The Future of African FinTech depends on One thing. And it’s not Technology.
The Presidential Jet of the republic of Ghana touches down in Brazil. It’s the year 2014. A World Cup year. And the African nation of Ghana is no stranger to the game. Loaded in the Jet is 3 Million Dollars in stacks of cash for the country’s National Football Team. The players have boycotted the Tournament being hosted in Brazil and demanded that the government pay them what is owed in full — In cash.
In Africa, Ghana has one of the largest mobile money usage rates on the continent alongside Kenya and Nigeria.
It is the fastest-growing mobile money market in Africa. According to the Bank of Ghana data, the total value of all mobile money transactions reached 156 billion GHS ($29 Billion) in 2017, compared to 35 Billion GHS ($6.5 Billion) in 2015.
So why is it so difficult to go completely cashless in the country? Why would even elite football players distrust digital payments to the extent of demanding their money to be flown over 4,000 miles in cash to them?
There’s only one solution. Uber did it. Airbnb did it. And the next African Startup must do it.
Culture.
The next African startup must change culture. For FinTech to succeed in Africa, Africans must let go off cash. Literally.
Uber and Airbnb both changed culture through their unique business models. Who would have ever thought that there’d come a time where people would be so comfortable riding in a complete stranger’s private car?
Or a time when someone would warmly welcome a stranger to stay in their home?
Fintech on the continent seems to be taking off, with companies like M-Pesa, Yoco and Paystack leading the way.
Forbes reported earlier this year that Africa’s Fintech Ecosystem had raised $320 million dollars and grown by 60% in two years. That is huge for the continent.
Besides Ecobank, most African Banks seem to be missing out on the continent’s FinTech rise. The FinTech space is currently dominated by Startups and interestingly Telecommunications companies as banks struggle to grab a piece of the cake.
But of course, every African startup needs to bear Ghandi’s words in mind if they ever want to revolutionize the Financial system on the continent.
“First, they ignore you, then they laugh at you, then they fight you and then you win.” Even Uber and Airbnb are still in the fighting stage of this cycle. They haven’t quite won yet.
This quote sounds intriguing and has been the mantra of several failed startups, unfortunately. It is unfortunately not an easy task.
It is, however, the cycle truly disruptive inventions go through. Cars and ATMs were once fought against. Today that might sound ridiculous since we can hardly live with either of those things. But that is the reality. Humans are hardwired to fight innovation.
As nice as it sounds it wouldn’t be a walk in the park. Attempting to change an attitude adopted for several hundreds of years won’t happen overnight. People love to hold cash. They love the feel of it in their hands. Paper or coin against their palm. The smell of it. The beauty of that crisp currency note lined up in your purse or wallet is a sight to behold. Research shows that the brain reacts to cash in some of the same ways it reacts to drugs. It would take a truly unique product and a great marketing campaign to change this.
Online Scammers have also created doubts in the minds of people. People are scared to use digital payment options due to the fear of never receiving their money back. Current digital solutions also offer good services but at outrageously high costs. The charges are so high that merchants sometimes tell whoever paying with a digital solution to “add the cost of the charges”
This statement is clearly why something drastic needs to change. FinTech solutions should simply not be a clone of other cultures. They should be tailor-made for the African people. Not only a small portion of elite and wealthy Africans.
The African continent has the poorest people in the world. Realistically any other product on the market to most people would be competing with food. It is no surprise foreign investors are usually warry of investing in the market. Here is a continent where currencies depreciate quickly. It would only make sense if they kept their money in cash and in their homes to at least save on digital charges.
Illiteracy is another very huge problem. It slows down the adoption of digital solutions since most people find it hard to use them.
Apps like WhatsApp have succeeded on the continent and can be a case study for African FinTechs. The Facebook-owned company overcame this problem through “Voice Notes” These days people who can’t read or write only need to record voice notes to communicate with one another. It has become a very popular way of communicating amongst younger people and older ones. The app has a very simple User Interface and is not too complex to be navigated by educated or uneducated people.
It will be interesting to watch how the African FinTech space evolves over the years.
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