Bigger than the Banks: Natalie Jabangwe-Morris on Africa’s movement to mobile money
The wave of mobile phone use in Africa has not only connected individuals to each other, but has connected many people to mainstream financial services for the first time. In regions where populations were majority unbanked, access to mobile technology has simultaneously unlocked mobile money, and spurred economic growth in societies previously run on informal, cash-based finance. By the end of 2016, the number of registered mobile money accounts in Sub-Saharan Africa stood at 277 million.
The wave of mobile phone use in Africa has not only connected individuals to each other, but has connected many people to mainstream financial services for the first time. In regions where populations were majority unbanked, access to mobile technology has simultaneously unlocked mobile money, and spurred economic growth in societies previously run on informal, cash-based finance. By the end of 2016, the number of registered mobile money accounts in Sub-Saharan Africa stood at 277 million.
It was platforms like Kenya’s M-Pesa that changed the game and paved the way for mobile money innovation in Africa – and those such as Zimbabwe’s EcoCash are continuing this movement to digital cash. Established in 2011, in the first 18 months of doing business EcoCash registered 31% of Zimbabwe’s adult population – with 22% of Zimbabwe’s GDP passing through the platform. Its explosive popularity has seen the platform eclipse the traditional banks and has created a bridge between the informal and formal economies, transforming the way many Zimbabwe’s handle their money.
“On average, mobile phone penetration in Sub-Saharan Africa is above 70%, mobile is a ubiquitous channel for serive delivery, across multiple sectors.”
We spoke to Natalie Jabangwe-Morris, CEO of Ecocash, on the explosion of mobile money in Africa, the future of EcoCash – and, of course, who she's most excited to hear from at The Annual Debate.
You're CEO of EcoCash, EcoNet's mobile payment platform. Where do you think EcoCash has had the biggest impact to date?
Natalie Jabangwe-Morris, Chief Executive Officer, Ecocash
In changing the financial inclusion stratification in Zimbabwe, to an extent Africa. Before EcoCash was launched in 2011, Zimbabwe only banked 10% of its population. 6.5 years on, EcoCash banks 80% of the adult population of Zimbabwe. We have 8 million registered customers, with these, EcoCash accounts for over 70% of the country GDP and is bigger than all banks amalgamated. EcoCash accelerated financial services distribution in Zimbabwe, beyond what local banks achieved in their 100 years of operation. We also launched the first mobile-card wallet in Sub-Saharan Africa. For these milestones, EcoCash is the uncontested recipient of the 2017 Mobile World Congress GLOMO Award – Best Mobile Payment Solution.
It's estimated that six times as many people use mobile money in Sub-Saharan Africa than the global average. Why do you think mobile money has proved so popular on the continent?
Traditional banking has been largely prohibitive than inclusive, with specifity to emerging markets. Financial services eligibility in Africa is largely based on the antiqauted models of collateralisation and employment. In Africa, employment is largely informal & entrepreneurial. The mass economy is not top-down, as would be constructed in developed markets, it’s bottom-up. Bankers have missed out on those portfolios of the unknown, completely failed to profile and rearrange them to offer services through a channel that is pervasive – the mobile phone. On average, mobile phone penetration in Sub-Saharan Africa is above 70%, mobile is a ubiquitous channel for serive delivery, across multiple sectors.
“60% of Africa’s population fall under the age of 25, these are the digital natives, today, connectivity will be imperative to improving access to finance for this demography.”
You're speaking on our panel The Digital Dividend: Leveraging the Power of ICT. How crucial do you think connectivity is to improving access to finance in Africa?
The gains have already started to emerge. In the last 10 years alone, Africa now has a total of over 100 million active mobile wallets, this is one in every 10 adults and far exceeds South Asia, the second largest continent, by adoption of mobile payments wallets, sitting at 40 million active accounts. 60% of Africa’s population fall under the age of 25, these are the digital natives, today, connectivity will be imperative to improving access to finance for this demography. There are more mobile phones than there is ownership of toothbrushes in rural Africa, on a 1:1 ratio, tells you already, that connectivity is priority! Nothwithstanding cable access to the internet, this will inevitably drive new ways of commerce and affordability in new access to services, electronically.
You're one of the youngest CEO's to run a mobile money business in Africa. What has been most exciting about leading EcoCash?
EcoCash has a very young, dynamic and talented team. Driven on a culture of disruption, ability to fail fast and empowered to experiment, responsibly of course. This has been by far, the most rewarding experience. We execute swiftly, and are passionate about transformation, today! We get our thrill form seeing how impactful our solutions are at market. Needs must! A sheer belief in solving challenges through meticulous application of technological solutions. It’s my first job in Africa, after developing my financial technology career in retail and investment banking across Europe and the US and to come home and replicate world class, in Africa, has been ultimately fulfilling.
Ecocash already enables its customers to transfer money, pay for goods and services, access loans, buy airtime – where are you looking to take EcoCash in the future?
Difficult question, there is infinite opportunities in fintech, particularly on the African continent. Banks have dominated for too long, but I doubt they know well enough how to analyse unfamilair profiles, productise and monetise, aptly. A convergence of connectivity, telecoms data profiling for financial services offering, opens up other unchartered domains – for example, targeted credit. Beyond this, access to markets, if you have a wallet you must be able to pay regional, at most, global. Admittedly, foreign exchange regulation remains a challenge across Africa, but who knows what blockchain will deliver in solving for this.
Which of our speakers at The Annual Debate 2018 are you looking forward to hearing from?
All speakers, actually! I love to learn anew. So, really looking forward to all interactions.
Hear more from Natalie Jabangwe-Morris, join us at The Annual Debate 2018, where Natalie will be speaking on our panel The Digital Dividend: Leveraging the Power of ICT.
From 'The Rest' to 'The West': 4G Capital tackles inclusive financing in Africa
- 4G Capital fintech solutions are accelerating financial inclusion in Africa
- US $26M worth of loans disbursed to date
- Customers financial literacy grows with adoption of the service
4G Capital fintech solutions are accelerating financial inclusion in Africa
US $26M worth of loans disbursed to date
Customers financial literacy grows with adoption of the service
When the African Development Bank reported in 2013 that over 75% of people in Africa did not have access to an account at a formal financial institution, it brought the issue of inclusive financing to the fore. Whilst for many this may have appeared as a limitation – a barrier to the ease of doing business – for some big-thinkers, it was an opportunity.
The same year, 4G Capital was founded in Nairobi by Wayne Hennessy-Barrett. Offering microfinance to small businesses, 4G worked with a vision to digitizing the informal economy, and connecting African enterprises to the world. Today, the company's financial services are expanding across sub-Saharan Africa, with $26M worth of loans awarded to date.
What makes 4G Capital shine, however, is their mission to combine microfinance with both digitization and education. Alongside loans, customers receive financial education, and the stats testify to the success of this, with 94% of customers reporting increased financial literacy. Meanwhile, Hennessy-Barrett is also working to make 4G Capital smarter. Collecting data via SMS surveys, 4G Capital is reaching those excluded from formal finance – and from internet connectivity. This is not merely bringing the company insight, but when customers come to graduate to a formal financial institution, they can take their credit data with them.
“There is a great gap in the market for affordable debt financing in local currencies, which places more risk on solid enterprises than would otherwise be the case in other markets. ”
We spoke to Wayne Hennessy-Barrett to find out more about 4G Capital's impact in Africa, his thoughts on inclusive financing – and, of course, who he's most excited to hear from at The Annual Debate.
So you founded 4G Capital, a microinvestment company providing microfinance and financial education - where have 4G Capital had the biggest impact to date?
Wayne Hennessy-Barrett, Founder and CEO, 4G Capital
As one of Africa's few profitable fintechs, our greatest impact has been the transformation of wealth creation for the majority of our clients. By ensuring we only lend working capital to viable businesses, and rightsizing credit lines with affordability, we have seen a marked growth in client business size and personal economics in a significant proportion of our client base. We're now matching bottom line profit with top-line growth as we scale in earnest with partners.
An impressive feat - you also report a 94% increase in financial literacy amongst your customers. How important do you believe financial education has been to the success of 4G Capital?
We think it is fundamental to delivering the skills to use credit to grow wealth, rather than to cover immediate living costs.
In your opinion, what is the most significant issue hindering inclusive financing in Africa?
The issues which hinder our clients are the same issues which hinder businesses across Africa - access to affordable capital. There is a great gap in the market for affordable debt financing in local currencies, which places more risk on solid enterprises than would otherwise be the case in other markets.
For those who have gained access to finance via 4G Capital, 86% are achieving increased sales - what are 4G Capital hoping to achieve in the future?
We are exponentially ambitious by design. We want to digitize the informal sector across Africa, connecting the vast opportunities in the growing informal sector with global value chains. We then want to see the best in class products and technologies migrate from African markets - 'The Rest' - back to developed markets in 'The West', to help solve the same problems of social and financial exclusion which hold us back from creating the world we want for our childrens' children.
Inspiring words! Speaking of which, who amongst our speakers at this year’s Annual Debate are you most looking forward to hearing from?
Impossible question! This is a stellar group of thought leaders and experts, I'm going to learn a lot and I'm very honoured to support it. I'm most interested to see how representatives from the UK government will describe Britain's engagement strategy with business in Africa. We live in a fast-moving world, and connecting capital with expertise and execution in exponentially growing markets in no longer a luxury for the few - it's a necessity for economic development everywhere.
To hear more from Wayne Hennessy-Barrett, join us at The Annual Debate 2018, where Wayne will be speaking on our panel Inclusive Financing in Africa.
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