The long path to Nigerian payments innovation
A couple of weeks ago, I decided to get a haircut in Lagos. After I finished, I realised that I had no cash with me, I only had cards and my barber Chika did not have a POS machine. He suggested that I try GTBank’s *737# USSD payments channel. I had never used it before and had no choice but to try it. The barber and my friend Kola who had accompanied me assured me that it was easy to use and it made more sense than driving to an ATM and back.
I tried it, and they were right. In less than 10 minutes, I had on-boarded myself and Chika had money paid into his Fidelity Bank account. The entire transaction happened in less than 5 minutes. The only time wasted waiting was for my barber to get the SMS confirmation that the money was already in his account. I almost lost my mind thinking about what had just happened, but the gentlemen beside me could not understand why. I had worked so hard for people to achieve this thing that now seemed mundane.
First, there was a time when interbank transactions only happened by cheque, and it took days for the instrument to clear. We had fought to sell an already successful automated clearing house solution to the Central Bank of Nigeria for many years in the 90s. Secondly, I had been part of all the initial efforts by Africa’s largest telco MTN to try to get mobile payments to happen in Nigeria by partnering with banks.
We had implemented mobile money in almost all MTN countries in Africa, but Nigeria had been elusive because of regulatory issues. It was amazing that the same Voucherless Top-up solution we eventually implemented and maintained for MTN as part of the initial EFT stack that ultimately became the gateway for banks to realise that they could do not only airtime transactions but also financial transactions as well.
The path to that simple transaction that I did with Chika had been long and brutal. I lost my mind because I was thinking of the billions of minutes Nigerians would have saved if mobile payments had been allowed in 2004. I was thinking of people who had possibly lost their lives because of unnecessary travel – lives that would have been saved because people got money to their relatives in need promptly. Why did it take so long for us to get there?
I have never been a big fan of technology regulation in Africa. I believe that we are too far behind to have any bureaucratic rules holding us back. MPesa in Kenya would not have been possible if regulation had held them back. Today, Paypal, one of the very first and most successful American payments companies, is celebrating their integration to MPesa. I am very confident that Nigerian mobile payments should have dwarfed MPesa by now if not for regulation that held it back.
The other bedfellow to regulation is government policy. Innovation cannot happen when policy doesn’t support it. African governments have not been progressive policy-wise, consistency has seemed to elude us. I have been part of a significant education technology project donated by a global technology company worth millions of dollars which would have benefited an entire African country, but got scuttled just because the government changed and a new set of people came into power. Policies don’t seem to be able to outlive politics.
The regulation and politics problems affecting technology in Africa are classic examples of “Wicked Problems”. According to Wikipedia – A wicked problem is a problem that is difficult or impossible to solve because of incomplete, contradictory and changing requirements that are often difficult to recognise. The use of the term “wicked” here has come to denote resistance to resolution, rather than evil. Another definition is “a problem whose social complexity means that it has no determinable stopping point.” Moreover, because of complex interdependencies, the effort to solve one aspect of a wicked problem may reveal or create other problems.
Solving our wicked problems
I believe that African technology people have a communications problem. We don’t know how to frame our arguments correctly, even when we make the right arguments, we do so to the wrong audience. The payments monopoly narrative in Nigeria has since clouded the people benefits’ narrative. Some people used fear to hold everyone back while they also made no progress themselves. Regulators were trying to prevent what they had never encountered, and the people who could have benefited most from payments innovation had no idea of what it meant and could not ask for what they didn’t know. The fact that I could do that transaction with my barber came from a simple collaboration between telcos, banks and regulators; this could have happened years earlier.
Robert Knapp stated that there are ways forward in dealing with wicked problems:
The first is to shift the goal of action on significant problems from “solution” to “intervention.” Instead of seeking the answer that totally eliminates a problem, one should recognize that actions occur in an ongoing process, and further actions will always be needed. For example, *737# is not yet the final solution to the payments problem; further actions will be required.