By: Katia Agostinho(FSDMoç Market Development Analyst)
Now-a-days more and more people are looking for convenience and flexibility when using financial services, especially the low income population which also look for accessible services in terms of price and physical access. Globally, technology is playing an important role in making that happen, by supporting financial service providers with innovation and expansion options. The use of technology in the financial sector is globally known as Fintech.
In Mozambique, were only 40% of the adult population is financial included but more than two thirds (68.8%) of the rural population is financially excluded, the fintech industry is in early stages of development presenting a huge opportunity for local startups and tech companies.
But, the question is, how well this opportunity is known by the key players: the startups, the tech companies, the banks? It is possible to see some of the largest banks and mobile money providers starting to tackle it but the frontier of possibilities is enormous.
There is a need to promote and discuss more the concept of fintechs, its importance and how we can, all together promote it.
The Financial Sector Deeping Mozambique – FSDMoç, an entity dedicated to the development of the financial sector focusing on expansion and financial inclusion, promoted a Panel on May 25th during the 4th edition of the biggest technology conference in Mozambique – Moztech. The goal was to promote discussions on how a Fintech ecosystem can be developed in Mozambique and what role all relevant stakeholders can play in this process, as well as, bring concrete experiences from other countries.
The panel had Matteo Rizzi creator and Co-founder of FintechStage from Italy, David Milligan from Maatchi based in Hong Kong, Philip Ngarambe the Co-founder of AC Group Rwanda, Mercy Zulu from GoodWell an impact investor based in South Africa and Helder Buvana, the business development head of FSDMoc.
As the key note speaker, Matteo Rizzi started by explaining that the relationship between financial inclusion and productivity growth in the country is proven, and then argued that in Mozambique, it is necessary to have such meetings with several communities represented more frequently, this is the first step. Then follow the international trends where there are success stories and not only. The aim should be the development of catalysts that enable Fintechs and other providers to work together. In Matteo’s view, the regulator must be close to the startups to gradually translate their language, and with enormous potential through digital services, many people can access the financial services they need.
In turn, David Milligan, brought some statistical data that estimate that around the world, around 17 billion dollars have already been invested by the 20,000 fintech companies. But this was possible only with Collaborative work among institutions, and a framework that allows banks to test these initiatives to see if consumers will use these services or not. For the particular case of Mozambique, David defends that to promote Fintech companies in Mozambique, we must include banks and regulators, which imply creating a facilitating environment for the experiences of the acceptability of these services. In its own words “In Mozambique, in order for innovation to solve a problem, it is necessary to create space for market players to articulate solutions … we need a culture to experiment and verify what other countries have already done.” David Milligan
To bring a more concrete example of a fintech work, FSDMoc invited a Rwandan fintech – AC Group – that is operating in the transport sector and has recently expanded its operations to Cameron. AC Group has successfully implemented a cashless transport payment system in the capital Kigali and has now more than 1 million users. This was possible in less than 5 years. On behalf of AC Group, Philip Ngarambe believes that success depends on support from regulator and government. The good result that AC Group achieved does not happen overnight, thanks to the good leadership of our government and the regulator who helped us influence change.
It is clear that to build a strong fintech ecosystem requires considerable amounts of investments, not only knowledge and capacity but financial resources.
To discuss this issue FSDMoc invited GoodWell Investments from Cape Town, an investment firm focused on financial inclusion, fintech and inclusive growth. To date, Good Well Invested in about 2 000 startUps in Africa and the ones in Mozambique are not so visible or are not attracting investors who come directly to the Country.
To FSDMoç, it is important to reflect, together with the digital services industry, the constraints necessary to achieve a mature stage of Fintechs industry in Mozambique, making it one of the solutions for the improvement of the financial inclusion levels in Mozambique. This is important because we believe it contributes to expand financial services to remote areas and underserved population, resulting in financial inclusion in Mozambique.
“Our role is to promote financial inclusion and we recognize that digitization is the fastest way to get there, so we look at Fintech as a strategic partner. One of our major goals is also to look at financial inclusion by the social component and by the social impact that financial inclusion may have. Even for this purpose, the Fintech play a big role. We also look at expansion, innovation, man-centered development, so Fintech has to identify problems in our society to gain our support.” Helder Buvana – Market Development Manager FSDMoc.