Fintech is big news this year in Africa, and throughout the world for that matter. Bitcoin, and other crypto currencies have brought the potential of new financial mechanisms to the forefront of those that had never considered changing their financial instruments previously. As people speculate on crypto currencies, and mobile money becomes even more popular across the African continent, there is more of an awareness that simply using cash, or a bank account, is not the only option any more.
With this awareness comes a craving from the market for more solutions to financial problems. We have seen this across many financial instruments. Mobile money has made payments more convenient, brought many new individuals into banking, enabled people to get credit ratings, and even helped people with medical insurance. Micro loans can now be facilitated online, enabling people to develop their small businesses, and people even have new ways of paying for their mini solar grids for the house.
Another big issue, that is yet to be solved fully in Africa is in the remittances sector. The figure seems to very, but around $33 billion in remittances flowed into the continent in 2016. That is a significant amount of many African economies, with 10 countries receiving 3% of their GDP through this method.
If you search innovation or technology in Africa, you will find a lot of Fintech, Solar, education and health care innovations that are creating a buzz and getting noticed across the continent. Entertainment innovations are of course also popular and receive a hype. But, what about African business solutions? I don’t know about you, but when I search nothing usually jumps out at me, which is curious as the African business world (excuse the generalisation) has a unique culture. Like different cultures throughout the world, there are different ways of operating in Africa, and in the diverse Africa countries.
I found this out the hard way in Kenya, when I realised pretty quickly that my loud humorous (I like to think its humorous anyway!) entrances into meetings that I was used to in Ghana, simply did not work in the Kenyan setting. There are a plethora of other differences in the African business setting, but of course, some things stay the same across the continent and the world. So, there should be nothing standing in the way of African entrepreneurs creating business solutions that are effective across the world.
My day job is working for a campaigning agency in Zurich, and I know all too well some of the difficulties companies face meeting the needs of their target group. Market research is a long drawn out process, in which teams invest a lot of time to create ideas and then ask their target group if they like the ideas. From the data collected, the team has to come to a decision as to which route to take, but this decision is still based on their own initial ideas. Not ideal and not an exact science! We ask the target group themselves to create the ideas in a Target Community Lab™, saving time, money and enabling us to create individualised campaigns or products for our partners.
Have you ever tried to buy land in Africa? It can be a tiresome experience, with so many channels to pass through, and often very expensive. Land has long been a sensitive issue across the country. In many communities there are land disputes that have been raging on for years. Land often belongs to traditional communities, or chieftaincies, rendering it very difficult at time to know who actually has a right to the land, and if it has actually been purchased correctly. In many instances, disputes about the borders of towns and villages, can also effect the ownership of land. In both Kenya and Ghana I saw walled off areas of land with “NOT FOR SALE” painted on the gates. A symptom of distrust in the land ownership system, with some trying to fraudulently sell land of others.
What happens to the new “owner” if one community sells land, that belongs to another community? In Ghana I have seen first hand the damage of land disputes, which can end up escalating to other issues. In one example, one community bailed a dangerous “fake pastor” who was charged with attempted murder of an alleged witch. (A lovely old lady from the community) The fake pastor subsequently skipped bail and was never brought to justice.
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At the Co-Willing conference in Ukunda, Kenya, there were a plethora of interesting people with different skills and areas of knowledge. On the first night of the conference I sat down to dinner with a member of the team from the Millennium Institute. Over our lovely meal, and after introductions, he began to tell us what he was doing. I must admit, when he began to talk about data modelling, I was already out of my depth and maybe because of my tiredness from a day’s travelling, I struggled to follow the conversation. However, the next day changed everything!
Across the world, governments and citizens argue about what policies to implement and how national budgets should be divided. Is the health service more important than education, should we put more money into security and the military, or social services. Do we cut money from the emergency services in order to pay our teachers more. There are so many different variations and through the noise of discussions and arguments, and political parties taking a standpoint because historically ideology, it is impossible to gain clarity on what is the right way.
By changing the expenditure in one area, it will effect other areas. For those of you that have played the sims, and have had to fiddle about with the budget to keep the people happy, but also have enough tax to pay the fire department for all of those natural disasters that seem to occur, you will realise that even on game level it is a difficult juggling act. (My cities always died horrible deaths)
Money! We all need it, and it never seems to be enough to meet our expenditure demands. (At least that is how I feel!) We work, we earn, we receive the money to our banks, we spend it, either wish cash or card. Well that has been the way for a long time, but innovation in the financial sector is beginning to make things look very difficult. The working, and earning hasn’t changed, but for some of us, especially in Africa the way we receive and spend money has changed drastically.
Innovation in the African financial sector is changing entire cultural norms. People are paid to their phones, rather than a bank account, which many across the continent don’t have, and they use their phones to purchase anything from food, to transportation across the city. In many cases there is no more need for cash, and with cryptocurrencies now trying to find their way turbulently there is more change on the way.
All this has meant that there are more ways for people to use their money with online purchasing gaining traction across the continent. But, this also means there are more ways for people to find crooked ways of stealing from others. Whilst there is more freedom of purchasing, there is also a perception of risk, with regular stories of people losing money in online transactions. In my short time in Kenya I heard of a couple of stories or people losing money through M-Pesa. In one case, a gardener allegedly lost his entire Christmas bonus to M-Pesa fraud, although his claim was not proved before I left the country. Continue reading “Did You Know you are now protected against online fraud in South Africa?”→
Inventive Africa is back from Kenya and completely enthused! The blog has gone a little quite for the last two weeks, apart from a fascinating interview with Dr Tonny Omwansa, the Chairman of the Nairobi Innovation Week. (If you haven’t seen it out check it out here!) Kenya is a really fascinating country, which really highlights why we can not treat the African continent as one. Too often we talk about the continent in general (I am sure we have fallen into this trap once or twice also) instead of understanding the differences between the different regions, countries, and even ethnic groups (Whose different cultural traits can come together to strengthen a country).
Apart from the first few days at the inspirational Co-willing conference in Ukunda, in which I was mainly based in a nice hotel and it was impossible to learn about Kenyan culture or personality, I was based in Nairobi, where I spent the time to try and get to know and feel the cultural differences. And also try and understand why it seems that Kenya is embracing innovation even more than many other countries across the continent. My main experience in Africa is in West Africa, and I found immediately that my West African style interactions with people around town did not fit very well. From the taxi drivers to the security guards, the style of interaction is very different.
I can’t begin to say I am an expert on Kenya after spending a couple of weeks there and I am only talking of first impressions. This may be a little harsh to Ghana, where I have spent most my time, but I believe I also saw a different work ethic in Kenya, with people from all sectors of society taking particular pride in their work and valuing their positions. Security is taken very seriously in Kenya, with sniffer dogs used at the SGR train stations, for the trip between Nairobi and Mombasa and back, and home security very strict about sticking to the rules. The cleanliness of the Nairobi was also impressive. Ok, it was not as spotless as a Swiss city, but there was a certain neatness, with grass cut and litter not strewn everywhere and clogging the gutters. (Or course in some parts of the city it was different)
“But what has this got to do with innovation?” I hear you ask. Well, I feel that these attributes have led Kenyans to be more open to adopt new technologies. M-Pesa (Kenya’s mobile money), which of course has been one of the major themes on Inventive Africa, is being utilised far more than I even thoughts. Taxis, shops, small roadside kiosks, paying staff, and even the informal sector receive payments via M-pesa. It is very handy, When short on cash, I used it to pay two trusting taxi drivers after they had driven off. And when I fancied eating local food (which is delicious) it was easier to pay with M-pesa and than cash, as often people don’t have the correct change. The willingness of people to use this technology from all walks off life is amazing. From the politicians and high earning expats, to farmers and informal workers, everyone has embraced and utilised M-pesa.
One other major innovative breakthrough across the continent is the use of Uber and other apps in the taxi business, and drivers are really embracing it. Not all of them are happy with the amount of commission they have to give to these applications, but they realise that without them they can’t compete, and through them they can find long term customers. Most of the drivers use Uber, Taxify and now Mondo at the same time, not just sticking to one of the apps.
I see more changes coming in the transport sector in Kenya. With the frustrations regarding commission and also occasionally drivers that struggled to find their way around, there is still room in the market for another taxi app, and also the private bus system can also be made more efficient. There were already attempts to change payment methods on the buses by bringing in an oyster card style system, but the system was not ready for it. (Oyster cards are used on London transport to touch in and out of transport and automatically charge your bank account) Tuk Tuks, Boda Bodas and the train system will also benefit from innovation.
With its tea and coffee exports (Kenya is the biggest tea exporter in the world) natural tourism, and many others, Kenya has a good foundation to build on. Their focus on technology and innovation is also giving them a chance to lead the way in Africa. Already many schools are benefitting from free tablets, and the youth are taking it upon themselves to learn how to code. But the country and can not sit back now and relax. There are still problems to solve, and it may need even more innovation to do so. Politically, Kenya still has some tension, especially with a second President swearing himself in last week in Nairobi. For the country to continue to attract foreign investors, from inside and outside Africa, and move forward, it needs to create a more stable outlook.
Kenya has massive potential, and a willingness to try new technologies and new approaches. If you are in Kenya, and have an idea or innovation, why not get in contact and becomes a guest blogger for Inventive Africa. You can contact us on Twitter @InventiveAfrica or via email, or on our Facebook page!
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