Mr. Isaac Ondieki is the Regional Managing Director, Microsave Africa, an international financial inclusion firm, which consults for clients in 40 developing countries. In this interview with ABIOLA ODUTOLA, Ondieki outlines the importance and risks of digital financial service. Excerpts:
How would you assess Nigeria’s mobile money sub-sector, comparing it with Kenya’s?
In Kenya, the mobile money addresses an existing need, which is the need to move money from point A to point B. The mobile money reduces risks and pain of carrying money about. It also addresses the needs of the upper middle class, who need to send money to relations in rural areas. To draw a parallel with Nigeria, there are people who currently have children in schools and pay fees in hard currencies. If the schools could give them the chance and the banks allow it, they could pay the fees from the comfort of their homes. For pensioners, government could borrow what is obtainable in other East African countries, like Government-to-Person (G2P) payment, through digital platforms to send the money through mobile wallet. If someone is sick in the hospital, the medical bills can be settled from whatever part of the world. Most of the low income population say when they go to banks, they are mistreated, and that the banks are so big and far from where they are, and they have to queue for two hours to be attended to. We want customers to have the same feeling they get when they listen to news from their homes, without going to where the news is being broadcast, with financial services.
How do we achieve same success with Kenya?
It’s through Client Centric Services. The first thing is to identify the true need of the Nigerian people, then address the real need. They may not need to be told to open a bank account, because all they need is to move money from point A to point B. Nigeria also needs to partner with firms from East Africa, share from their wealth of experience, and learn not to repeat their own mistakes. A supportive regulatory body is key in this. They need to allow you to sometimes experiment. In Nigeria, there are chances of collaborations between the banking sector and telecommunications, to bring a unified service to the customer.
Which of these innovations is most impactful on the African financial system?
The most impactful would be the one that enables ease of banking. For example in Nigeria, 40 per cent of the adult population, which is about 39 million people, are not banked. That is the population of Kenya where I come from. You can imagine leaving out the entire country out of the banking sector. All Africa needs is ease of access. In Nigeria, it costs longer time for customers to get into the bank than the service they are going to get in the bank. Current advances in digital services have enabled customers to have the bank at the palm of their hand through the mobile phone, and I think that is going to be the key advancement for the most of the adult population that has been unbanked for a very long time. A good number of them have access to a phone, which is all it takes to have access to a financial service.
In Africa, telecommunication has advanced, but the same cannot be said about mobile money, which seems to be growing slowly. Why?
I don’t think the mobile money has been growing slowly as the media has been reporting. Sometimes, customer education is lacking. We also need to grow a system that allows this electronic money function smoothly first.
How would you describe the African accounting system?
The African accounting system mimics the United Kingdom system in one part of Africa and the United States in another part. I said mimic in the sense that we have local hybrid of those systems but their foundations are laid to suit ‘big brother’, so to speak, in business. I can say it is well developed, highly regulated, which sometimes stifles innovation. We need to have a pragmatic garment, appealing to the big entities, to see value and start seeing these bottom-of-the-pyramid customers as normal and as customers of tomorrow.
How can platforms, such as your firm, come together to strengthen the capacity of Africa to deliver some of these services?
We seek opportunity to work with regulators and the government to expose them through the acquisition of what we call sound boxes, where the innovators can come and experiment the innovations to the comfort of regulators, to see that the perceived risks or negative effects of that technology are eliminated.
In terms of e-business, South Africa is ahead of Kenya and Nigeria. How would you rate Nigeria and Kenya penetration in e-business?
In Kenya, e-business is a mature business. For example, you can go to any village and be able to transact business electronically through the mobile or electronic platform, through a normal shop or merchant. In Nigeria, I would say it is a margin market; I see a lot of learning from what we have done in East Africa, especially with the advent of the acceptance of the bank ID.
What are some of the risks that come with these new innovations?
One of the risks involved is that the money is electronic and the services occur very fast. So, if a fraudster intercepts your account, you need to move very fast to rescue yourself. Secondly, people can hack into the system from anywhere in the world. There is also the risk in telecoms and banks keeping people’s data. Some of these fraudsters access these data and sell them to use in other services. What is required to tackle this is the right technology, the right watchdogs to the porting place, to ensure this does not happen without effort. With the right protection in place, we are able to slow down these
fraudsters.
