Archive for the ‘Technology’ Category

Chinese investments in African tech will transform the fintech landscape

A recent article brought to my attention this report on the pattern of funding experienced by fintech startups in East Africa and India with rather damning results. 90 percent of the capital invested by “Silicon Valley-style” investors went to startups, technically in East Africa, with one or more North American or European founders.

These results put an entirely different spin on more recent articles on the rise of African fintech and the millions of dollars raised by startups in Africa. Village Capital, too, has been making an effort to promote their recommendations for structural change in the ecosystem in order to enable the emergence of hundreds more fintech and DFS (digital financial services) startups deemed necessary to transform the economic landscape in Africa.

But the challenge, as framed by this snippet from the report, will remain, as it “reflects deep cultural trends in American life”, of bias, stereotyping, and inbred prejudice. So called “first world” technology such as artificial intelligence is already dealing with the problem.

China’s interest in African tech, particularly trade related such as in commerce and payments, is being noticed

Simultaneously, and recently, I came across this op-ed for the WEF making the case for why the tech sector is China’s next big investment target in Africa.

Given China’s position as a leading and rapidly accelerating technological superpower in the world, making strides especially in the fields of logistics (smart cars, drones, e-commerce) and energy (solar panels, smart metering, etc), it makes sense that the most logical industry for the next stage of Sino-Africa collaboration is technology.

But that’s not fintechs and DFS startups, you say, comparing these apples to the Village Capital’s report on oranges?

Perhaps this is why Alibaba Group, the unparalleled pioneer of e-commerce and payments in China, has started to show an interest in Africa. Not only did they collaborate with UNCTAD on the eFounders programme to train over 100 African entrepreneurs in the next couple of years, they recently announced a fund of $10 million to invest on the continent over the next 10 years. Furthermore, Alibaba’s subsidiary Ant Financial has signed a partnership with the United Nations Economic Commission for Africa and the IFC to promote digital financial inclusion. While these are preliminary steps, we are hopeful for more serious commercial involvement in Africa from a company with a $500 billion market cap.

DFS, DFI, what’s the difference between digital financial services for financial inclusion and digital financial inclusion? The target is clear. And been noticed from the other side, as this rival opinion piece in the Financial Times shows, albeit with a greater sense of urgency and panic in the tone and style. It may also explain why Village Capital woke up this week to trumpet the results of their analysis on funding patterns from over a year ago. From the FT:

The Trump administration has made a perceived global rivalry with China the centre of US foreign policy. This competitive stance has coloured the view of African countries in Washington and a tale of Chinese mercantilism in the region has come to dominate the narrative, under which China greedily demands privileged access to Africa’s natural resources in exchange for no-strings-attached infrastructure financing.

But that story is outdated and fails to capture an emergent area of true competition — that among US and Chinese tech giants.

Given what we’ve seen in the Village Capital report linked in the first paragraph, will Chinese funding patterns be any different? Two key factors are being highlighted by both sides:

Read On…

The Mobile as a Post Industrial Platform for Social and Economic Development: Top 3 Trends in Africa

Source: CHI2007 “Reach Beyond” http://www.chi2007.org/attend/plenaries.php

Just over a decade ago, in San Jose, California, I was invited to speak as the Closing Plenary for the CHI 2007 25th Anniversary Conference. The theme was “Reach Beyond”, as this was the 25th Anniversary conference of the Computer Human Interaction society, and as the closing plenary, I was tasked with articulating the vision for the next 25 years of man machine interfaces. This was in May 2007, mere weeks before the launch of the iPhone. That’s important to note, because Apple’s little phone transformed the world of humans interfacing with computers in its own way. You must remember that back then we didn’t really send texts in the United States, and the mobile and it’s role in society had nowhere near the transformational impact it was having in the developing world. mPesa had just begun to catch attention in Kenya – particularly the Central Bank’s – and there were no such thing as apps or smartphones. This is the background and context in which I gave my talk, which sank without a trace in the history of impactful communication ;p

It was in April 2006, that I first wrote about the mobile phone as a post industrial platform, and as a driver for innovation, in its own right. Two snippets:

One of the recurring patterns I’ve been seeing of late is how mobile phones – not just the handset, but the system as a whole, have become drivers of innovation in emerging economies.
[…]
Not just in India or China; this phenomena of the handphone – freed from the shackles of state sponsored infrastructure required for landlines in the majority of these developing nations – has demonstrated its effect in improving the micro economy and providing opportunities for the entrepreneurially minded in hitherto backward regions around the world.

Today, 11 years and 4 months later, I would like to highlight the undeniable impact of the mobile platform in Africa’s development story by introducing the top 3 trends that are sweeping across the continent (and capturing global imagination) very briefly in 3 paragraphs below:

  1. Fintech solutions – Whether its mobile money transfers, instant mobile loans, or cross border payments and more complex back-end solutions; the financial services industry is being disrupted by the mobile platform, on smartphones and on feature phones. Mobile technology is rapidly becoming the default solution delivery system for the last mile of money in sub Saharan Africa.
  2. Solar power – This in turn is accelerating the rapid adoption of small solar systems for domestic energy needs in offgrid locations; a new pay as you use or “prepaid” solution for acquiring solar powered products and for charging can be seen to be launched in a yet another African country every month it seems. My favourite example is the solar powered cold room lockers that one can rent via micro mobile payments. In another year, I expect that one could replace the word “solar” with utilities, with the visible increase in solutions for potable water, and a plethora of government services shift online to the platform.
  3. Agritech – From the very basic “farmer information systems”, agritech is rapidly evolving to more nuanced and complex solution delivery via the ubiquitous phone. Whether its using the smartphone capabilities to identify the army worm pest infesting the fields, or decision support systems that let you choose the ideal species of tree to plant, given soil and drought conditions, agritech is a newly emergent megatrend on the mobile for African agriculture.

And the future, the next ten years? What will 2027 or 28 bring about? And, will we still be using the handheld device we have in our pockets right now? I can’t see it yet, but my gut tells me that easy access to powerful computing within reach of each and every one of us is something that will only be transformed but not replaced.

The Informal Industrial Ecosystem: An Introduction to REculture

The Art of Seeing Beauty in Garbage, Kenya, September 2010

This article introduces and explains some things I’ve been seeing in the informal industrial ecosystem in the developing world context for almost a decade now. First noticed in 2009, I then named it REculture, a neologism to capture the vast and complex ecosystem I saw in the revenue generating facility of recycle, replace, repurpose, reuse and resale. Given contemporary interest in developed country concepts such as the circular economy, and other sustainable and ecological initiatives, I thought it timely to sit down and attempt to synthesize the past work before proceeding to write more on current events.

What is REculture?

I thought I’d start from the beginning – is there, for example, a difference between “the entrepreneur” and “the producer”, “the creator” and “the innovator”, if at all? And if none, then perhaps start to fill in some few blanks based on our earlier thinking on the BoP “consumer” and their mindset, worldview or value system.~ June 2009

In July 2009, I was inspired by my observation of a man sitting under a tree in the administrative district of New Delhi with a visibly large bag of buttons by his side. His service, to the civil servants rushing to and fro from important governmental meetings, was to quickly repair a missing button from their suit jacket or shirt. Not unlike a shoeshine boy, this gentleman’s service was on demand, while you waited, his fingers flying rapidly with the needle as he sewed a reasonable facsimile of your missing button back on for you.

Look at the unusual yet welcome niche he had found for himself! A repair service that could only work in this part of the city where the common uniform was a suit and tie and important visitors the norm.

Once he opened my eyes to what it was I was seeing on the streets – the entrepreneurial opportunities squeezed out of the margins of daily life – I began noticing such services more and more. Repair, re-use, re-purposing, resale, and, in their own inimitable way, recycling of used up or abandoned products of industrialization were turning out to provide a significant chunk of the revenue streams of many of the informal sector’s service providers who now became visible to me.

In June 2009, I wrote:

…many other such observations got me thinking about the whole RE culture among the BoP. Stepping back, if you take the broad space of REuse, REpurpose, REpair and REcycle – its the low hanging fruit for the BoP entrepreneur’s opportunities for income generation. In fact, REpair is an entire professional service area in its own right, perhaps a subset of the opportunity space in the informal economy with varying degrees of skill and ability required.

But coming back to the other three, it seems at first glance that they look to be more or less the same thing i.e. how different is it to reuse a plastic bottle to contain some liquid from recyling it? particularly if the manufacturer had intended for it to be a disposable container? Yet, from the big picture perspective, one can say (and it has been said before) the whole concept of recycling is a cost in the OECD world whereas its actually a source of income, in a myriad ways, among the BoP.

The second thing that struck me, when I pondered these signs of a post-consumption economic ecosystem, was that the actors in the informal sector – whom we now discuss as traders, fabricators, service providers – were still then thought of as the “Bottom of the Pyramid” or the BoP – the economically vulnerable, the marginalized, the low income barely making ends meet on a dollar or two a day. There was no attempt at segmentation, this was the lumpen mass of the next 4 billion. Even though the late CK Prahalad had called them out as micro-producers, creators, and innovators, in his seminal book The Fortune at the Bottom of the Pyramid, those who had grabbed the label with both hands and run with it were still thinking in terms of consumption. “How do we make products profitably for the poor?”

What about the creators, the makers, the innovators, and the producers in the informal economic ecosystem?

Again, back in June 2009, I wrote:

I am attempting to evaluate whether all our previous observations and learnings viz., “Life is hard” (the mindset and values of a customer at the BoP particularly one living on an irregular income) can help us begin to understand the other side of the coin, that is, the “innovator” or “creator/maker” or simply, the “informal business owner or service provider” at the BoP.

At this point at least, it seems to me, that rather than quibble about each individual word choice to describe “who” or “what” they are, perhaps we’re better off looking at the “why” and “how” – by this I mean, that the driver of motivation is to generate an income stream (the why) and the gaps observed, as mentioned above, are the opportunity spaces (the how). That is, the BoP seem to display more of a tendency towards ‘opportunity spotting’ (not quite the same as the word opportunists, though that may also apply in many cases or situations), filling the niche quickly with a service or product. Some of these services have arisen spontaneously around the developing world, mobile phone repair comes to top of mind.

It feels as though its a far more active than passive quality – poverty and hardship can be a powerful motivational driver in itself, though we tend to overlook the ingenuity and creativity involved.

That is, back then, just over 9 years ago, I connected the dots I was seeing in this space – the mindset and values of the low income customers and their post consumption behaviours, taken together with the “RE” space where visibly they were earning income – and framed it so:

That is, the lower income market tends towards maintenance and extending the lifespan of the products (through repair or repurposing it) they purchase rather than disposing it for convenience or replacing it for a trendier style. All very obvious, you say, but its this very same quality that leads to the wide variety of opportunities for the entreprenuerial or the innovative to make some money (or even a living). From the very basic, in terms of skills and ability such as the button repair guy to the complex, such as the mobile phone hacker, all of these services meet an ‘unmet need’ in the market, an opportunity gap which they can fill.

However, what’s interesting about this is the fact that these opportunities would very rarely be either a) spotted as one in mainstream consumer culture; b) not be a gap per se due to a difference in mindset/worldview OR even c) not be profitable enough, given the comparative cost of labour vs the price of the product involved. These conditions for making money, and more so, making money that is deemed a valid ROI seem only to be available among the lower income demographic and in the developing world.

For the precondition to their success is also a sufficient customer base seeking such a service and their willingness to pay for it,  and that, imho, emerges from their mindset as BoP consumers, one quality of which is their need to Maximise the return on their investment (purchase). This shows up in this context as a wish to REpair, REuse, REsell (for REpurpose or REcycling or whatever along those lines) – I doubt if they’ve stopped coming by from door to door among the ‘consuming classes’ in India to buy old bottles, newspapers and other sundry junk. (A sign of development if it stops?)

Once I could “see” the entire post consumption entrepreneurial activity in the informal sector, I went back to my research documentation conducted in rural Philippines and India for the original ‘prepaid’ economy work, and pulled out the patterns seen in the photographs that, when fitted together, showed all the evidence of an entire industrial ecosystem. As a working title for this seemingly vast economic space within the informal economy across Asia and Africa, I had called it REculture – the group blog went on spawn a magazine.

An entire industrial ecosystem within the informal economy based on the discards of the consumer lifestyle

A discarded Kraft cream cheese bottle would be picked out of the garbage by a waste picker and sold to an intermediary who would clean and sort these by colour and size and sell them on to a fabricator, who in turn, would convert these into affordable – and handmade mass produced – kerosene lamps, completed with spot welded wick tube.

An entire industrial life cycle from “raw material” through to “mass production” supported by distribution and retail. The only difference? The informal nature of the entire value chain and the post consumption adaptation of the materials and discards.

My concluding thoughts at the stage in which I’d left my explorations almost a decade ago can be summed up thus:

So, at this point, early stages of exploration though it is, one could say that the whole area of “post consumption” consumer practices – most of which have withered away like the appendix in the ‘rich’ world – forms one major  basis for both products and services, with value addition to varying degrees, in the ‘informal economies’ of the developing world.

There are insights to be teased out here on flexible, adaptable, ‘on demand’ business models ~ but applied outside the virtual world. Scarcity of resources and circumstance force lean overheads and inventory. Constraints of demand and customer purchasing power create their own flows in the chaos. Is there a pattern to the flow of the informal after all?

What next?

I summed up this history so as to provide me with the foundation and backdrop to pick up the threads of this conversation, now with the added insights of the past decade, and the increasingly sophisticated frameworks of framing the informal economy as a commercial environment in its own right, populated with entrepreneurs and niches that the mainstream overlooks.

As the topics of sustainability, resource conservation, and the circular economy become top of mind and critical, the early lessons from the developing world will only become more important going forward. I’ll be writing more under the category and tag “REculture” for old times’ sake.

Designed in China, Made in Africa.

In Ethiopia, Transsion Holdings, a Chinese company, is manufacturing handsets costing as little as $10 in an industrial park outside Addis Ababa. Mobile phone models from Tecno, Infinix, and Itel brands, which all belong to Transsion, to be Made in Africa.

Almost 13 years ago, in December of 2005, I wrote my first column for BusinessWeek which began with the sentence “Designed in California, Built in China.” That referred to Apple’s iconic iPod, the MP3 player that industrial design made into a household name, one that led to a whole new medium: podcasting.

Imagine the scale, depth, and level of change that must take place in production planning and control, not to mention supply chains and global value chains, for this continental shift in design and manufacturing to have taken place in less than half a generation.

One (last) word: Plastics

A UN report issued on World Environment day  showed dozens of nations acting to cut plastic, including a ban on plastic bags in Kenya, on styrofoam in Sri Lanka and the use of biodegradable bags in China. via

There’s a backlash against plastics that is ongoing in many not so noticed parts of the world today. So called ‘weak’ signals from three major economies stand out for the impact in the near and emerging future of their policy shifts towards the material use of plastics.

The first is India, where a recent waste audit in Bengaluru showed that over 60% of the waste littering the streets was from non recyclable consumer product packaging by both international and domestic brands. By 2020, India will abolish all single-use plastics, and introduce a campaign against marine litter, among other things.

The EU has also moved to ban the same, and the proposal also requires EU countries to collect 90 percent of single-use plastic drink bottles by 2025 and producers to help cover costs of waste management and clean-up.

China, on the other hand, has caused consternation among nations who relied on shipping their plastics off for recycling. They’ve banned imports of contaminated waste plastic, leaving questions hanging such as “And how do you get manufacturers to design a product that is more easily recyclable.” Though I find this conversation interesting for its consistent and tone deaf externalization of the problem – waste management is certainly a developing country problem, but materials technology and consumer packaging innovation is a developed country design challenge.

With more than 50 countries waking up to the plastics problem, there’s a deeper shift occurring in the air, beyond our critical need to protect wildlife and the oceans. That of dependency on oil – in case you didn’t know, the bulk of plastic is made from oil.

Here’s a quick round up of something of things happening in these major economies with significant chunks of the world’s population.

India has just approved a massive new 5000 megawatt solar farm, and as the map shows, there’s many more out there in the desert wastes. The Chinese and Indian solar farms are 10x the size of those in North America.

The number of electric cars on the road has more than doubled over the last three years, and of the global sales of electric vehicles (EVs) last year, China contributed more than half. And there’s a shift now from blind growth towards more strategic product development, with greater impact. Numerous European marques are opening factories and R&D centers in China. And India’s doing its best to keep up.

What is going to be the impact of these moves, combined, from these three major economies on the planet? The head of Shell’s Scenarios* team has already developed a scenario called Sky “which shows that changing the ways we transport people and goods is one of the crucial steps toward the world meeting the goals of the Paris Agreement — keeping the increase in global average temperature to well below 2⁰C above pre-industrial levels.”

On a planetary scale, these trends are the future, and products and business models that do not adapt to them are going to be increasingly obsolete, or suitable only for walled gardens. The use of Fahrenheit is but one example. Conserving humanity’s collective home is far more important for all our emerging futures.

 

*Shell originally developed the concept and tools for scenario planning

The comparative global impact of Alibaba vs. Amazon

Alibaba Business School and the United Nations Conference on Trade and Development (UNCTAD) brought 29 young entrepreneurs from 11 countries across Africa to the Alibaba campus in Hangzhou, China for the third eFounders Fellowship cohort.

Chinese corporate soft power influence is production driven, not consumption focused. Alibaba, the e-commerce giant with digital payment tentacles, has been graduating cohorts of young entrepreneurs from Asia and Africa this past year. This initiative is the outcome from Jack Ma’s seminal visit to Nairobi last year, when thousands of young Kenyans waited for him in the sun.

Photo Credit: Abdishakur Mohammed, July 2017, University of Nairobi grounds, Kenya

He talks about entrepreneurship in a digital world, and personally shows up to meet visiting cohorts to talk about taking the lessons learnt from e-commerce in the most challenging environments in China (rural, mobile, social) back home to their own not dissimilar operating environments.

Contrast this with the first thing that comes to mind when you think about Amazon these days – a desperate workforce unable to take a leak, afraid to lose their low waged jobs as worker bees in a humongous warehouse. It keeps prices down and the consumption that runs the billions flowing, but whom does it benefit beyond the shareholders?

It struck me when I saw the news about “Alibaba Global Leadership Academy” that Chinese soft power was increasingly about driving production and growth aka development along their entire value chain, even among putative new consumer markets, whilst the American model was still stuck in a consumption driven mindset of the 1980s first wave of globalization. Buy more cola, wear our jeans, use our credit card, say the American brands in Jakarta or Accra or Nairobi.

The difference in mindset is stark when you think about the tech giants of Silicon Valley looking to uplift with low cost connectivity and internet basics for free, and compare to the Chinese giants thinking about raising the purchasing power first. The english language media would have you believe its all about neo-colonialism for natural resources, but the recent shifts in tactics and strategy seem to imply a less demoralizing mindset than anything evidenced by charitable good works handing out goodies to the downtrodden. Because whatever the agenda, the bottomline will be that at end of the exercise there will be a group left inspired to build their own markets on their mobiles, versus a group left holding a palliative goodie.

“My experience here has shifted my thinking. Before, we were focused on pleasing the investors, but now I see the importance of putting our customers first, then my employees, then the investors,” said Andreas Koumato, 26, from Chad , the founder of Mossosouk, an e-commerce platform. “Let others [benefit], then later, we will gain.”

Production driven social impact is far more powerful than consumption driven. Human centered productivity even more so.

Ecodesign, Ecolabels and the Environment: How Europe is redesigning our footprint on earth

What do chopped fresh green beans have in common with high definition flat screen TV’s? And how does this relate to design? In Europe, they’re both considered consumer products whose journey from raw material to shopwindow requires energy to process—emitting greenhouse gases that can have an adverse impact on the environment—and are considered to possess a ‘carbon footprint.’ In other words, they are products of a larger global industrial ecosystem.

When the postal service is setting down guidelines on the creativity and production of direct mailers so that their customers can better recycle them, it signals that graphic design needs to evolve the way its practiced entirely.

 

Acronyms and Initiatives
The European Union’s chosen approach to address the issue of environmental degradation and climate change is a combination of regulations, directives and voluntary activities. Industrial designers and engineers around the world are familiar with many of many of these already in effect—the EU Directive on the Restriction of Hazardous Substances (RoHS) and the EU Directive on the Waste from Electrical & Electronic Equipment (WEEE) are top of mind in the field of consumer electronics and other energy consuming products (EUPs)—the first sector to be addressed by these rules.

Just ratified is the new European law on chemicals, REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals), which covers the toxicity and hazards of chemical substances, touching the nascent field of green chemistry. Also to be enforced is the EU Directive on the Ecodesign of EUPs – this will directly regulate the negative contribution to the environment across the entire lifecycle of the product, not just the use phase.

Supporting activities include the Ecolabel—a voluntary certification for a wider range of products beyond those that merely consume energy during their use—helping consumers identify products that have considered all aspects of environmental impact toward minimum ecological footprint, compared to other products in the same category. This includes the chopped green beans, as their total carbon footprint assessed across the supply chain would take into account the energy expended to grow them, process them, package them and deliver them to the neighbourhood supermarket.

All of these and more come under the holistic approach of the Integrated Product Policy (IPP), which can be considered the foundation for such decision-making and the design of the various directives, programs and certifications. The IPP is a systemic look at the environmental impact of the entire supply chain and life cycle of any given product, taking all aspects of the global industrial ecosystem into account: raw materials, manufacture, transportation, distribution, marketing, sales, delivery and waste treatment at the end of life.

 

The Power of Design
While design has been picking up speed in addressing issues of sustainable development, a quick purview of the larger ecosystem helps in understanding the long-term consequences of the decisions made in the studio. It is recognized that a significant proportion (ranging from 70% to 90%) of any given product’s ecological footprint can be addressed at the design stage. But the considerations mentioned above take into account factors all along the product chain that can directly or indirectly contribute to environmental degradation; decisions made at the design stage now become crucial in ensuring the best outcome throughout the entire system.

Carbon Trust UK‘s simplified diagram of the lifecycle of a typical can of cola, for example, enables us to visualize and correlate the relationship between product design choices and energy consumption at every stage of the supply chain.

Read On…

Primer on African Fintech: Myths, Misconceptions, Opportunities, Hotspots and Roadblocks

As we prepare to start work for our third African fintech client, I thought it was time to quickly and briefly introduce the opportunity space and clear up some misunderstandings around fintech in Africa.

  • The first point is the common confusion between Fintech and financial inclusion. Investopedia’s definition of Fintech says financial inclusion, that is, affordable and accessible financial services to the underserved and unbanked is only one of the many areas fintech is actively addressing. While technology helps provide cheaper solutions for emerging markets such as those on the African continent, all fintech cannot be said to be equivalent to financial inclusion.
  • This leads us to a clarification on what exactly is Fintech. I prefer to quote Investopedia since the entry in Wikipedia defines it as the industry itself. “Fintech is a portmanteau of financial technology that describes an emerging financial services sector in the 21st century. Originally, the term applied to technology applied to the back-end of established consumer and trade financial institutions. Since the end of the first decade of the 21st century, the term has expanded to include any technological innovation in the financial sector, including innovations in financial literacy and education, retail banking, investment and even crypto-currencies.
  • Thus, while financial inclusion is a key untapped opportunity space for fintech innovation of all kinds, there are numerous other opportunities along the entire value chain of financial service provision both B2B and B2C, including intermediary services, which are ripe for disruption in the African context.
  • Beyond the conventional preference for disruption of the existing context, there are as many if not more opportunities for meeting the unmet needs of African businesses and consumers. History, geography, economics and conventional wisdom have together combined to create a vacuum of solutions and services that address the unique circumstances of the African operating environment which still tends to be heavily cash dependent and is described commonly as “informal”. And this commercial environment has lagged in custom designed tools and services for small business productivity or household enterprise management.
  • Hotspots: Kenya overwhelming leads in mindshare as the leading fintech innovation market on the continent, and grabs the lion’s share of investments in East Africa. However, the GSMA’s latest report implies West Africa is rapidly catching up, and may outspend East Africa. The WAEMU region is a hidden hotspot, and Ghana leads the anglophone countries.
  • The largest market opportunity, by population, remains a challenge however, for a variety of reasons including policy and regulation. Nigeria’s payments innovators have made a name for themselves but their domestic market has not felt the impact of their efforts. Even mobile money, introduced more than 5 years ago, has only achieved 1% penetration. On the other hand, it took India years and years before digital payments reached visibly transformational critical mass. There’s hope.
  • Lastly, Chinese investment has just entered the African fintech space, talking up financial inclusion – a clear sign of its economic importance for the future development of trade and industry.

Implications of Mobile Money Interoperability in Kenya?

Mobile money pioneer Kenya, has finally gone live this month with account to account interoperability between mobile money services. Neighbouring Tanzania pioneered interoperability between the mobile money services offered by local telcos with a soft launch back in 2014. Fears of cannibalization and zero sum scenarios were unfounded, as documented in an early evaluation report by the GSMA. On the other hand, perhaps that assessment of impact was far too early as little else is mentioned in the rather thin report. Fellow East African Community member Rwanda too has had interoperability for a couple of years now. Now, its Kenya’s turn.

In a market where mPesa services posted a market share of 80.8%, what, if any, will be the impact of this newfound ability to send money directly from wallet to wallet without cashing out?

Talking points in news media articles and various interested non profit bodies point to “increase in financial inclusion” and “increase in competitiveness” with lower transaction costs as the benefits to end users, but these seem to be just that, talking points.

Safaricom, the telco behind mPesa, has long maintained a stranglehold on the market, and even now continues raising barriers to frictionless payments. In the decade since mPesa’s launch and unchallenged dominance, the vast majority of Kenyans have had no choice but to set up their own account even if it means using a separate SIM*.

In a different market, such a move would be cause for a celebration- the potential benefits clearly outweighing any drawbacks to individual service operators, and the future potential for digital commerce and trade enabled by a frictionless payments platform to be realized in time. In fact, mobile money usage is only growing in both Tanzania and Rwanda, though in each the numbers of subscribers is less unevenly distributed across the telcos.

But in Kenya, beyond providing ~20% of mobile subscribers with the ability to send money to mPesa (more or less) seamlessly, the overall impact on platform and service innovation within the local economy is likely to remain limited. Providing the service takes the edge off Safaricom’s issues with monopolization of the market but will in no way change much of the daily transactional reality on the ground. Habits are hard to break. And mPesa has become a Kenyan habit.

 

*  mPesa has a penetration rate of ~81% as compared to Safaricom subscriber penetration of ~72%, as of January 2018

 

West Africa’s incipient mobile platform boom will transform the ECOWAS economy

While East Africa has tended to grab the headlines as the mover and shaker in mobile platform innovation, there’s an imminent boom due to emerge in West Africa. The GSMA’s most recent report on the West African mobile ecosystem contains all the signals of this happening within the next 3 or so years.

Even in mobile money solutions, where East Africa has had a headstart (and worldwide fame for M-Pesa), numerous new solutions have been launched in West Africa and subscriber numbers show double digit growth.

In addition, both smartphone penetration (~30% of all subscribers) and internet use are growing as well.

All of this, taken together with the growth of incubators, accelerators and variations of tech hubs to support the startup ecosystem provide evidence of a transformation underway.

Does West Africa have the potential to surpass the success of East Africa? I believe so, given its larger population, greater numbers of dynamic economies from both Francophone and Anglophone regions, and the side effect of years of watching East Africa grab the headlines.