Find The Gap 🌍
Access to capital.
It's the constant theme when one looks at the major challenges that Africa faces.
From capacity building to infrastructure, without improvements self sufficiency becomes a monumental challenge.
All the good will and aid will be a short lasting solution.
Beyond remittances, foreign direct investment and overseas development aid, innovation is a necessity - new solutions are a must.
It requires a constant dedication but also requires the lights to stay on.
So whats the current state of play in financial services innovation?
What of the potential game changers?
PAPSS
There is a lot of enthusiasm about #AfCFTA and the hype train around the first #PAPSS transaction to be done from Ghana to Nigeria.
PAPSS for those not in the know, is the Pan-Africa Payments and Settlement System.
It is an initiative of the African Union which aims to create a single payment and settlement system for all African countries.
The main goal of PAPSS is to promote intra-African trade and economic integration by providing a platform for the seamless transfer of funds between African countries.
This system will allow for faster, cheaper and more secure cross-border transactions, which will help to increase trade and investment flows within the continent.
A great ribbon cutting moment between Ghana and Nigeria (sharing the Jollof) but the reality is that to cut out the middleman it will require the right macroeconomic conditions to work on a bigger scale.
Pomp and ceremony and suits patting each other on the back aside.
At this stage the optics are vital for momentum.
AfCFTA has though seen early examples where trading coffee from Rwanda to Ghana ( Igire Coffee produced by women farmers sent to Accra) or Tea from small scale farmers in Kenya to other parts of Africa are live and proof that in the right moment, this could work.
The potential if we laud potential, is not insignificant for the drive to self sufficiency.
However it is naive to assume that global partnerships to build AfCFTA and trading with the West should be avoided.
A narrative i have heard but its easier for the rich or politicians in Africa to make such statements. Yet they also benefit from the global networks.
What about the have nots?
CBDCs
What about #CBDCs?
Whats the value when mobile money is such a dominant force in Africa?
The #eNaira as a classic example of a beta mode product, too early to market, which has been sluggish to say the least.
It is being suggested that the Central Bank of Nigeria is in talks with other parties including R3 as to replace Bitt as an existing software partner.
Bitcoin Exchanges
P2P #BTC and Bitcoin exchanges are in the ascendency especailly amo
All the rage where parallel markets loom large.
Companies like Paxful , Prestmit , Binance and Remitano Global - Cryptocurrency Exchange continue trailblazing in markets like Nigeria. For the unbanked and the youth, Bitcoin is seen as the solution.
The Naira continues to depreciate.
One of the main reasons why P2P Bitcoin exchanges are so popular in Nigeria and Africa is due to the challenges associated with traditional banking systems. Many people in Africa do not have access to formal banking services, making it difficult for them to participate in global financial transactions.
P2P Bitcoin exchanges provide a decentralized and accessible way for people to trade and invest in cryptocurrencies, which can be used for various purposes, such as remittances, online shopping, and investment.
The growth of P2P Bitcoin markets in Nigeria and other African countries has been significant in recent years.
According to a report by Cointelegraph , Nigeria is currently the second-largest market for P2P Bitcoin trading globally, after the United States.
In 2020, Nigeria's P2P Bitcoin market saw a 15% increase in trading volume compared to the previous year. Other African countries such as Kenya, Ghana, and South Africa have also seen significant growth in their P2P Bitcoin markets.
However lack of regulatory oversight, issues with KYC and AML, while it's unlikely to stop the wave, it bears a consideration for innovators looking to build long term, secure investment relationships for capacity building, infrastructure development in Africa.
However while the top of pyramid pushes the CBDC agenda, the bottom continue to innovate and its the issue of the masses that need to be resolved.
Solutions to the Problems
The further decentralised the innovation the better (with caveats - as above)
The one constant of funding to Africa, even in times of crisis, pandemics and war has always been the #diaspora.
In the US, Diasporans represent a powerful constituency in the economic development of Africa and the U.S. African immigrants in the United States earned $55.1 billion in 2015, contributing significantly to the U.S. economy with $40.3 billion in spending power and $14.8 billion in tax payments
The Biden-Harris administration in 2022 pushed out the welcome wagon to demonstrate the U.S. government's commitment to fostering stronger U.S.-Africa relations,
This has culminate in follow ups as Harris herself plans to visit Ghana, Tanzania and Zambia.
The trip, in partnership with African governments and the private sector, the Vice President aims to advance efforts to expand access to the digital economy, support climate adaptation and resilience, strengthen business ties and investment, including through innovation, entrepreneurship, and the economic empowerment of women.
What about beyond government interventions?
From the Cloud to the Crowd..
There are also many socially conscious donors out there that seek new opportunities to create an impact.
Community driven financing towards scaleable projects that work with the relevant stakeholders to make a real difference.
It goes beyond remittance, which is immediate consumption.
Bonds have been bastardised - no return there.
Access to the capital, which is where i began in this piece remains the absolute barrier to execution for many enterprise and entrepreneurs.
Access to capital for capacity building and infrastructure is a major challenge for many African countries.
The lack of investment in these areas has hindered economic growth and development, and limited opportunities for poverty reduction.
Some of the key issues related to access to capital in Africa include:
To address these issues, there are several potential solutions, including:
And finally...
That's where this new chapter begins.
Follow me on Twitter @rajeshcloud.
PS. Prototype is ready, MVP will be ready by May 2023.