Banking the Unbanked African: The Disconnections

Mina, a Ghanaian Lady that I met on my recent trip from Accra, the capital city of Ghana to Aflao, the border town with Republic of Togo, was travelling to conduct withdrawal transactions with her ATM card and nine other cards belonging to friends. The distance to Aflao from her rustic roadside village is close to 45 kilometers and return trip will consume three hours of her productive time as a school teacher. She said ‘I do this every week and also help my friends but I don’t know if I can continue this way. She continued ‘If by the end of the year, no Bank stations an ATM in her locality or open a Branch, I will resort to keeping my money under my pillow. At least I don’t incur chargers to make withdrawals from under my bed’. That is the typical scenario across Africa’s rural population. She might end up adding to the statistics of the previously banked by the year end.

In Africa, in bid to turn in massive profits and assume a continental Player status, Banks are focused on the Big picture :Africa, while neglecting their backyards where credible statistics has shown that 70% percent of the citizens live in the rural and semi Urban areas. The Banks are engaged in Grand prix like race to breast the tape into many African countries.

With the ear bursting sermons of Banking the unbanked in Nigeria and yet the attitude of the Banks are a direct opposite, it seems to be fashionable to sing the song but never dancing to it. While some Large Rural local governments in some parts of Nigeria are without a Bank branch, a high street in Lagos of 1.8 kilometer stretch, has 8 branches of a particular Bank which translates into a bank branch for every 180 meters. These are same Banks with aggressive African roll outs, exporting same disconnections.

Governments in it’s wisdom, thought Micro Finance Institutions will bridge the gap but they too fell into the large commercial Banks trap by modeling their services to be exact or look alike. They issue same standard KYC forms and conditions like the large commercial Bank ( LCB) to a different type customer .Some even went further to style their offices to look imposing and as intimidating and located in the major cities like the LCB, far away from their potential and targeted market. Rather than close the gap, the MFI’s by design are widening it.

For the unbanked African, with few options for formal financial inclusion, out of sight is out of mind. They continue to patronize the informal channel which is unreliable and unsafe. While promoting this imbalances, the LCB are slow to take on innovations that can significantly change this pattern and are quick to muscle in any perceived incursions into what they think will be their bread and butter forever, the unbanked populations.

The games changers are here. Regulations across the world is changing and favoring the entities that can make it happen. In Kenya, while the Banks are still importing security doors and window blinds to set up ‘profit centres’ Bank Branches, Safaricom through Mpesa was signing up average of 80 agents a day. Today, 15% of the Kenyan GDP passes through Mpesa. In Banking the unbanked African, the telcos seems to understand the four Horsemen to tackle: Reach, cost, regulations and technology.

While the telcos are promoting a Bank in your pocket strategy, The Banks are busy pushing the crowds through their doors. Last update on Banking statistics in Nigeria, there are 22,000 people to a Bank Branch in a country with 140 million people and 62 million mobile subscribers.

Banking Businesses are meant to be profit driven and not social benefits but Banking the unbanked will not be achieved if African Banks continue with same strategies that shut out potential new customers base that constitute 70% of the continent’s population.

With the new thinking amongst African Financial and telecommunications regulators, the bridge is closing on the Financial institutions that are not ready to use what the Left Behinds already have, the Mobile Phone. Little snippets from the Bank / Telcos, war front capital – Kenya, The Crying Babies are the Banks and the winner is Mpesa with 6.5 million subscribers and 10 million monthly usage. Will the likes of MTN Mobile Money, Wizzit in South Africa, Txtpay in Ghana,Mi-pay in sierra leaone and Tagattitude in Nigeria, be able to replicate the Mpesa challenge? Only time will tell but for sure,the game changers are here.

The release of Mobile Money guidelines in countries like Nigeria, is expected to accelerate the process but if it does not happen early enough, the likes of Mina in Ghana, will have to continue investing 8 cedis ( 10 dollars) to make trips for ATM witdrawals,40 kilometres away and if she will the join the millions of previously banked and currently unbanked across Africa, only time will tell.

Emmanuel Okoegwale
emmanuel@mobilemoneyafrica.com
www.mobilemoneyafrica.com