Lessons from Kenya for our local fintechs 

One visiting Ugandan national early this year who had exchanged her Ugandan shillings into over KShs 3,000 carried her Kenyan cash back to Uganda after several businesses and enterprises rejected cash payments and demanded M-Pesa (mobile money) payments instead.

From roast maize sellers, boda boda riders and taxis to high-end restaurants, businesses in Kenya now operate almost entirely with digital cash only at least in Nairobi central business district.

Out of Kenya’s population of 55 million, at least 30 million are said to be active users of Safaricom’s M-Pesa platform, a digital money transfer service which has now transformed into a fully-fledged financial service provider offering savings, insurance and micro-loans.

Despite being hailed as the birth country of mobile money [although India too claims the bragging rights], mobile money payments in Kenya were not as smooth as now since the launch in 2008 and were just as cumbersome as currently in Uganda due to interoperable issues.

The major mobile money providers, Safaricom (M-Pesa), Airtel (Airtel Money), Telkom Kenya (T-Kash) were forced into a corner by both government and end users to allow customers to make payments for services irrespective of the network. On April 8, 2022, the Central Bank of Kenya (CBK) announced mobile money merchant interoperability which it said was an important step in the evolution of Kenya’s payment services.

“In subsequent phases, interoperability will be extended to additional mobile money services such as pay bills and gents, to make the objective of “pay anyone anywhere” a reality,” CBK said in a statement.

Unfortunately, where Kenya has left is where Uganda is heading. Ugandan businesses which earlier on had only MTN Mobile payment merchant payment platforms are now forced to acquire another for Airtel so as to appeal to all customers.

At Stabex petrol stations (which incidentally originates from Kenya), for example, payments to their Airtel merchant code are still handwritten in books and ‘evidence’ demanded on the sender’s phone which obviously raises issues of data privacy.

With the coming of agent banking where banks outsource services to third-party providers, banks had not only predicted rivalling mobile money but also cut down on operation costs. However, queues at physical banks are still as long – with many people still not trusting the mobile banks that are even closer to their vicinities and operate beyond office hours.

It is not uncommon for some Ugandan businesses to demand ‘withdrawal charges’ when someone opts for mobile payments, especially on a platform they are not subscribed to. This issue of cashing out mobile money transactions is still an issue that must be sorted out by fintechs, experts at the Fintech Landscape Exhibition that crowned the 40 Days 40 Fintechs exhibition at Mestil hotel last week said.

Steven Kirenga, head of product and business development at Centenary Technology Services, a technology development subsidiary of Centenary bank, which has been praised for banking the unbanked and making it profitable, said although Uganda ranks high in mobile money activity ratio at 53 per cent of its 33 million mobile money subscribers in comparison to the global average of 25 per cent, Ugandan fintechs are even more obligated to engage government so that their innovations spur development.

He also called on the central bank to reduce on the Shs 250 million capital for startups, saying it is prohibitive. Christian Wamambe, the vice president Payments at SafeBoda, whose company is a victim of designing products that didn’t outlast user or client demand, called for better collaboration between fintechs, saying partnerships should not be based on who offers the best money but, rather, who understands the product and service being designed.

About two to three years ago, SafeBoda, it had been thought by many, had revolutionalised Uganda’s chaotic boda boda industry. The riders were smarter, they respected most of the traffic rules and customers were generally happier. However, complaints over payments by the riders saw a big chunk of them leave the app and go back to their original default boda boda operations.

From suspending riders off the platform, SafeBoda now literally hawks the same app to riders that used to beg to be left on two years ago. A case in point is their marketing officers near Old Kampala police station who beckon random riders to come
in and register for the app.

A similar predicament also faced their food app which Wamambe says was launched too soon for the market because the merchants weren’t ready for it.

Similarly, Chrispinus Onyancha of ClinicPesa said; “Of course, you may not involve everyone in the process but the few selected. You can do like the sampling typically involving the users to understand and get the comfort of their feel of the solution you’re designing, the interfaces that you’re actually putting out…of course not designing boardroom solutions. Boardroom solutions end up scaring the people we are actually designing for. It’s better to go down to them rather than designing solutions that we adopt.”

fkisakye@observer.ug