In your own words, please tell us who Masego Mbaakanyi is
I’m a patriot and a pan-African who also happens to multi-task as most of us Batswana and furthermore, Africans typically do.
Your background is in business. Briefly take us through the journey that landed you in fintech
My first job was as an investment analyst. Part of my job was a tedious process of analyzing stocks and fixed-income securities. The process felt very mechanical in a sense (whilst there was a layer of art in stock selection), but certainly, the collating of information was very mechanical. I always felt there was a more efficient way to consolidate information but didn’t have the technical know-how on the possibility. I then learnt about the robo advisory industry. At the time it was a “buzz word” and now it has completely taken off. I think asset management introduced me to the possibilities but I didn’t understand that it was “Fintech” at the time. Fast forward to 2019 and I became more exposed through my network to people within the industry. This sparked a fascination, alongside travelling and living in the US, Asia, Europe and the United Arab Emirates. There I was exposed to how people could split bills at a restaurant without taking out cards and swiping individually, or dare I say call on an Uber or Uber Eats. People could use their rental payments history as a means to access mortgage finance, people could pay for coffee using digital currencies, people could round up payments to invest in the stock market. The list literally goes on. All this alongside what was already happening on the continent from MPesa, Interswitch, Fawry, Jumia and many others led me to my journey in fintech
You are one of the founding members of Fintech Association BW. Please tell us more about the association
In summary, the association was formed with the purpose of building a collaborative fintech ecosystem for Botswana. Where we can all work together to build better financial services products and services not just for Botswana but the continent and world at large.
What was the motivation for starting the association?
I think the ecosystem existed but it was heavily fragmented. People who should have been connecting weren’t, and people who needed access weren't getting it. Fintech Association BW is a very young association but the hope is to remove bureaucracy so innovators can be left to innovate as opposed to dealing with bureaucratic processes of approval. Academics can collaborate with technologists (as they are both innovators in my opinion) to introduce products and services which can be housed by regulatory sandboxes or innovation offices. Other associations such as the Bankers Association of Botswana can come together to push mutually beneficial agendas in the interests of consumers. Regulators can sit at the table with other ecosystem actors and work with them (us) to create solutions that are efficient but promote financial inclusion/literacy, data privacy and rights, cybersecurity, physical infrastructure such as agent networks (where relevant) and of course establishing the relevant framework for operating.
Africa’s fintech sector has been growing rapidly over the last half a decade or so in terms of innovative products launched and funding (internal and external) invested but using those metrics, Botswana is still very much left behind. Why do you think that is?
This is a simple yet challenging question. From my own observation, there is so much talent in this country. People have the drive and will to solve problems. Some of the solutions I’ve been exposed to by members of the association are absolutely mind-blowing. The problem is, anyone who puts in work to build a solution wants to be remunerated appropriately more especially if they are creating niche solutions and sometimes even novel solutions. The other issue is access to the right funding platforms such as YCombinator, SEEDRS, Founders Factory, 500 startups and Antler, to name a few. If just one Botswana company makes it into YC and has a successful exit, that’ll spark enough of a revolution in the country and not just in Fintech.
What do you think we can learn from fintech trailblazing countries like Nigeria,Egypt,Kenya and South Africa in moving our fintech sector forward?
I think an important difference to note from all the above-mentioned countries is they have the numbers which Botswana does not. If we can start to look at ourselves more as Southern Africa with the hub in Botswana, we have a significant value proposition. So numbers matter. Therefore I don’t think the comparison is fair besides comparing notes on products and services that may be relevant here. One thing I will say and that is not just from our African giants is, the private sector leads innovation (without permission from regulators). This is a common thread even in Brazil for example. Therefore, innovators should not rely on regulators to pave the way; rather create in collaboration with other actors (including regulators), but not wait for the approval. As a continent, we are all still learning Fintech so the private sector need to make the mistakes (sometimes at a high cost as was seen in Nigeria recently)
What do you think the country stands to gain from having a vibrant fintech sector?
There are countless benefits, the first is that my phone will be sufficient to pay for anything. A cashless society means less theft and greater monitoring of irregular transactions. Greater financial inclusion is arguably the most important, particularly for women who have been and continue to be marginalized. For MSMEs, Fintech provides access to affordable credit which allows people to move up LSM brackets. Fintech can facilitate saving which is understood by the greater population or at least extends from the existing informal savings model. Open insurance facilitates access to healthcare and insurance products which would typically have not been accessible to lower LSM brackets (who have the propensity and affordability to pay but don’t trust the existing system). All these aspects fulfil the government’s mandates on a broad scale of digitisation, financial inclusion, upskilling for 4IR, financial literacy, and of course job creation to name a few
One of the major building blocks of any successful sector is an enabling regulatory environment. Botswana still does not have an open banking regulatory framework. How do you think this is affecting the rate and pace of fintech innovation in the country?
I think the regulators have a mandate of financial and price stability, thus as conservative organizations particularly the central bank, open banking is a priority but implementation is incremental. I can definitively say that the central bank has established a Fintech Committee to understand trends within this growing and broad sector. They have also stipulated other projects which will come on board in the future to facilitate the development of regulation. The reality is that what is practised in the UK, Singapore, Hong Kong, San Franciso, Brazil, Estonia may not be applicable in Botswana and again as a conservative organization, there is some balance in deciding what to take on and what not to take on. As mentioned previously, innovation leads regulation, so we as an association need to collaborate with the private sector and the regulators to make incremental but necessary steps towards our final goal, but again led by the private sector.
What role do you think associations have to play in pushing for legislation which will create this enabling regulatory environment?
The association won’t have the power to push legislation more than constantly showing the benefit towards political and more importantly, national agendas. The legislative process of Botswana is incredibly slow. What we aim to do is find the small wins such as policy changes that are non -legislative, or collaborations that happen indeterminate of the central banks such as banks and startups.
Even with a regulatory framework in place, fintech startups are still at the mercy of unpredictable government actions as we saw four fintech startups having their accounts frozen a fortnight ago in Nigeria, Africa’s fintech poster child. How do you think startups can foolproof themselves from this?
The only way to foolproof yourself against drastic actions by the government is through constant communication and collaboration. The regulators need to always be aware and appraised of the latest innovations, their implications and the benefits to government mandates. Also, the private sector cannot deviate from what has been discussed and agreed in the hope that the regulator will let things slide. They may, and they did in Nigeria, until unfortunately, they don’t. There has to be beneficiation across the board (taxes, accountability, financial inclusion, jobs etc…)
There is a growing concern that the amount of money being pumped into Africa’s fintech is creating a bubble effect. What's your stance on this?
I must say that the bubble in Europe concerns me more than in Africa. I do however acknowledge that it could be a problem in the near future where there is too much money chasing too few viable ideas, and people invest in Africa for the story but not on fundamentals of the entrepreneurs. Otherwise, 11% unbanked is sufficient enough a story for me on growth, more especially given how significant the banking sector currently is.
Coming back to Botswana, a largely unbanked population and below-par banking services presents a huge potential market for fintech innovators to tap into. How do startups take advantage of these elements and garner a significant market share for themselves?
I believe there are various ways and how you take advantage is based on what avenue an innovator wishes to take, be it in wealthtech, paytech, insurtech, etc. Certainly, an industry that has been underexplored is micro-insurance, micro-investing and even interoperability in payments. I think the other main approach is to not make products just for Botswana but for the region and adapt them accordingly much like Letshego has managed to do and now Alpha Direct.
With regards to the association, what is on the horizon in the near future?
We are part of the Africa Fintech Network which is a network of 35 associations across Africa. Part of access to the network is to create bridges for entrepreneurs to learn from other economies first-hand. The other is certainly to focus on some key identified challenges which our members face and resolve those as a main priority. Finally, to educate people on Fintech so they can understand the possibilities at large, what they deserve
Lastly, where can you be reached in case our readers want to get in touch?
We have our Linkedin page:
https://www.linkedin.com/company/fintechassociationbotswana/
On there you have access to the WhatsApp groups and upcoming events as well
Alternatively, follow us on Twitter @FintechBotswana and @MbaakanyiMasego