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In the light of the prevailing economic realities of the pandemic across the globe, and its huge impact and implications for financial services, leading African Women CEOs have advised Fintechs in the continent to reinvent their current model of delivering financial services solutions for sustainability and growth in order to navigate the new normal post-pandemic.
This was the key takeaway from the panellists comprising of award-winning female experts and business leaders at the African Women CEOs Network webinar which took place on Thursday, May 21, 2020, with the theme: African Fintech: Financial Services Solutions.
The virtual event which was moderated by Dr. Anino Emuwa (Founder, Avandis Consulting) also had seasoned panellists that comprised of: Viola Llewellyn (President & Co-founder Ovamba Solutions, Inc), Agnes Gathaiya (CEO PesaLink, Kenya), Olayinka David-West (Academic Director, Lagos Business School Executive Education & Lead, Sustainable and Inclusive Digital Financial Services) and Judyth Oduor- Engels (Digital Economy Consultant).
During her opening remarks, Dr. Anino Emuwa provided lots of insights on the socio-economic impact of the pandemic on the African continent, the adverse effect on businesses, especially SMEs, the implications for digital financial services, the impact on women, who are disproportionately represented in the informal sector and the huge opportunities and threats presented by the crisis for Fintechs to leverage digital technology to bridge the financial inclusion gaps.
While dissecting the African Fintech landscape and the associated challenges in the wake of the pandemic, the panellists provided broad perspectives and strategies for Fintechs to take advantage of the emerging opportunities on a sustainable basis.
They also stressed that navigating the crisis would require a careful rethink of the value proposition and offering to the customer, and Fintechs with the right product and ahead of the curve would come out of the pandemic a lot better and wiser to take advantage of the opportunities.
“We still have informal businesses doing informal business. We still have individuals working within close quarters of each other. We have a very broken supply chain and we have financial institutions of a traditional nature grappling with the fact that they actually do not always know what it means to have a digital solution. We do not see very much communication between banks and businesses. And more than anything, we are seeing the very quiet, yet urgent need to digitize products, services and deliveries”, said Viola Llewellyn.
In terms of the current situation, Agnes Gathaiya state that, “Certain things have kind of been forced, that really should have happened organically and by themselves in the Fintech space. What has happened in Kenya within the last three weeks is that between the telcos, banks and the regulators, they have been pushed to start operating as a single unit as opposed to divergent units that were hitherto in operation. This means things like moving money from a bank account to a mobile wallet has been zero-rated. The cost was significant before and therefore created a lot of friction which was unnecessary. If we look at transactions under 1,000 Kenyan Shillings, and you will realize that in Africa most transactions are under a 1,000 Shillings ($10). So, all transactions under 1,000 Shillings have actually been zero-rated for three months up to the 30th of June. Why? Because cash has to keep moving. Regardless of what is happening or how bad the pandemic is, if cash stops moving, the economy will die”.
While concurring that there are huge opportunities, Judyth Oduor- Engels admitted that there are also myriads of challenges. “Most Governments are now more than ever before, standing confident in support of digitization. So, I don’t see any other push that we will ever get or that we can wait for other than this for the Fintechs to take off in their wings. There are many opportunities right now, but at the same time, there are many challenges”, she said.
On her part, Olayinka David-West canvassed for an inclusive approach to financial services. “Financial services are not an end in themselves alone, they are enablers in general. So, how do we embed then into the value chains, in terms of easing the financial flow which is one of the biggest problems in a lot of our value chains? In the sense where physical products stop to move because the money or evidence of it is stuck somewhere. So, if you think of Nigeria for example, that’s one of the reasons why we have a lot of wastage in our food products and in our agriculture sector. So, I think we need to broaden the sector, we need to think about it from an inclusive perspective and we need to ensure that there’s collaboration”, she asserted.
Highlighting further on the challenges, Judyth Oduor- Engels stated that, “I work with the underserved communities and so whenever we get to the point where the conversation is about scaling and how to capitalize all other opportunities, I always ask, what about those who do not have all the necessary infrastructure? Those are the kind of conversations we need to have, in terms of inclusivity. Clearly, the Fintechs are here with us, they are not going anywhere in any shape, form or size and we are going to use it. But then, there are those who do not have access to it. And so, the conversation should be about access for those who don’t have it and adoption for those who do”.
On the future outlook, Agnes Gathaiya maintained that the pandemic has provided a soft-landing for scale and growth. “The pandemic has actually softened the ground for Fintechs. The biggest issues Fintechs have is creating awareness, selling them and scaling. So, things like the demonization of Cash by most Governments, especially in Kenya, has softened the ground for Fintechs that have any product on the maturity curve to be able to finally introduce themselves to the customer. So, the pandemic has created the environment that we have always been looking for where people are willing to listen, which makes it easier to drive awareness, adoption and scale”.
While corroborating, Viola Llewellyn further stated that “We are seeing an integration of digital industries coming together held by the thread of financial technology. So, the acceleration of adoption of payments solutions, especially those that have been successful in East Africa, is becoming more of interest than ever before for us in West and Central Africa. In the African continent, there really isn’t a better time than now to push for a digital economy”.
While giving an illustration of the observed disconnect between the service offerings and value propositions, Agnes Gathaiya further stated that “In Kenya, we have 106% mobile phone penetration. We have a population of 48 million people and have 42 million bank accounts. Yet, only 10% of the value traded every single day goes through digital channels. So, there’s a huge disconnect between the offering and the people who are supposed to use it”.
On the opportunities presented by the pandemic, Olayinka David-West affirmed that “I think this is a call to action in exploring ways to collaborate rather than building disparate systems, knowing that we can all leverage a harmonized architecture. Because we cannot afford to continue building disparate systems with disparate sources of data, as we need to begin to harmonize things now. So, the opportunities are there, just that we don’t all need to jump into payments to the detriment of many other areas that are largely untapped”.
While highlighting the regulatory environment as a key enabler, Judyth Oduor- Engels opined that “As we discuss new products and services, there is a period of testing and a period of nurturing this innovation. So, countries that have established themselves very well with regulatory sandboxes will not be stifling innovation, rather they will be encouraging and supporting it so that it can scale”.
At the end of the session, there was somewhat of a consensus that there’s a greater need to have a uniform digital infrastructure to enable a digital economy across Africa.
© 2020
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