Identity Verification: Is Hindering Financial Inclusion in Africa

18Google prides itself in building technologies that improve access to the world’s information by shouldering complexities for others to achieve their goals.

One neglected information problem affecting many sectors is Identity Management. Its negative impact is worse in the financial sector and the $726 Billion global payments sector that require strict user identity verification. Outdated means of identity verification have slowed financial inclusion in developing economies, frustrated customer-acquisition and on-boarding in financial, education, health, customs, government services, to mention but a few.

If my first bank or even better my National Identification Registration Authority already verified my identity, why does it still take hell for my next bank, online payments providers and services to verify me and in several worse scenarios reject genuine transactions?

Relatedly, I always angrily ask myself why I have to spend 1 — 5 hours filling about 5 – 15 forms (both online and printed) every month, each form asking me the same information, when I could just click to allow applications to securely fetch the bio information i approve through an API in less than a minute.

This market opportunity requires a strategic owner-managed technology solution that will make the future of access to and verification of personal information and identity an easier experience.

I co-founded www.elmot.ug in 2008 and recently founded www.varows.com. In both companies we help clients in Africa, Middle East & Europe setup websites including e-commerce businesses. In varows.com we go beyond setup and aggressively work with clients to make sure their websites produce actual returns on investment.

Challenge #1 in our works is  The Frustrating Payments Companies and their irrational transaction policies. Now, I know they have very strict federal or national payment regulations to comply with but I also know that with technology advances like Blockchain, ML, and AI, the key pain points of users can easily be resolved while remaining within regulatory constraints.

Above 6 in 10 of our and our clients’ payments pain-points hinge on Identity-Verification and unsurprisingly so do most payments regulations. This denies over $25 Billion genuine transactions. Each transaction denied is a life changing opportunity denied.

I believe the Identity Management challenge especially in developing economies is the missing link to massive adoption of cross-border digital payments.

Access to and verification of personal information determines access to several services that improve lives. A blockchain powered zero-knowledge proof solution to organize the world’s personal information and make it securely accessible to others especially for verification purposes is something i would love to work on.

From Paypal, WorldRemit, Banks, even the mushrooming Fin-Techs,  and now crypto giant Binance, and hundreds others, identity is still a silent show-stopper for millions of individuals looking to change their lives.

 

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Why Product Management?

I attended a meetup on Product Management by ProductTank Which was Good for a start.

Didn’t have chance to respond to a question where someone asked how ReadyPay cops with many people sleeping at 7PM in Eastern Uganda.

I believe this is an opportunity in and of itself, because the more important question to ask (as a Product Manager) is; Why are over 4 Million households sleeping so early? The answer would be that they don’t have access to (or have not heard of ) disruptive products like ReadPay’s to keep them awake.

Technology is there to disrupt our behaviours with hitherto new opportunities. In Africa before knowledge, mail, telephone, cars, internet, etc, you had to hire a SWIFT runner to send a message to the next village.

And this is where good product management comes in as it it is the difference between winning & losing as https://www.kennorton.com/essays/productmanager.html says.

Extrapolate that, it is the difference between profit and loss, between adoption and rejection, between building a sustainable solution and a 1–9 year old company.

Most importantly to my Ugandan brothers and sisters, it’s the reason me and you have no more than 2 locally built apps if not none on our phones. It is the reason we still prefer western products right from the toothpick through undergarments to now Chinese building our roads. We have good engineers but we relegate the importance of Product Management.

 

UMEME contributing to Uganda’s Slow Growth

Naye UMEME do you need a PhD to know that 1 hour without power in business areas like BukotoStreet is worth over 5 days in village & residential areas. And it’s worth over 50 Million in URA taxes. On average you disconnect power for 40 hours a week, that is 2 Billion, 8 Billion a Month and a whopping 64 Billion UGX a year. Wait!! how much do our selfless Doctors, Teachers, etc. et.c. need to stop these daily strikes?

But you make sure power is on in low production areas and off (DMC transformers & other equip) in High production areas, more so during production hours. Sincerely when will Uganda grow. Let’s see how much we have lost in 10 years. 640 Billion. Bannange!!!

On average you need just 50 companies filling tax returns of 1 million. And in these areas there are over 1000 companies combined. And its not just filling but also a dense web of buying & selling of taxable products & services. All this is put on hold when power goes off.

Response to: Why Venture Capital hasn’t taken off in Africa

This is a response to TMS Ruge’s Article specifically to his expression about what he calls White-Fronting which is where a start-up from Africa (I prefer Developing Economy) intentionally recruits a white person(again i prefer “Developed Country” citizen) as co-founder  just to get VC financing. It also includes related ideas i had already given thought about and intended to write about before reading TMS’ post.

To understand why VCs haven’t shown as much appetite in developing economies as anywhere else, you need to understand their KEY selection criteria. Every VC web-page or VC-blog you read shows that VCs accord almost 90% to the team. Most VCs/Accelerators will fund a great team even with a lousy idea/model. And perhaps for good reason, i mean given an early-startup with an unknown future what is your next best ‘right-now’ gauge? The Team.

One blog i read said in a world where 9 in 10 startups fail, VCs will choose the ones that are less likely to fail and they believe the strength of the founders has much to do with increasing chances of success. But i think this is much in theory and rationale otherwise why do more startups fail even with great teams?? You definitely need a great team but there has to be a Balance, the idea needs to be great as well.

So the BIG question is why are teams entirely from developing economies neglected most of the time? Again to understand this you need to understand what VCs mostly look for in an individual on a team. Education is the key here, if you have a Harvard, Stanford, MIT, Oxford, Wharton, Caltech and other big names, it speaks a bunch not just about the quality of education you received, but also sums-up your knack to succeed generally. It speaks about your past, i mean you don’t just get admitted to top universities without standing out of the crowd. Actually if you are an African trained in these top Universities, you just might stand at an almost equal footing with your Developed economy peers. But why is this gap there anyway?

There is still a knowledge-gap of over half a millennium between Developed and Developing Economies. Arithmetically it could be more considering that free education was officially mandated by the Church in the 1100s AD in Europe. While the first formal African school was opened in 1658 in Cape Town never mind it was a school for slaves as the white man sought to make slaves more useful to him. As some Europeans were paying for education, this slave school had to reward pupils (mainly adults) for their presence, they each daily received a glass of brandy and two inches of tobacco. We generally had to be colonised to receive life changing knowledge. Yes we had education before but it was not only undocumented but also rudimentary, things like fermentation, weaving, backcloth making etc were transmitted across generations verbally and by observation. But this is the killer, communication between villages and kingdoms was done by swift runners who relayed information verbally. The developed economies probably had there fair share of these rudiments in the BC era.

This knowledge-gap is the reason the top-ranking universities  (over 400) by all metrics are from Developed Economies but a handful. It is the same reason top global corporations are from Developed Economies. You can extrapolate this to all social, health, economic and political sectors and the best of these will be from developed economies in general sense precisely because of earlier exposure to knowledge.  The whiteman’s forefathers might have used their knowledge superiority cruelly to their advantage, but colonisation like all things had it’s advantages and disadvantages.

Since we are in the information era, this knowledge-gap is perhaps the cause of almost all other differences between Developed and Developing economies even when the Internet has done wonders in closing it, it still haunts us and might take another century to close in on it if at all. This is day Makerere University Kampala will rank among the top 10 universities in the world??  someone wake me-up.  The more knowledge or exposure thereto you have about a subject the better the ways you are going to use it to better lives.  Children in Developed economies are exposed to knowledge very early on. Compare the daily tasks of an American teen say Zuckerberg, Bill Gates to that of an African entrepreneur. While the two were tinkering with computers and code, and reading fairly advanced text, an African in their times wakes up to go the garden until midday and play football or other games after lunch fetch water from the lake, and firewood in the evening . The two go to advanced primary and top secondary schools and top universities and the African is limited to medium quality education (but best in developing economies). SO at what point really will this guy catch-up with all the wealth of knowledge someone in a developed country is exposed to, and what are the chances that he will successfully build a global company? And if you are a VC or accelerator who is more likely to deliver the returns your profit hungry investors pay you to make?

My observation is that even people in developing-economies prefer ‘DEVELOPED’ products and services, right from the tooth-pick, if one can afford a European made tooth-pick, they won’t buy one made in Uganda. And it doesn’t have to be labelled ‘Made in Germany’ the stark difference in quality alone makes it the preferred choice. And i think this is a natural and logical disposition, i mean why should i buy a tooth-pick that will prick my gum to increase my dental budget when i can afford a better designed one?

For-example, How many products made in a developing country do you use, on your phone, PC, even domestically? I guess none, I personally have no more than 2 local apps on my phone and none on my PC, and this is the case anywhere you go, maybe the exception could be China.

The main reason we are called developing-countries, is because of this knowledge-gap between DEVELOPED and DEVELOPING economies. This means we have a developing health-sector, developing financial-sector, developing social-sector, developing education-sector, developing, developing, developing, everything is just developing, and this includes the software-development sub-sector. It also means the products and services from developing economies are DEVELOPING” or immature products and services.

So i think the idea of “white-fronting” TMS Ruge describes in the above article is to the VCs’ a more realistic bet that their ambitions are in safer uncertain waters because of this knowledge advantage but to the Startups who so “white-front” they get the chance to not only tap into the knowledge wealth of developed-country citizen but also be part of building global companies. I don’t know about the startups that have white-fronted so far but i would gladly court the right developed-country citizen as co-founder(s) not to purposely get Venture Capital but to harness this knowledge advantage to build a defensible global company to maximise the impact of a startup’s benefits. Like Entreprenuer First CEO Matt Clifford says “Maximising impact is the essence of ambition, so ambitious individuals seek out paths that give access to their era’s dominant ‘technology of ambition’.”  Since knowledge is also transferred through close interactions with more knowledgeable people, this would be another opportunity to close the knowledge-gap above, which can be transferred to future generations.

Why are we actually not talking about African VCs? Don’t you think it takes knowledge to understand the importance of VCs but also to manage a successful VC? We don’t have African VCs because we lack money, but because the people who would be in position to own African VCs lack knowledge of the importance of VCs, but also knowledge to manage thriving VCs and so we have to rely (for now) on VCs in developed economies who are also averse to our startups precisely because of this knowledge-gap. If 10 in 100 startups that have white-fronted manage to hit global markets in 10-20 years, perhaps we might see 5-10 African VCs.

But as the VC bubble shudders to burst on US startups (ReutersGV), the rest of the world especially developing economies are waiting arms wide open to develop solutions to impeding worse challenges. I stand with those who believe that with so many global challenges glaring at us, we don’t need another selfie or photo-sharing app yet US VCs will still invest millions in such ventures.

 

Freewill is 50/50

Beauty-of-FreewillI believe our freewill is limited to 50%. And i think(still exploring) the other 50% is destiny. Ali (R.A) was asked about freewill and he said to the questioner. Lift your right leg, the man lifted his right leg and then Ali told him to also lift his Left leg without putting his Right leg down and ofcourse if you trying this at home don’t lean or hold your hands to support your body. Continue reading “Freewill is 50/50”

Formalising Informal Borrowers Vs Formalising Informal Lenders.

Overview

I co-own and for over nine years manage a small ICT Agency in Uganda East Africa. In 2015 we won a government contract to supply software and equipment, but didn’t have the funds to execute it. We talked to Banks but were ignored as we lacked collateral and our account activity didn’t merit a loan. Continue reading “Formalising Informal Borrowers Vs Formalising Informal Lenders.”

A Balance Btn the Seen (Secularism) and Unseen (Religion)

20597200_801662319993872_4224427294627736987_nIn a split second someone regarded as intelligent went from programmer to well i don’t know martyr, “Jesus”, arsonist, terrorist, anyone will choose a fitting category, just a few days after declaring and trying to execute the first blow of an ill-informed call to arms. Continue reading “A Balance Btn the Seen (Secularism) and Unseen (Religion)”