What you need to know:
- While cash is still a predominant method of payment in Uganda and across the Africa, Covid-19 is steadily drawing people towards cashless transactions, which presents a great opportunity for Financial Technology Companies (Fintechs).
SafeBoda, a ride-hailing App for boda-boda rides, is set to get a payments license that will enable it play in the electronic money (e-money) space as it moves to expand its service provision.
Mr Tim Jamieson, the SafeBoda vice president-payments and finance services, said they are currently waiting for Bank of Uganda, which regulates electronic money services under the its National Payments System Act.
Mr Jamieson also noted that they were in the process of building a range of new products, including building a payments ecosystem, open-loop products, savings products and working capital loans, to enable more people access financial services, easily and affordably.
The company, he added, will soon pilot its working capital loans product, to extend credit to the merchant partners with priority given to female-run enterprises to boost inclusion.
SafeBoda, which is based in Nigeria but headquartered in Uganda, started off providing ride-hailing services six years ago, before expanding its service offerings to food and shop, buying airtime and payments, among others.
Mr Jamieson, who was speaking during the on-going 40-Days 40-Fintechs initiative, said they seek to provide a cheap ecosystem that allows customers to send money across networks for free as well as drastically reducing the cost of withdrawing these funds.
“If you want to send Shs5,000 across networks can cost you just Shs1,000 to do so or Shs2,000 if you are sending to-two-to-three different networks; we think there is more that needs to be done here. Mobile money ecosystems form such a large part of the back bone of Uganda and Africa as whole, so there should be continuous improvements in how this is delivered,” he said.
While cash is still a predominant method of payment in Uganda and across the Africa, Covid-19 is steadily drawing people towards cashless transactions, which presents a great opportunity for Financial Technology Companies (Fintechs).
However, Mr Jamieson said, there is need to work together as an industry to share knowledge, technology and regulatory stack and working with regulators to solve existing problems.
“We have a huge unbanked and underserved population; we have a high cost of time and money to access financial services and at the same time we have this amazing fast growing ecosystem of Fintechs that is coming through locally. We need to bring them together so that we solve these problems,” he said, commending Bank of Uganda for creating a stringent regulatory framework that will build customers confidence in transacting in electronic money services.
Under the National Payment Systems Act, Bank of Uganda is mandated to regulate electronic money service providers and payment systems.
Mr Jamieson said this will not only create confidence among users but is also likely to attract funders in the Uganda’s Fintech space.
“I think we are entering a very exciting time as more companies start being funded. And as we work together, we will have a strong Fintech industry that fills the gap left by commercial banks,” he said, but noted the National Payment Systems presents the challenge of creating monopolistic tendencies due to stringent requirements required to get an operation license.
Mr Malcolm Kastiro, the Mallan Company Limited chief executive officer, said the National Payment Systems Act does not favour startups or students, noting that innovative idea could be locked out because of failure to afford license requirements.
“This law unfortunately protects big players, new entrants will be stifled before they even take off,” he said, adding that there is need to find a way of helping new players to offer solutions so that they are not buried before they scale.
Bob Moses Oyuru, the Cytrone chief executive officer also said that most Fintech players may not be in position to afford the fees imposed on them to get an operating licence.
The 40-Days 40-Fintechs initiative is organised by HiPipo in partnership with Crosslake Technologies, ModusBox and Mojaloop Foundation, and sponsored by the Gates Foundation.
It seeks to enable Fintechs to innovate solutions that facilitate cross-network financial transactions at minimal risks to enhance access to financial services.
The HiPipo Chief Executive Officer Innocent Kawooya alluded that Fintech in Africa offers attractive opportunities, adding that investors are rightfully picking interest in the various startups that are offering a plethora of services, ranging from payments and lending, remittances, cross-border transfers and neobanks, among others.
He adds that the 40-Days 40 Fintechs initiative seeks to give exposure to the best emerging and transformative innovators of Africa.