By Sibel Kusimba, American University and Solène Morvant-Roux, University of Geneva
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| Sean Maliehe, Lena Gronbach (Human Economy Program, University of Pretoria) |
The international colloquium entitled “
Digital Finance in Africa’s Future: Innovations and Implications” was held in Johannesburg South Africa on 22-26 Oct. 2018, organized by the Human Economy Research Programme at the University of Pretoria and the Johannesburg Institute for Advanced Study (JIAS), in association with Disrupting Africa.
The colloquium was unusual in bringing together and encouraging interaction amongst academics studying digital finance along with African innovators (entrepreneurs), regulators/consultants and development professionals to discuss the latest developments and their impacts. For academics it was a unique opportunity to engage more with important actors in this space especially regulators and innovators. List of presenters can be found
here.
John Sharp, Director of the Human Economy Program of the University of Pretoria, put it succinctly: “You need corporations and big money if your human economy is going to work. We need to think about how to bring the people with power into the conversation.”
One distinct aspect of the colloquium was the relatively small size of the group, with less than 20 participants. The live internet feed and the large public talk that launched the colloquium on the evening of Oct 22 brought larger numbers of participants, giving the meeting both an intimate feeling as well as exposure to the public and a medium to broadcast the talks and discussions to online viewers.
Innovators and Providers’ Perspectives on Academic Knowledge
The emerging and rapidly changing field of digital finance and its entwinement with development policies is often hard for academics to study. Financial services and development interests produce large amounts of data and studies, often very detailed but with an aim to find use cases for financial products, so their claims are difficult to evaluate. Often the perspective of academia feels too critical or not relevant (too complex) to innovators or practitioners. Our discussions often tried to broach these differences.
For example, we discussed the uses of well-known financial diaries developed by scholars with a view of better capturing people’s financial behavior. The collective discussion ended up challenging the broad industry belief that these reports represent a kind of pure empirical or ethnographic view of financial behavior - partly because of their detailed recording of expenditures. These industry reports and the understandings of finance they produce often focus on inflows and outflows over relatively short periods and may assume financial explanations for peoples’ behavior without assessing alternatives. In one often-cited example from Kenya, a family cannot raise enough money for a sick person, but a few weeks later raises abundant money for her funeral after she unfortunately dies for lack of care. This story is frequently used to posit a need for different financial tools that can nudge a more rational response to illness. However, a lack of trust in medical care and many other cultural reasons, important in their own right, could also explain a lack of fundraising for a hospital stay.
At the same time, our discussion showed that the more inductive approach of anthropology seems to collect information that providers and innovators may not find clearly relevant. For instance, one professional in insurance offered that his experience with oft-touted “Human Centered Design” (which is a kind of “fast” ethnography) had led to assumptions that actual users ended up refuting once the product was rolled out. Anthropological studies presented by
Kusimba and Morvant-Roux also came to a fuzzy conclusion. People want to be interconnected with others using financial technologies, but they want to be autonomous as well. More work needs to be done to further understandings that can make sense for product development.
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| Sibel Kusimba (American University) |
The study done by Nnamdi Oranye on undocumented migrants in Nigeria also highlighted that meeting social obligations is as important as being able to fulfill personal projects and aspirations (and therefore call for specific financial services). This result was confirmed by Morvant-Roux from a study on undocumented Mexican migrants living in the USA. Financial services around international remittances would do a better job by acknowledging such a duality rather than trying to induce a rationality that doesn’t really exist.
It was humbling and also inspiring to learn more about the perspectives of innovators. For them the Silicon Valley catchwords like “disruption” have a lure and a kind of hope for African innovation that academics might take more seriously. At the same time the entrepreneurs also revealed that their pitches for funding often must refer to frameworks around charity and African development, which many felt influence the kinds of fintech that get funded in Africa. One innovator located his company in the Philippines after being frustrated by this mindset among Western venture capitalists.
The Regulatory Future of African Finance
The final area of great interest and a real opportunity for new exposure for an academic was the important talks by regulators. Dr. Steven Nduati was a Central Bank of Kenya payments regulator behind the M-Pesa legend, who felt that regulation must anticipate how financial technologies eventually work but must also be flexible and responsive to how these new technologies end up being used. The former Finance Minister of South Africa, Trevor Manuel, gave a compelling keynote. Speaking around “the intersection between finance and data," he noted that in the past politics involved land and physical assets – but in the 21st century, there will be an economy of data. How will African governments deal with privacy and security issues, and who controls and owns the data? A marked example was the case of South Africa’s innovative government cash transfer programs. In the case of
Sassa, Gronbach brought evidence that the South-African State has let a private tender taking advantage of the most vulnerable population segments through massive unauthorized deductions from the social grants and therefore undermining the social protection floor. Mesfin Fikre from University of Addis Ababa University and previous IMTFI alum added, “if the pace of M-pesa of Kenya continuous, for sure it will capture the data of almost all Kenyans, which gives it an upper hand in the future digital economy. This is because, having (owning) data means owning a weapon. So, it is high time to consider ‘who owns and control such data?’. Given the participation of foreign companies (investors) in the area, this scales up the problem. For example, in Ethiopia, mobile money related data is captured by foreign companies working in the area (
BelCash and
M-Birr).”
Manuel also warned that mobile money was largely becoming a solution for the poor, and expressed concern that African fintech would eventually lead to two solutions—remitting solutions for the poor, and traditional banking and investing for the affluent.
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| Nnanmdi Oranye (Disrupting Africa), Mario Fernandez (GoSocket), Funmi Arewa (Temple Law) |
“The engagement of representatives of industry and academia offered an opportunity to engage with real world contexts within which digital finance technologies are actually used. The contributions by anthropologists (particularly Morvant-Roux and Kusimba) enabled a better understanding of varied on the ground uses and understanding about technologies,” says
Olufunmilayo Arewa, Professor at Temple University’s Beasley School of Law and IMTFI Academic Advisory Board member. “Conceptions and uses of digital finance technologies in Africa and elsewhere are complex and multifaceted and constantly changing. A dialogue that includes both industry and academia offers needed insight into technology practices on the ground.”
Ideally more interaction between regulators, innovators, and academics—bringing “the people with power into the conversation”—one could imagine new futures for digital money in Africa that would prevent both the abuse of the data economy and the potential isolation of mobile money and remittance products from broader fintech innovations.
