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The ongoing COVID-19 pandemic continues to wreak havoc on the global economy. This crisis has become the single biggest catalyst for a digital transformation. For organisations and business, not just in the continent, digitizing has moved from a good to have, to a survival game-changer in what has become the new norm.
Within just months, the world has been flung into ‘Digitization Unusual’ as businesses seek ways to stay above water and ensure continuity post-crisis. Rapid changes in consumer behaviour and diverse demands are forcing organisations to reinvent their business models to enable the delivery of their goods and services online. Digital payments have now become a critical service.
In a bid to curb the spread of the virus, the World Health Organisation has been cautioning against the use of hard currency and encouraging the use of digital payments. This move has prompted African governments and regulators to enforce measures aimed at facilitating more cashless transactions.
Could the coronavirus pandemic provide the trigger that pushes Africa towards becoming a digital economy? How will this impact the Payments landscape? How will in the region be affected? What pre-existing conditions have become the crucial building blocks that will foster this?
In a bid to proffer answers to these pertinent questions, Digital Jewels as part of it’s Africa Tech Leaders’ Series hosted an interactive and well attended online webinar on Thursday, May 7, 2020, at 10 am (WAT) with the theme: COVID-19 Pandemic: The FinTech Outlook: How Will The Payments Landscape Evolve?“.
Digital economy speakers
The list of carefully selected Speakers and Panellist across Africa includes Dr. Diane Karusisi (MD, Bank of Kigali, Rwanda), Mitchell Elegbe (MD, Interswitch Group, Nigeria), Alex Bram (MD, Hubtel, Ghana), Agnes Gathaiya (CEO, IPSL, Kenya) and Adedoyin Odunfa (MD/CEO, Digital Jewels Ltd, Nigeria), as the moderator.
In her opening remarks, the MD/CEO, Digital Jewel (Adedoyin Odunfa) gave an overview of the impact of ravaging pandemic on the African continent and the possible implications for the African Continental Free Trade Area Agreement (AfCFTA Agreement), in view of the huge potential as the largest trading block in the existence of the WTO and the critical role of payments/Fintech in facilitating and enhancing intra-regional trade.
The first speaker, Mitchell Elegbe (MD, Interswitch Group, Nigeria), gave a detailed account of the emerging payments landscape and some of the data-driven observed user behaviour before and after the pandemic induced lockdown on Interswitch platforms.
In what appeared to be an ‘unpopular’ view, he opined that things will go back to normal in terms of the customer behaviour pattern after the pandemic, unless a value chain approach is adopted in dealing with existing challenges. He acknowledged that the experience of the lockdown was completely different from the recession which did not necessitate a complete shutdown and restriction of movement.
While confirming the adverse impact of the hugely debit driven nature of the market, he stated that the lockdown forced a lot of behavioural changes in the usage of the online channel which led to channelling migrations for channels like the point of sales (PoS) and Mobile.
He also confirmed an observed marked increase on the mobile payments, PoS and in instant transfers (Electronic funds transfers) channels, while transactions of the ATMs remained flat. He also revealed that the growth in transfers was observed for both P2P and C2B types while transactions from sports betting companies dropped significantly, for obvious reasons.
Mitchell further confirmed that close to 500 cards expired during the lockdown period which made it impossible for such customers to assess their funds during the lockdown. This, he confirmed was a major contributing factor to the rush and long queues experienced at some of the bank branches after the ease-off; to enable the banks to re-issue new cards.
On the activities of cyber fraudsters, Mitchell confirmed that there was an observed increase in attempts by cybercriminal albeit, largely unsuccessful. Majority of the observed attempts were phishing attacks around Covid-19 while the others were through the proliferation of fictitious websites by Ponzi schemes.
On post-COVID, Mitchell was however optimistic that things will go back to normal, with PoS, Online and Mobile channels maintaining the winning strake while ATM and Branch channels trail. In conclusion, he made a strong case for the strengthening of logistics infrastructure and enhancement of customers confidence as critical success factors for the growth of online transactions.
The second speaker, Dr. Diane Karusisi (MD, Bank of Kigali, Rwanda), provided detailed insights into the payments space in Rwanda and the emerging trend across the continent and how this can be leveraged to enhance the intra-regional Free Trade Area Agreement.
She sees a very bright outlook where the fintech ecosystem will grow through product differentiation and enhancements that will evolve towards other innovative solutions. She maintained that new technologies with Data analytics and Artificial Intelligence (AI) capabilities will be key for banks and financial institutions as a whole.
She remained very optimistic that the Fintechs will close bigger deals with greater impact on the overall ecosystem and enhanced partnership with the banks.
In conclusion, she submitted that digital payments through an integrated payments settlement system for the continent will be a critical enabler with key impacts on the successful implementation of the African Continental Free Trade Area Agreement.
On her part, the third speaker Agnes Gathaiya (CEO, IPSL, Kenya), provided an incisive perspective on how the East African community is being shaped by emerging payments trends.
She shared in the optimism of the earlier speakers on the bright outlook for Fintechs, especially for those with minimum viable products on the maturity path as the pandemic provided a unique opportunity to force adoption by slow adopters.
She stated that the growing shifts towards digital channels and the future of work (remote) will be to the benefit of the Fintechs who are wired to be resilient.
She also stated that Kenya played a leading role in the democratization of payments in Africa with the successful implementation of M-Pesa and other instant payment schemes, and the largest number of bank accounts of 42million in 2019.
While drawing an analogy on ‘payments’ as the blood that flows through the human body, with ‘cash’ as the transmission route, she revealed that only 10% of the total transactions in the entire ecosystem in Kenya go through the digital channel.
She further enumerated the number of measures taken in Kenya to cushion the impact of the lockdown to include: zero-rating by the mobile network operators on transactions less than 1,000 Kenyan shillings, zero-rating on M-Pesa transactions for three months.
In terms of observed patterns, she confirmed that some of the key sectors that got a hit (adversely impacted) during the crisis are the Hospitality, Agriculture and Manufacturing industries. An interesting pattern observed was the shift by some auto manufacturers into the production of ventilators.
She concurred with the submissions of the earlier speakers with respect to the post-crisis trends to include an increase in the demand for e-commerce and logistics, increased demand for instant payments and mobile channels, increased user account activity and increased mobile wallet limits.
In conclusion, she asserted that a secure, affordable and easy to use solution, with an easy and seamless onboarding process holds the ace for the continuous stability of the payments system in Africa.
The final speaker, Alex Bram (MD, Hubtel, Ghana), gave a background of Hubtel, Ghana as the leading eCommerce platform and largest provider for SMEs in Ghana with an average transaction processing hit of 6 million transactions daily.
He confirmed a mixed observed pattern with about 65% increase in some types and about 60% downturn in event-based payments. He further observed that the lockdown saw a 45% dip in PoS sales, 45% increase in electronic transfers (inclusive of cards to mobile money, mobile wallet to a bank account, etc), 200% growth in food and essentials, as eCommerce was exempted from restriction during the lockdown.
He also provided an interesting observed pattern in cybercrime where there was a slight increase in system attacks, but mostly at night, and a small increase in social fraud. He, however, informed that the incidents are being investigated by the Compliance and Risk Management teams in collaboration with the Security Agencies in Ghana,
He concluded by saying that the crisis portends huge potentials for eCommerce as observed patterns showed that some hitherto business laggards are beginning to soften their stands on eCommerce adoption, which presents huge opportunities for SMEs on the platform.
During the Q&A session which was anchored by Adedoyin Odunfa (MD/CEO, Digital Jewels Ltd, Nigeria), the existing onboarding process was identified as a key area that requires improvement. The need for a digital onboarding process was canvassed in line with necessary behavioural and legal considerations. Other key areas highlighted are the need to adopt a value chain approach, Tailor-made solutions, User experience, Customer confidence, Trust and Security. There was a general consensus that Africa’s need for payments is very strong with eCommerce, Healthcare and Agri-Business as likely winners with huge opportunities.
Digital Jewels Limited is a leading African focused IT Governance, Risk and Compliance (GRC), Consulting & Capacity Building, firm with deep competencies in Information Security, Information Assurance, Project Management, e-business and Knowledge Capacity Building; with extensive footprints in several African countries.
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