraged the reach and discoverability of social media to grow his business.

Social biashara such as this is diffusing outwards from the urban centers where it first began. Expect to see many more such stories emerge from the unexpected places.

Mobile First Africa: Opportunity for Accessories that Boost Productivity on Smartphones

Long ago, when smart phones were still on their way to changing the world, I remember the product development of a host of accessories that would boost business productivity in a variety of areas for phone owners.

The projector phone was one such innovation, flopping back when it was launched due to the tech not having caught up yet. I bring this up because I read an article this morning that highlights a major challenge for the ‘mobile first’ African market.

“We hear about mobile-first Africa, it sounds sexy,” said Nanjira Sambuli, digital equality advocacy manager at the World Wide Web Foundation. “But how much meaningful work can you get done through your mobile. Are we creating a divide? We are not going to be equal if mobile is the only way. Because mobile is for consuming.”

Today, technology is far more advanced, and as China has shown us, far more affordable. Can a range of productivity solutions be launched as accessories for smartphones to disrupt the African SME market?

The Japanese are already ahead with their answers, such as this keyboard by Elecom. The products are all out there, I think its just a matter of identifying the opportunity and the price point for the African markets.

The continent tends not to be taken as seriously for enterprise solutions as it could be. Informal sectors do not mean lack of purchasing power or opportunity space. Perhaps this is the sector that is now ripe for disruption by an enterprising entrepreneur.

The Strategic Entry of China’s Transsion into the Vacuum Left by Nokia in Africa

Branded storefront in Karatina, Kenya (April 2013)

If you’re outside Africa, you’ve never heard of them before, but a mobile phone brand called Tecno has been painting Kenya blue ever since I started fulltime fieldwork there in late 2011. It was in Mombasa that I first noticed the name and wondered what it was about. Over the years, I saw the line up of phones even in the smallest market towns and began wondering if this brand would be the new Nokia of Africa.

Transsion, Tecno’s manufacturer, has two other brands on the market – Itel, and Infinix catering to different price points and consumer segments. What sets the company apart is that they are solely focused on the African continent and do not even sell in their domestic market of China. This was a strategic decision, as a recent article says, and their rapid success very likely due to the vacuum left by Nokia. They’ve customized completely for the African market, going as far as to develop cameras suited for local conditions, something no other phone manufacturer has done anywhere on the planet.

“For African consumers, a main medium of entertainment is photos – they love to take selfies and share them with friends. The traditional camera was not optimised for the African consumer because often, for those with darker skin, the photos don’t come out well especially in low light. We did research using over 10,000 photos of African consumers to create a special algorithm to optimise the camera to attract 30% more light on the darker face. We call this ‘Africa Focus’. It’s been heavily popular. It improved our cameras and won the hearts of Africans who like to take selfies.

In fact, Itel is so popular among traders in the Uganda Kenya borderland due to its low price and long battery life, that our research associate went as far as to capture the mound of Itel packaging seen on the rubbish heap.

They’ve brought in local languages and messenger apps. They’ve established a factory in Ethiopia to show their commitment to Africa, and they’ve set a full customer care facility – something glaringly missing from any other imported brand’s portfolio.

In my opinion, they’ve done what Nokia could have and should have done, cater to the emerging markets across the developing world where they’d originally begun connecting people.

And, they’ve shown us that it is indeed possible for a consumer product manufacturer to not only focus solely on the African consumer market but to make an outstanding success of it.


Quartz echoed the story to share the factoid that in Africa, not only have featurephones sold more than smartphones but Transsion’s brands lead the way.

Book Review: Operation Elop, the final years of Nokia by Merina Salminen and Pekka Nykänen

Design auditing the new Life Tools for Nokia, Sept 2009, India

Operation Elop, uploaded by Harri Kiljander has just been made available in English and I’m already on Chapter 8. I saw the editor’s tweet 23 minutes after he said “It’s done and available on Medium under a Creative Commons license” and I haven’t stopped diving in and out since.

It starts with a memorable day in Finland – 10th September 2010 – so memorable that one asks “Where were you that day?” and people remember. I remember it well, and I have photographs to prove it. My life changed rather dramatically in the year that followed, and the period that the book covers is the same period I was away from Finland, having already decided to make my home here for the remaining years of my life.

Its complicated, this history of Nokia’s demise. The impact on Finland was palpable, the responses ranging across the spectrum of human emotions. You have to know that I was in love with Nokia and the changes they had wrought across the developing world. In 2007, there’s a photograph of me sitting in their lobby stunned from the impact of coming face to face with a corporation that conveyed the values of their brand. And its because of Nokia’s design and innovation researchers blogging their exploratory user research across Africa that inspired me to do what I have been doing for the past 10 years. Every chapter in this book has been adding new layers to my own personal journey.

I’ll highlight the one paragraph that’s important to me. When all the news was breaking over the years, I thought that Nokia was splitting their product development energies too broadly. In fact, in May 2011, I was invited to a feature phone workshop to present on the future and on Africa. What I said we wanted to put on t-shirts, “Don’t get stuck in the missionary position.” They were taking a Mother Teresa route in Africa instead of focusing on what they were good at – robust engineering and products that stood up to harsh climes and rough usage. At a value for money price point. I didn’t know it was already too late, but here’s the key snippet from the book that helped me make sense of things from long ago as I read it today.

From Chapter 19:

In 2010, the foundation of Nokia’s business consisted of devices priced at a few tens of euros ($30–50), with which one could make calls, send text messages, and use simple web services. Thanks to efficient production, feature phones yielded larger profit margins to Nokia than smartphones. The amazing efficiency was based on the S40 operating system, which had been introduced in 1999. Nokia conquered the world with S40. It was made possible because the system could be tailored at a low cost to mobile network providers operating in different regions. By 2012, Nokia sold 1.5 billion S40 devices across the world.

This was squandered in the race to the top, the glamour of being world famous, complicated by so many factors – all simply and accessibly laid out in the book – that it still makes one weep to think of what might have been. All I know is that the Nokia I own today doesn’t even have predictive text.

I want to thank the translators for their hard work and effort. The book has been a joy to read and it’s kept its Finnishness in choice of words, and sentence structure. You can read it online or download it for free.

Mobiles at the Border Post: Anti-Atlas of Borders Exhibition Slides (Jan 2016)

In January 2016, our submission for the Anti-Atlas of Borders Art Exhibition in Brussels was accepted for a commission of 500e. We were thrilled and surprised since we’d never imagined our work on mobile platforms, technology, and the borderland biashara could be considered from the arts and culture point of view.

Here is our story in the form of slideshow – each of these was printed in full size and hung on the walls.

Introduction to rural household energy consumption behaviour in East Africa (1 of 3 parts)

The following is extracted from a six month study during 2012 on household energy consumption behaviour in rural Kenya and Rwanda among the lower income demographic, that led to an understanding of some of barriers hampering the sales of client’s solar products in this market. This first part is an overview of household financial management in conditions irregular and unpredictable income streams from a variety of sources. The 2nd and 3rd part will focus on fuel usage and consumption behaviours for cooking and for lighting separately. Users sampled for this study were selected based on varying fuel consumption patterns, ranging from a single homestead to a rural hotel catering for more than 12 hours a day.

Aspirational ownership and tangible evidence of savings in prepaid purchase model of solar panel, as seen in Chuka, Kenya (Photo: Niti Bhan, February 2012)

Rural Kenyans are not very different from rural Filipinos or Malawians or Indians when it comes to the way they manage their daily household expenses. Similarities in decision making, in purchasing patterns and in observed consumer behaviour, all stem from the same underlying need to plan and manage on irregular incomes from a variety of multiple sources in harsh environments of scarcity and uncertainty. The underlying driver is always to stretch the limited shilling, rupee or peso to the maximum while keeping one’s head above water.

With the exception of the salaried schoolteacher, who managed on fixed amounts of cash paid predictably on a calender schedule, the rest juggled an irregular cash flow against required expenses, attempting to minimize the differences over calender time and as a planning mechanism across the natural year’s seasons of abundance and scarcity. Even cash croppers like Mama Grace, who received end month payments from the tea factory, coped with the significant difference in the quality and quantity of tea harvested during the wet and the dry seasons with a variance of as much as 300% between high and low payments.

Rural homesteads manage their household finances rather like a “portfolio of investments” that mature over varying times such as cow’s milk which can be sold daily for cash, while a chicken takes less time than a field of maize to be ready for harvest and sale. Thus decisions are made based on timing of the expense and the choice of ‘investment’ to liquidate on what was ‘ready’ as well as the amount of cash required. For example, in Kilala livestock market it is a known fact that livestock prices always drop in January as its time for first term school fees and everybody needs to sell to raise the necessary cash. Similarly, major purchases or cash outlays are planned for known times of abundance such as right after the seasonal harvest.

Unlike those on a fixed salary who are able to plan ahead, those on irregular incomes need greater control and flexibility over the timing – that is the frequency and the periodicity; and well the amount – in cash or kind; of their cash flow, as a planning mechanism for financial management. In fact, the greater the span of control the customer has over their time and money, as articulated above, the greater the success of a business model or payment plan. This is why prepaid airtime is the preferred model for 96% of the African continent’s 700 million mobile phone users and also why kerosene has been so hard to dislodge. It can be purchased by cash amount (say 40 Kes worth) or quantity (half a litre or 5 litres) on demand or in bulk, and then frugally used for as long as possible, allowing consumers control over their “time” and “money” with great flexibility.

Observations on household fuel and energy use reflect these purchasing patterns and consumer behaviour. Cooking and then lighting are the most important needs, and the two elements of time and money as discussed above, show up in the form of duration and location. While duration of use has a direct relationship to the amount of time and money required, location has a critical bearing on behaviour in rural Kenya as will be seen in forthcoming posts.


Part One: Introduction to Household Energy Consumption Behaviour Study in East Africa (2012)
Part Two: Cooking
Part Three: Lighting & Concluding Remarks

Some Highlights from Reviewing the African Consumer Market 2014-2017

Photo by Niti Bhan in Busia market, Kenya in January 2016

Recently I was reminded of the cover story in the Africapitalist magazine published back in 2014 on the theme of the true size of the African Consumer market, that is, the hidden and untapped purchasing power embedded in the continent’s vast informal and unrecorded sector. Today I’ll start by reviewing some of the consumer trends, particularly in FMCG, that have become rather obvious over the past three years.

    1. Airtime is now a Fast Moving Consumer Good (FMCG) With the advent of a wide variety of different voice and data bundles, as well as affordable smartphones, airtime in Africa, while still prepaid, can be considered along side tea or sugar its distribution and sales patterns. In fact, smartphones and in-app purchasing have made it so that airtime voucher sellers are rapidly going out of business in key markets like Nigeria. In early adopter markets like Kenya’s this digitization has led to barriers lowering for the adoption of crypto-currencies like bitcoin and ethereum.
    2. Hair is a huge business across the continent. This goes beyond cosmetic products like shampoos and creams, to include hair extensions, weaves, services, and add-ons. Hair care related services are mostly in the informal sector while products themselves might be both formal (Unilever, Godrej, Marico) or informal (recycled weaves, imports from Indian temples, etc). Services are also traded and Maasai experts often travel around working and sending money home from providing weaving services. There is a gap in the market for local players and branded chains of retail outlets for the Maasai moran to leverage.
    3. Women’s hygiene and well-being products. This market has been valued at USD 800 million annually and is virtually untapped by formalized solutions. There is literally a gap of products priced for women who are neither beneficiaries of NGO donations, nor can afford urban supermarket prices of imported brands. Otoh, this FMCG product has finally become visible as a market opportunity.
    4. Social Biashara. Smartphones and free-to-use social media networks such as YouTube and WhatsApp have transformed the entrepreneurial opportunity space for unemployed youth struggling to earn in challenging economies across the African continent. In subsequent posts I will consider the impact of e-commerce and changing consumer behaviour on existing markets, both formal and informal. For now, assume that these apps have lowered the barrier to finding and providing trade goods and services and giving rise to an entire demographic of freelancers in cutting edge services including Ethereum/Bitcoin to Euro brokerage.