It gets a bit tiring sometimes to listen and read of solutions that are purely capitalist claiming to care about “financial inclusion.” Don’t get me wrong, I fully support making a profit from selling products and services, however, it is the deception at the expense of poorer Africans I have a problem with.
There’s also the ugly side of “financial inclusion” which is exploitative, extractive in nature, and in some cases violates the privacy of customers. However, for today’s newsletter, I wanted to look at why some “financial inclusion” digital solutions thrive in some countries and not so much in others.
Let’s take the example of M-Pesa. Often seen as the case study of how Africa can innovate and find digital solutions to leapfrog legacy financial services, it however is mostly only popular in East Africa.
Have you ever wondered why?
I will give you an example.
I have lost count how many times M-Pesa through different partnerships has tried to launch in South Africa. Every single time it attempts to launch, it hardly ever gains traction.
It has nothing to do with marketing, Vodacom and Nedbank have truckloads of cash to spend on marketing. It has nothing to do with South Africa not having an unbanked population - millions still don’t have bank accounts and are excluded from formal financial services. However, if you look closely, it is all about regulation.
In Kenya for example, M-Pesa is operated through Safaricom, a telecommunications company, and a Vodacom subsidiary. This is only possible in Kenya and some East African countries. In South Africa, to transact and take deposits you require a banking license. That banking license comes with huge requirements and checks and balances. Hence, every single time M-Pesa has tried to launch in South Africa it has had to partner with an existing bank, which defeats the whole purpose of why M-Pesa exists.
This is not to say in countries like South Africa mobile money and mobile banking for the unbanked are not there, they exist, however, they are operated and run by banks thanks to regulation. Is this good or bad? I really don’t know. However, I have started realizing that in countries where financial services regulations are relaxed, “financial inclusion” (yes, in quotation marks) tends to spread quickly.
I will leave it to your imagination as to why there would be a correlation between less regulation and digital “financial inclusion.”
Quote of the day
“We have decided to launch a telemedicine program at Unite for Health Foundation (Cameroon) to permit those in the communities that we serve to be able to use their phones and reach out to us to consult with our doctors,” (Tweet this)
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