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Covid-19 accelerates Fintech developments in Africa

Ranine Awwad

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Covid-19 accelerates Fintech developments in Africa

African countries long served by traditional banks are experiencing a huge digital financial transformation amid Covid-19. The move – initially used to control the spread of the virus – might position Africa as an international leader in digital banking which will boost the digital economy.

According to the GSMA report entitled “State of the Industry Report on Mobile Money 2019”, 50 million new accounts were registered in Sub-Saharan Africa and mobile money deployments were live in 95 countries. In 2019, Africa had over 1billion mobile money accounts registered and 57% of Digital transaction values have been exceeding cash-in/out values. According to the same report, mobile money appeared in Sub-Saharan Africa in 2008 and it has faced a significant increase over the past years.

African governments have been focusing on limiting cash as a response to the Covid-19 pandemic, according to The Africa Report website. Ghana, Kenya, Tunisia’s central bank, and West African Economic and Monetary Union (WAEMU) have been deploying mobile banking. A report published by the International Monetary Fund (IMF) mentioned that Togo, a small West African Nation, managed to distribute financial aids to 500,000 people within two weeks using mobile phones. On April 2, 2020 “The Banque Centrale des États de l’Afrique de l’Ouest (BCEAO)” decided to facilitate money transfers through digital platforms.

M-Pesa launched in 2007 by Vodafone Group PLC and Safaricom has been dominating the market in Kenya. In addition, more than 37 million people have been using the technology across seven African countries, according to The National. This tool enabled Kenya to position itself as one of the highest mobile rates with 60% of the population having access to mobile money services. A significant amount of mobile-money transfers are made via SMS as most Kenyan’s do not have Internet-enabled phones.

On March 18, 2020, a press release by The Bank of Ghana Monetary Policy Committee states, “The bank has agreed with banks and mobile money operators on measures to facilitate payments that are more efficient and promote digital forms of payments for the next three months”.

MSF Africa, a gateway to send money to mobile wallets in Africa, covers 200 million mobile money recipients across all major networks. Launched in Uganda in 2013, East-Africa based Fintech Company Beyonic has been acquired by MSF Africa late June 2020. Enterprises that operate in Ghana, Uganda, Tanzania, Kenya, and Rwanda benefit from Beyonic’s digital payments services provider. Dare Okoudjou, MSF Africa founder and CEO said “Since being founded in 2009, the Fintech company has built a “network of networks” by enabling interoperability between 200 million mobile money wallets across different platforms in 34 markets in Africa”, according to Quartz Africa.

According to the The World Bank Global Findex 2017, Africa has the largest number of the world’s unbanked population. However, the Mckinsey report estimated that more than 50% of the African continent inhabitants would secure access to banking services in 2020.

Ranine joined Inside Telecom as an Investigative Journalist. Her extensive fieldwork and investigations shed light on many socio-economic issues. Over the past few years, she has transformed her key findings into in-depth analytical reports. She earned a Bachelor’s Degree in Journalism and Communication.

Feature Articles

Will startups lead the line of 5G rollout?

Yehia El Amine

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5g rollout

Timing has always been the catalyst to many inventions, ideas, businesses and the like; and more often that not, timing is underestimated as a key factor for the success of a startup.

In fact, Bill Gross, the founder of Idealab, was stunned by his own research when he found that timing accounts for 42 percent of the difference between the success and failure of a company, during his Ted Talk back in 2015.

And there is a wide array of examples to back it up.

Take for example companies like Airbnb and Uber, they both were pushed into the limelight at the height of the American recession.

Who would have thought that letting a stranger sleep in your own house, or riding with a stranger would disrupt and rock the industry.  

Their timing, however, was the catalyst that changed everything; the recession created a need for people to seek extra income far and wide, and apps such as these were the driving force that incentivized people to enroll.

Thus, with the emergence of 5G, the world’s eyes look toward startups to lead the line of disruption and innovation at this turning point of technological history.

While startup companies may be small compared to the established firms, they nonetheless have the chance to significantly impact the 5G landscape. This can be seen through the increased number of 5G-powered startups being taken under the wing of some of the world’s biggest tech companies.

Firstly, there will be a whole new generation of hardware and devices to take advantage of with 5G.

One startup that focused on 5G communications is PHAZR, which has developed a solution known as Quadplex. This technology utilizes millimeter-wave frequencies for the downlink while using sub-6-GHz frequencies for the uplink. The company believes its technology can enable “high-performance, cost-effective, and power-efficient 5G systems.”

Another startup company fixated on 5G is Movandi. The company works extensively with millimeter-wave frequencies—its BeamX front end integrates RF, antenna, beamforming, and control algorithms into a modular, 5G millimeter-wave solution. Movandi’s goal is to help accelerate 5G deployments and grow the market faster.

Startup GenXComm has also thrown its hat into the 5G ring. With its simultaneous self-interference cancellation (S-SIX) technology, the company is targeting the 5G market, among others.

Startups will thus have a considerable impact on wireless internet services; an example of these kinds of opportunities was seen earlier back in 2019 when Google Fiber had to enhance its Webpass service in the U.S. due to increased competition from startups NetBlazr and Starry.

Essentially, startups could offer more competitive 5G broadband rates, since they have low operations costs and can provide faster service.

This is just a fraction of what 5G-based startups are attempting to do.

In parallel, 5G will unlock the ability to send and receive information in real time, which would open an unprecedented level of opportunities far and wide.

While 4G paved the way for social media influencers, 5G would open up the opportunity for a whole new generation of artists and engineers to leverage new modes of consumption for AR/VR content as well as immersive media in general.

According to a report done by Vodafone, with 5G, startup companies would be able to compete with industry leaders in terms of speed and quality of business processes, market awareness and intelligence, along with ensuring better productivity.

The study also found that 56 percent of leaders in the startup space in the U.K. are convinced that 5G will transform the way they operate their businesses.

Entrepreneurs are greatly recognizing the effect 5G may have on their business models, their strategy going forward, the potential impact it will have on society and how it might change society.

All of the elements that 5G is presenting can give SMEs a glimpse into the future and what they can do to prepare for it. The next Ubers and Airbnbs of the world will attempt to crucially center 5G as a metric for their upcoming success.

Especially since those who can adopt the next generation mobile network early while hitting all the right notes will be earmarked to a have significant advantages over their competition – no matter their size.

The rollout of 5G will ultimately change the way governments, organizations, and startups communicate, work, engage with their customers and partners. Thus, with a “sky is the limit” approach clinching to 5G, now is the time to consider how your business can unlock, benefit and thrive from its potential.

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Future mobility services: SK Telecom and Uber team up for new venture

Inside Telecom Staff

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South Korea’s largest mobile carrier, SK Telecom, has partnered up with U.S. ride-hailing app, Uber, to spin off its mobility services, while the latter aims to crack the tough SK market.

According to the mobile carrier’s regulatory filing, the mobility business, called T Map Mobility Co., will be entirely owned by SK Telecom to become its own independent company as of December 29, 2020.

The partnership brings forth a joint venture that will see Uber Technologies directly invest more than $50 million within the new entity that offers mobility services such as satellite navigation and taxi-hailing, while the remaining $100 million will be done via joint venture structure.

“The new joint venture would create opportunities in the taxi-hailing market in Korea and explore new areas, including future mobility services,” Uber and SK Telecom said in a joint statement.

The move is Uber’s latest attempt to expand in a market where it has previously faced tough competition as well as opposition from taxi drivers and regulations which forced it to stop using private cars for its ride-hailing service in 2015.

According to the joint statement, the mobility services venture combines T Map Mobility’s “network of drivers and mapping technology with Uber’s ride-hailing technology and global operations expertise.”

The platform will look to launch in a co-branded manner, where riders and drivers of T Map Taxi will be encouraged to join after launch. T Map Taxi is SK Telecom’s taxi-hailing platform, the second largest in Korea after Kakao.

Under the plan, Uber will own a 51 percent majority stake within the joint venture, while the remaining 49 percent will be held by SK Telecom. “We expect T Map Mobility, which is valued at 1 trillion won ($873.3 million), to grow into a company worth 4.5 trillion won by 2025,” the statement read.

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Embedded finance: the next phase of growth in Fintech

Yehia El Amine

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embedded finance

Financial services have always been the nervous system of the global economy, a critical system that must always provide effective and equitable services for social cohesion and enhanced development.

While advancements in the Fintech industry have grown tenfold, the legacy 20th century business models in finance have grown out-of-date, with many not even adapting to the fundamental paradigm shift – technological, institutional, and societal – ushered in by the monumental transition from an Industrial to an Information Age.

As such, these business models need to be reshaped to better serve the needs of the market and keep up with the ever-changing technological tides.

The current buzz around Fintech right now is embedded finance, which, according to UK-based venture investment firm Anthemis, is predicting a market-wide revenue of almost $7 trillion in the next decade.

What is embedded finance?

Embedded finance is the integration of financial services within a non-financial app, website or platform. The biggest and easiest example of this is done via ride-hailing apps; when a customer pays for a ride at the end of the journey directly on the ride-share company’s app, they are using embedded banking.

They do not need to fumble with cash or hand their payment card to the driver. In fact, they don’t even need to say a word to the driver at all. They can simply exit the vehicle and finish up the transaction on their phone.

The same can be applied to Amazon loans, Apple Cards, booking a parking space directly from the Google Maps app, and Shopify merchant accounts.

How it works

Embedded finance can take on many shapes and forms, but traditionally fall into three categories:

  • The transfer of value in space:  This category includes payment processing and traditional bank products such as savings and checking accounts.
  • The transfer of value in time: This category includes investments as well as loans and other forms of financing.
  • Managing risk: This category includes insurance and other products that provide some layer of protection against risks.

All of these can be integrated into non-financial services and platforms delivered on the Internet. The difference between embedded finance and different forms of integration is that it paves the way for cross-industry integration.

This can be seen via the popular rise of digital wallets, in which a person stores their payment card information on the app. The credit or debit cards are issued by a traditional bank.

From there, customers can use the app to pay for purchases in brick-and-mortar stores, online payments, as well as the ability to transfer money to other users of the app without having to type in their bank account or credit card information each time.

Thus, the versatility of embedded finance can be a widely impactful tool for businesses to open various revenue streams, as it allows all sectors to become more Internet-enabled ultimately leading to be “finance-enabled.”

What’s on the horizon?

Previously, organizations who wanted to integrate financial services within their business models had to deal with massive heaps of operational coordination and technological plumbing in the background.

As Banking-as-as-Service (BaaS) is on the rise, technology-driven suppliers that underpin the infrastructure of banking is also meeting it upwards in parallel for both financial services and non-financial companies.

“While embedded finance is still a nascent field, we expect many more use cases to come. It’s a great opportunity for selected start-ups, SMEs and large corporates to create more client value, while capturing new revenue lines,” the report by Anthemis said.

This gives embedded finance companies an edge due to their ability to streamline operational capabilities through distribution, data, and resources, which in turn, provides a major boost to the worldwide startup ecosystem.

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