Building Africa’s e-commerce future through the “innovation” layer

To drive innovations in digital commerce that reach the majority market in emerging markets, the innovation layer – just like roads, bridges, power need to be developed.

All business from large mature enterprises to small startups operating or planning to operate in Africa and other emerging markets face significant barriers – the cost of doing business is high because of poor infrastructure including roads and transportation, water and power. In addition, effective demand is weak because of low income levels. More than 95% of business in emerging markets is driven by a cash based informal sector that’s off the formal finance grid.

Two (2) profound things have happened in the last few years that have the promise to include the majority market into the formal finance sector. These are mobile penetration and mobile wallets.

Mobile penetration - South Africa has 86% phone penetration, the same as the United States and even poorer countries like Uganda have as high as 65% phone penetration and growing fast.

Mobile wallets - mobile wallets are a runaway success in many African countries. Mpesa transfers more money in Kenya than Western Union does globally (http://www.mobileworldlive.com/money/blogs-money/m-pesa-now-bigger-than-western-union-but-does-it-loom-too-large/). If MTN Mobile Money in Uganda had a bank license, they would be the largest bank in the country with over 1.5 million peer to peer transactions every day.

It is now possible for businesses to innovate and scale through electronic commerce channels, for instance in Uganda, utility payments done through wallets are more (number of transactions & volume) than utility payments done via all the banks combined  while in Kenya, Commercial Bank of Africa (CBA) became the biggest lender in the country through its collaboration with Mpesa to offer loans on mobile devices through its MShwari product  http://www.businessdailyafrica.com/M-Shwari-lifts-CBA-above-Equity-in-loan-accounts/-/539552/2342556/-/o6wxli/-/index.html.

Mobile is acknowledged to address economic and social challenges across the region including delivering digital inclusion, delivering financial inclusion and delivering innovative new services. However, innovation is not happening fast enough or at the scale that it ought to be. It still takes great technical and business effort to roll out even simple products because of the lack of an “innovation layer” optimized for emerging markets.

The electronic commerce stack typically looks like this

1. Access

2. Aggregation

3. Banks

However, the electronic commerce stack needs to change to develop and grow electronic commerce in Africa and other emerging markets. Business as usual needs to evolve to Business unusual.

Electronic Commerce Stack	Business as Usual	Business Unusual
Banks	Banks are the foundation of the digital commerce, over many years, optimized processes to guarantee safety of their customer’s funds. Developed markets - both the merchant and the customer hold an account in a bank. Emerging markets - the business will have a bank account BUT the customer will not have a bank account. Where the customer has a bank account, it may not be not easily accessible (bank branch a few kilometers away).	Banks have a huge role to play, a huge opportunity for banks with foresight. All consumers don’t need to have a bank account, however they have a mobile wallet account backed by an escrow in a bank account. Traditional merchant accounts can be modified to support payment processes through mobile wallets and alternative payment methods.
Innovation / Aggregation Layer	Ecommerce aggregators in more developed markets for example Visa, MasterCard, Stripe, PayPal, DataCash, PayFast, Adyen and numerous others are innovating and facilitating other businesses to innovate and have tremendous scale. However, all these players have almost no operations or transactions in Africa and other emerging markets because their businesses models and architecture is not well suited – it assumes both consumer and merchant have a bank account.	Innovation /. Aggregation is critical for success of electronic commerce and needs collaboration between banks, mobile money / wallet providers and their vendors. Aggregation / integration companies like www.iwiafrica.com provide innovators with the tools and capabilities (usually through API’s) to build value for their customers easily and quickly. Electronic commerce in Africa and other emerging markets will not scale without a well-developed innovation layer.
Channel / Access Layer	Access to electronic commerce services is mainly via phones, PCs and Point of sales (POS). This is not a problem in Africa anymore, phone penetration is high (65% in 2013 expected to grow to 91% by 2020) and smart phone growth is in double digits in many countries (72 million smart phones in 2013 expected to grow to 525 million by 2020, a CAGR of 33.7%).	Africa and other emerging markets are mobile first so the tools given to innovators needs to help them target mobile devices from dumb phones which are still a majority to first growing smart phone market. Costs of access for dumb phones via SMS and USSD should be lowered further

To drive innovations in digital commerce that reach the majority market in emerging markets, the innovation layer – just like roads, bridges, power need to be developed. The best solution is the one that will piece together all the major actors in the stack and optimize for African and the Emerging market environment.

intelworld win at mobile money and payments event

We are glad to announce that we winners of the inaugural edition of the Payments Dragons Den Africa at the Mobile Money and Digital Payments in Johannesburg.

The session welcomed pre-selected start-up and financial technology organizations to the stage, to pitch their products and services to a panel of experts, potential investors and conference delegation and we emerged as winners.

This is another endorsement of our business that is trying to get all businesses transacting efficiently without using cash. .

We would like to thank the organizers, judges , sponsors and everyone involved with Mobile Money and Digital Payments conference for giving us the opportunity to show case our company  

Is USSD the answer to universal access of mobile financial services for the poor ?

Most experts in the digital finance field agree that USSD - (unstructured supplementary service data) is the most efficient channel to access financial services for rural poor people.... But is it ?

Most experts in the digital finance field agree that USSD - (unstructured supplementary service data) is the most efficient channel to access financial services for rural poor people.... But is it ?

USSD (unstructured supplementary service data) is a text only service that allows anyone with a phone (even those without internet connection) to access text based applications. It’s the reason it’s highly used in Africa and other developing countries where people buy cheap feature phones and data connections are flaky, especially in rural areas.

It’s for this reason that it is a very popular channel for apps in developing countries.

This article from the Consultative Group to Assist the Poor (CGAP) explains very well what USSD is and why it matters for financial services. 

At intelworld, our experience is making us rethink USSD as the defacto access channel to poor people, for the following reasons

1. You must be able to read to use USSD – and there is a high correlation between poverty and illiteracy. My colleagues in telecom in South Sudan tell me that SMS and USSD usage are so low because people can’t read
2.  The user experience with USSD sucks. You have to remember codes like *687*34# to access the service you require. You can’t have images.  There is a character limit (260 characters for most USSD gateways) to what’s available on the screen and session timeout as it operates in client server mode. It is okay to use USSD to load prepaid airtime and it might even pass for peer to peer payments but trying to do anything as complex as saving or getting credit! – good luck

3. It’s very very expensive for both the provider and customer. For the provider - the annual license for a USSD code in Uganda is now USD 12,000 excluding setup fees with every telecom you connect to.For the consumer - USSD sessions are billed, so it might cost a user about UGX 220 (approximately 70 US cents) for a USSD session. Imagine getting billed 78 cents for a web page with only 260 characters. This article from CGAP shows that is true in other African markets

USSD for financial services reminds me of MMS (Multimedia messaging) – a service that was heavily invested in by telecom companies that promised to get users sending media like audio and video on their phones. It worked, but did not get traction. The reason it did not get traction was the user experience was ‘just not right’ with regards to costs and usability. It was a 5 step process to send and receive an image and it cost UGX 220. It was not until smart phones and whatsapp came along that users started to send each multimedia – because the user experience is ‘just right’. Its 2 steps to send an image and the cost is nicely abstracted away.

My opinion is that rather than focusing on channel, we should focus on user experience. Rather than focus in siloes with regards to access channels, the focus should be on delivering an Omni channel experience where a user has choices on how to interact with the service e.g. instead of a Micro Finance Institute (MFI) having totally different access channels and services for mobile , online , Over the Counter (OTC) they should have an integrated system where a user can interact with their service depending on the experience they are more comfortable with. Very poor illiterate people may work better with assistance from agents or with biometrics or cards. The more literate in rural areas may be able to use USSD or even mobile web (via GPRS) and urban millennials love their smart phone apps.

That’s our aspiration at intelworld. To build a true Omni channel user experience for digital finance and digital commerce as well as abstracting the complexity of dealing with multiple payment providers. We believe that by doing this – everyone, no matter where they are in the world can participate in the global digital economy.

Implementing digital products in Africa

Africa is a very complex market. In fact, they's no African market. They's a Nigerian market, a Uganda market, a South African market, a Kenyan market etc. The different market characteristics in each country usually mean a product will succeed in Kenya and totally tank in South Africa.

Africa is a very complex market. In fact, they's no African market. They's a Nigerian market, a Uganda market, a South African market, a Kenyan market etc. The different market characteristics in each country usually mean a product will succeed in Kenya and totally tank in South Africa. (See Mpesa) 

Further, disparity in social and economic characteristics within a certain country make it very difficult to build products that scale. Build a smart phone app to give users a simple and rich user experience and you’ve eliminated millions of people who still don’t have access to those type of phones. Build feature phones apps and most of your customers can’t afford the costs of USSD /SMS messages or even navigate the complex text menus. Rolling out point of presence including agents, POS terminals, and automatic machines is very expensive.

We believe the best digital strategy for the majority of businesses is an Omni channel, multi payer experience.

Support different payment methods.Support the millions who still have access to feature phones , but also support the upward mobile youths whose device of choice are smartphones (very fast growing segment) .  Support Point of Sale and over the counter (OTC) transactions.

If you agree with us but buckle on the technical complexity of executing this strategy, we have good news for you. At intel world international (IWI), we have built a platform that you can leverage to start offering your customers service seamlessly across several device and payment channels. We integrate to your line of business application (ERP, CRM, Billing System etc.) and within weeks your service is available on feature phones, smart phones and even POS.  Further, unique customizations on the platform mean that you can build a product that not only fits the country you are operating in but also ensures a usable product no matter the social economic status of your target customers.

Contact us  E-mail: support@intelworld.co.ug   Phone: (+256) 392176048 

intelworld a innotribe finalists

We are glad to announce that we are finalists in the innotribe start-up challenge 2015

Delegates at SWIFT’s African Regional Conference (ARC) where asked to rate how important the companies that pitched where to the future of the financial industry, and they rated us high enough to qualify for the finals that will be held in Sibos, Singapore.  

Peer to peer payments are hot in Africa, and we think businesses can leverage this to automate their payment processes and become more efficient. By using our platform, businesses can move away from using cash (98% of transactions in developing countries are still cash) to more efficient cashless methods by leveraging existing mobile wallets and the high adoption of mobile devices.

We would like to thank SWIFT and the innotribe team for helping us communicate our story ,for the opportunity to showcase and exposure to customers and partnerships that the event gave us.

See you in Sibos

intelworld debuts NFC ticketing solution

Intelworld in collaboration with SMS One and Micropay successfully implemented NFC cards as tickets at the recent Friends of Bebe Cool show held at Serena Hotel on Friday 7th August 2015

Revelers only had to obtain an NFC card (branded Gagamel Card) and then used mobile  money or cash to load ticket values onto the card. To gain access to the event, revelers tapped  their cards against an NFC reader which then showed the ticket value after which they were let 
through. 

We believe that going forward, this is going to be the way all events payments and access are going to happen

 Bye bye cash and easily forged paper tickets.

inteworld a innotribe semi finalists

We are glad to announce that we are semifinalists in the innotribe start-up challenge 2015. We are 1 of 60 (14 from Africa) startups selected to pitch our products at the regional show cases to be held in Cape Town, New York, London and Singapore

Innotribe is SWIFT’s fintech innovation initiative that brings together highly qualified financial services experts, angel investors, venture capitalists, and global fintech and financial decision makers.

We are 1 of 14 startups African startups selected to pitch our products at the regional show case in Cape Town South Africa. Another 46 from other regions will showcase in London, New York and Singapore.

If we do well, we shall secure a place in the finals and show case our products at Sibos in Singapore.

Being chosen by innotribe validates our business model of being the glue that will bring the bottom 2.5 billion people excluded from finance and commerce into the global digital economy.

How do we do this?

We do this through mobile devices. 70% of adults in emerging markets have access to mobile devices, this is an excellent channel to reach them.  

Cash is the defacto transaction model, but it’s a very inefficient way to transact for both the business receiving cash and the consumer paying with cash.

This article from MasterCard explains very well the cost of cash.

We’ve been trusted by big brands like MTN and Airtel to deliver solutions for them.

We’ve also currently do work for startups like ALTX (ALTX will offer an electronic marketplace where securities and derivatives are traded, providing a reach for investors in Africa to securities in various locations worldwide and to African securities for investors outside Africa.)  and xente (xente is a solutions that enables customers to send money internationally using mobile phone starting with the United Kingdom to Uganda corridor) to bring their ideas to life

We hope to leverage this  opportunity with innotribe to get exposure to customers, investors , coaches , mentors and partners that will help us make our products better for our customers.