Inside Africa’s Digital Payments Revolution – Robert Ochola  [Season 3 | Episode #05]

Intro & Outro 00:00:00 Hello. Welcome to P.I.T. Exchange, a podcast by Currency Research. Join us as we discuss the latest in payments innovation and technology with the industry’s most innovative thought leaders. Today’s payments are changing and moving around the world faster than ever before, and Pit Exchange gives you the knowledge and insights to keep up. Sit back and relax as we join currency research, exchanging ideas with today’s special guest.

Jens Seidl 00:00:34 Welcome to another episode of The Pit Exchange payments, Innovation and Technology. My name is Jens Seidl and I’m your host for this episode. I’m very happy to have a special guest from Africa with us today. Doctor Robert Ochola from AfricaNenda. Robert, welcome.

Dr Robert Ochola 00:00:54 Thank you so much. And it’s a pleasure to be here. Great.

Jens Seidl 00:00:57 Thanks. Thanks for joining us. As usual with my episodes, I’d like to start with a quick icebreaker three random personal questions just to get to know the person. Robert a little bit before we then jump into the the payments related topics. So first question, it’s all travel related today.

Jens Seidl 00:01:15 First question on a plane, do you prefer aisle or window?

Dr Robert Ochola 00:01:19 I prefer window. Okay.

Jens Seidl 00:01:23 You’d like to look out the window.

Dr Robert Ochola 00:01:24 Yes, yes, even if there’s nothing to look out at. Just daydreaming sometimes. Okay. Fair enough.

Jens Seidl 00:01:31 then when you travel on holiday, do you prefer the seaside, the ocean or the mountains?

Dr Robert Ochola 00:01:39 I prefer, mountains and a bit of bush. Okay.

Jens Seidl 00:01:44 All right.

Dr Robert Ochola 00:01:45 Yeah.

Jens Seidl 00:01:46 And then a bit more precise. Do you have a favorite travel destination in the world somewhere where you like to always go back to.

Dr Robert Ochola 00:01:54 Yeah. You know. Yes. Like you already know me. Yes. Cape town. Cape town is one of my favorite. Yes, absolutely. Yeah. Absolutely.

Jens Seidl 00:02:02 Great. Lovely. Well, I’m looking forward to going back to Cape Town at the end of this year. We’re having another conference there. I think it’s our third now in the last few years because it is a fantastic city. I love it. So yeah. I’m with you.

Jens Seidl 00:02:14 Great. Lovely. So, without further ado, then let’s jump in. Robert, can I hand over to you, maybe first and let you introduce yourself and Afrikan Linda a little and tell us a little bit about yourself and what you do.

Dr Robert Ochola 00:02:28 Right. Thank you very much, Jens. And it’s really a pleasure to be part of this conversation today. And thank you for taking time to speak with me. as you mentioned, Robert Ochoa from Kenya. I’ve spent, I think, about 26 years working at a continental level, both in, mostly in Africa, you know, covering between 16 to about 40 markets. and also, I spend a bit of my time in the Middle East as well. so my background is engineering. did, you know, I did some work in mechanical and material engineering. but I’ve worked mostly as a strategy and innovation, technician within the banking and the mobile space. So coming out of that pivoted to Africa and India about four and a half years ago. and this really is probably the culmination of all the work, and experience, because for the first time in a very long time in my working career, we’re actually trying to work to transform and improve the livelihoods of underserved, on the continent.

Dr Robert Ochola 00:03:34 And that’s what we do at African. And every morning we wake up, and we try and ensure that 400 million Africans today who are financially excluded, can actually get on to some form of digital, you know, bank or mobile, or digital, financial, account, even if it’s a QR code. So that’s what we spend our time doing. Thank you.

Jens Seidl 00:03:57 Okay, so, I mean, that sounds like that. It’s probably covers a really broad range of initiatives. And I’m pretty sure in the next 40, 45 minutes or however long we’re going to chat on this, we’re going to cover a lot of that. But maybe if you want to start with the high level, what’s what’s what’s your vision. And I believe you’ve defined some, some goals for the next five years for 2030. Can you tell us a little bit about that.

Dr Robert Ochola 00:04:25 Right. So so we’ve got a mandate, to achieve, to build payment systems that cover about 260 million Americans. But let me take a step back, because my people sort of know that the continent of Africa is known for, you know, the innovation around mobile, mobile money.

Dr Robert Ochola 00:04:45 and we respect that. I want to give you a little, story. let me start in 1990. Actually, it’s a bit of a naughty story because I applied for a landline after I just finished my A-levels. Very O-level. That’s the GCSE, and I was staying at home at my folks place, and I applied for a landline for some reason. I still have not received any response from the telco company. Can you? Right. But probably since that time I’ve had, I don’t know how many mobile phones and mobile numbers. So mobile technology drove a significant shift in in how people communicate, especially on the continent. And then you dovetail that with the introduction of mobile money, which, you know, East Africa, Kenya specifically is known for. And that’s been great innovation. But over the last sort of 5 or 6 years, there’s been a plateau. And what do I mean by that is we seem to have saturated the market and brought on board those who can afford mobile phones, and therefore they can then indeed, afford $4, at least have some sort of mobile wallet to receive or send money, depending on where they are.

Dr Robert Ochola 00:05:56 But the projections we have as African render show that if we continue with the onboarding of people, even on mobile wallets, by 20, at the current rate, at the current sort of rate, in terms of gradient, by 2030, we shall still have about 350 million Africans who don’t have a digital presence. Digital from a financial perspective? Yes. And if you do another sort of cut cost that forward up to 20, 20, 35, 2040, you will still have only brought on board, another 140. So they’ll still be 250 to 60 million Africans who are financially excluded. so what we need to do as Africa and collectively on the continent is really bring down the cost of either opportunities for people to have a more affordable mobile. Mobile phones so that they can then jump onto a mobile money account. Or indeed. As we’ve seen in innovations across other parts of the world where people were disenfranchised can receive even one US cents or 0.1 US cents at no cost to the person sending them using a QR code.

Dr Robert Ochola 00:07:11 And they can go use a biometric to receive to cash out, or at least pay for something. So that’s the kind of vision we have as African vendor. It’s to really say that we bring in 260 million, Africans today who are financially excluded by 2030. That’s the vision that we have.

Jens Seidl 00:07:29 Interesting. Is its cost the main barrier there, or are there other issues like lack of infrastructure? digital literacy perhaps? What’s what’s your perception on that?

Dr Robert Ochola 00:07:41 Absolutely. You’ve covered, you know, significant part of it. First of all, we’ve got a regulatory issue, because the long and we’ve made like I’m saying, I’m not trying to take away from the work that’s been done, especially from a regulator perspective in terms of growth of mobile money. But now you’ve got areas where you don’t have interoperability. So that’s one of the big pieces. How do you level the playing field to ensure that even small fintechs who are running a four man, ten man show can come in and build a bespoke solution? For example, for the lady selling tomatoes on the streets, of of a village somewhere in Africa.

Dr Robert Ochola 00:08:18 So, so that’s the first thing, is interoperability and creating a level playing field so that regardless of the size of the player, they can participate and deliver. Secondly, so that’s on a regulation perspective. Secondly, is indeed, building cost effective infrastructures. you what’s been interesting over the last sort of 6 or 10 years when somebody is talking about building payment solutions, the numbers that are being thrown out, anything from 20 million, $30 million, sometimes even here, $50 million. later on, we’ll share with you how we’ve crushed that to 400,000 and building off the cloud. So that’s a significant piece. Then finally is indeed digital literacy and indeed at the same time trying to mitigate fraud. Former perspective of technology, but also ensuring that, you know, our potential clients are educated around the challenges of, of, you know, basically social engineering and those sort of challenges that if once they get scammed, you might not see them back on a digital, space. So yes, those are some of the key barriers today.

Jens Seidl 00:09:23 Interesting. Yeah. And scams. We should definitely talk about that because I think it’s one of the, it’s linked to, to digital literacy. because the scams are not even, starting within the payments world anymore. Right. They start in telecoms and, through social media and other channels. And the legitimate payment is only the end results, but maybe we can touch on that a bit later. But before we get to that, maybe do you want to tell us a little bit? You describe the vision, I think, really? Well where Africa lender is going to go. have you defined some more concrete goals within that as well? What’s what’s needed to deliver that vision.

Dr Robert Ochola 00:10:05 Right. So so what’s needed to deliver that vision, is really to build, interoperable systems across the continent. And when we started our journey about four and a half years ago, the first challenge we had was a dearth of data when somebody was asking us, okay, on the continent today, tell me which country has achieved the level of interoperability, the level of financial regulation, the level of cost efficiency, and inclusion, you know, at the level that would then say, yes, indeed, this country has now achieved a certain level from a design execution perspective.

Dr Robert Ochola 00:10:44 And now it’s just onboarding. So we have to start and actually build a body of knowledge. And that’s what we did is to start off by designing a solution, a product which well, a paper called the SIPs report State of Inclusive Instant Payments, which we launched in 2022. And what we did with that, and we were quite bold. We actually, you know, my colleagues and I, Sabine and a few others were asking ourselves, who are we as some small startup to start telling, countries that, look, you are mature, you are progressed, you are basic or you’re not classified. So we came up with the maturity model, and that maturity model allowed us to to to map all the countries on the continent. And we had a couple of things that we were looking at from an inclusivity spectrum. And we classified all the 54 countries on the continent according to that spectrum. Unfortunately, at the time we did not have any country. As mature we had some in progressed. We had some in basic and quite a few unfortunately in unclassified.

Dr Robert Ochola 00:11:48 So we had to decide and define the space. What is data? Because without data you cannot make informed decisions. So that was one big piece. And we continue to do that research. And through that research we’ve gotten buy in from countries through their central banks to try and move up the maturity model to solving some of the issues, the technical issues that we picked up in the CIPs report. So this has been a very big game for us because at least now we start and everybody saying, yes, we are looking at the same page. Everybody is brought in by and large to the data. The second thing.

Jens Seidl 00:12:20 To report sorry, that’s just quickly the the report is available to everybody. They can just go to the African and the website and download it.

Dr Robert Ochola 00:12:28 Absolutely. It’s an annual report. We we launch it every year in November. So this year it’s going to be our fifth edition. but yes, it’s available on our African and our website and anybody can access it, right? Absolutely.

Dr Robert Ochola 00:12:41 Yes. So the second body of work was to actually now see how to design and build solutions so that you actually show success. I mentioned my background engineering. So initially my team would come to me and they’re like, Robert, let’s talk about what we’re going to do. And I’m like, no, let’s talk about what we’re doing or what we’ve done. and, you know, my marketing team and comms team used to be very upset. And please allow us to tell the story of what we’ve done. It’s a better story. So they they were very patient, and they, you know, finally agreed to. Yes. Okay. We agree with the direction. You think. So what have we done? Because I think that’s important. We’ve built two payment systems at the moment using local engineers from Africa who we trained. The first one was launched in Rwanda last year. And it does person to person and person to merchant. So this is very exciting. And you know basically probably the first of its kind built through software engineers and system integrators who are 100% Rwandan.

Dr Robert Ochola 00:13:45 And then the second one we launched in Liberia, where we allowed mobile money integration. So the two mobile money providers, Orange Money and and MTN, and that’s been a roaring success. So we continue to build solutions. That’s the second big piece is to say, listen, let’s not talk about doing things. Let’s build and show that this is how you drive interoperability, bring down cost, and actually reduce the time to build. Because some of these things you say take about 6 or 7 years, we’ve been able to do that. The first one was about three years, and the second one we did in about eight months. So we built assets that are repeatable and reusable. So I think that’s quite exciting. Thank you.

Jens Seidl 00:14:28 That’s incredible.

Dr Robert Ochola 00:14:30 Yes. And that we built that. Yes. And we built it off the cloud and told the central bank, look, you know, you cannot wait for building data centers to change the lives of your citizens. So let’s build off the cloud. And then later on, when you have a data center that can achieve the right levels of uptime, you can always move it to to the data center.

Dr Robert Ochola 00:14:49 so and there’s an issue of sustainability as well. So these are some of the things that we’ve been discussing and getting quite, quite a, quite, quite a lot of buy in. I think the final thing because I want to talk about the top three is, is really then, to create a movement and what do I mean by that? let everybody understand that where we do have a problem. Yes. We’ve been good in terms of driving mobile money, but there’s still a big cohort of Africans who need to be onboarded so that they can have digital presence, build some sort of credit history so that then, you know, maybe insurance products can. So that conversation has also taken a foot. and I believe now when you go across the continent, the conversation that we’re having, at Regulator Space, even at some points in Ministry of Finance, and those sort of things is quite different from what we, we, we had maybe 4 or 5 years ago where everybody thought, oh, this is not a problem.

Dr Robert Ochola 00:15:43 We’ve we’ve dealt with it. So I think those are the three things I wanted to share.

Jens Seidl 00:15:47 Great. No. That’s fantastic. Thank you. may I take a quick detour then, because you mentioned something there which resonates with me because, you’re going to be with us in Istanbul in four weeks time. at the central Bank Payment conference at the end of March. And the overarching theme there is around resilience and sovereignty and fragmentation. And you mentioned that in Rwanda, you have built a complete payment system with local companies, with local people. So that’s a sovereign as you can get, right? I’m just interested in your views because you also mentioned cloud services. A lot of the cloud services are provided by a small number of big companies, or at least the leading ones. But then there’s alternative solutions. How do you view this, this issue of sovereignty and really having full control over your infrastructure and not relying on other parties that might not be as reliable anymore?

Dr Robert Ochola 00:16:48 And you didn’t tell me you want to ask very difficult questions.

Jens Seidl 00:16:52 You can pass it if you like.

Dr Robert Ochola 00:16:54 No, no, I’ll definitely I won’t pass it. That’s a fantastic question. And, and and that shows the depth of of of the, of your knowledge on the issues. So this is always a delicate balance for me. And I’ll explain to you what I mean to drive a high, high availability infrastructure with, from a technical perspective, what you call active active at all times, where you’re trying to achieve 99.99% resilience. You need to have either tier three or tier four data centers, two of them, And usually from my perspective, there’s a difference. There’s a certain distance that those data centers, I think about 100km or something that’s from each other for certain levels of resilience. So on the continent today or in Africa, if you’re saying, let’s wait to build data centers, which are tier three or tier 4 in 54 countries, so that we can have our own sovereignty for sovereignty from a data sovereignty perspective. That, to me is the challenge.

Dr Robert Ochola 00:18:01 So is there what Estonia has done, a way where you can look at data embassies. So yes, you keep it on the cloud. You don’t own the cloud, but you make sure that the legal and regulatory pieces that are put in place, ensure that that data sits in what’s called the data embassy. And you try and put in place that and then you build so that at least you achieve some form of financial inclusion while you begin to deal with your data center needs. So, so our view of the world is We cannot wait for that. Let’s work with what we have. And countries indeed have the resources. And even as they are building those. They can start with the cloud and then move it later into their country so that yes, you then deal with data sovereignty issues. And one of the things we did, just as a final point, is that we actually worked under something called the digital trade protocol with the African Continental Free Trade Area to say that maybe Africa needs to look look at data slightly differently, maybe in a hub and spoke model where we build out maybe four or 5 or 6 African data centers, put in place those data embassies and then start the digital transformation of the continent.

Dr Robert Ochola 00:19:12 And when we get to a point where there’s enough money and time to build data centers in each country of the right level, then indeed. But you cannot wait for that before you start the digital transformation, especially from a financial inclusion perspective. So it’s a chicken and egg one, but we had to deal with what we have at present. Yeah.

Jens Seidl 00:19:31 No, that’s absolutely fair enough. And look, don’t get me wrong, this is not a an African or African continent specific issue. It’s become a global issue and it’s been discussed globally. And it’s good to see that there are more alternative providers now coming onto the market as well. So you don’t necessarily don’t have to spell out the names, but you don’t have to necessarily rely on on those handful of big, industry leading cloud services. But there are now more regional, more local alternatives available as well. And I’m sure you must be looking into those as well.

Dr Robert Ochola 00:20:09 Absolutely, absolutely. And actually sometimes when we do have opportunity, we do work with the local data centres.

Dr Robert Ochola 00:20:14 As long as they achieve, you know, certain resiliency that we need for for running these high availability systems. So absolutely right. Absolutely. Right.

Jens Seidl 00:20:23 Right. Well, you’re going to be with us in Istanbul. I’m sure we’re going to talk a lot more about that there. But let’s let’s get back to Africa and, and what your plans are now for this year. We talk a little bit about what you achieved already in 25. We talked about the long term roadmap. But what’s a bit closer ahead now. What what kind of things do you have on the agenda for 2026.

Dr Robert Ochola 00:20:46 Okay. So so that’s that. Thank you for the question. And really our strategic focus is not necessarily pivoting because it’s still to execute on the projects that we have. We still have about 6 or 7 projects that we’ve picked up in very exciting markets. And hopefully, you know, as we’re building, you know, one of the things that matrices, as I mentioned, was that 260 million. So it’s looking for, you know, sizable countries or clusters of countries where when we build, we cover those people who are underserved.

Dr Robert Ochola 00:21:15 So that’s a big thing. So that is almost the first thing is to continue to deliver on these projects. And we’ve got a couple of exciting pipelines where we’re executing and some new projects which were also commencing. Actually, even one was signed up last week. Actually this week on Monday. So that’s the first key, piece. The second key piece is to now start saying once you build those solutions, payments for what? Or payments for whom, that’s the next thing. So we’re talking about payments for the agriculture vertical payments for the healthcare vertical payments for the MSM, payments for education. Right. So those are the critical pieces. So how do you ignite, this onboarding of solution providers who can now deliver bespoke to, to these, customers. allow me to give an example of a country which rolled out their instant and inclusive payment system. and from that they changed some of the regulation around open finance. So when customers opt in, a fintech could build on top and bring down the cost of working capital or small.

Dr Robert Ochola 00:22:33 We call them kiosks. In Kenya and East Africa. Those small shops, and they were looking at their working capital and saying, okay, you know what? We can actually give you working capital at 3% because we can see your, your, your, your transactions on a daily basis. Crashing that form about 25%. This allows for more. Yeah. So those are the things that we’re now enabling. So it’s infrastructure is in place. You need to do a little bit on the regulation but then say how do you ignite you know this next phase of innovation. So payments for what is what we’d like to begin the journey in 2026 as well.

Jens Seidl 00:23:08 All right. Well, that’s really interesting because I think so far, at least to me, the way we talked about this so far, it sounded very much like focusing on infrastructure and technology, data centers, all of these kind of things. But what I’m hearing is you’re also very much looking at the user experience, the commercial aspect of of what difference this makes and how you will actually get people to adapt these new technologies.

Jens Seidl 00:23:35 Is that fair to say?

Dr Robert Ochola 00:23:37 Absolutely. That’s exactly fair to say so. So, you know, I come from Kenya today when I go to my village and I want to pay for like maybe some milk or tomatoes, the lady would not allow me to use the mobile money infrastructure because it’s still too expensive. Whereas in other markets the lady will have a small QR code either on her, you know, on a badge. And basically I can pay through that. And she receives her money or, or he would receive his money. So that’s the next second wave of innovation. So to your point, how do you now use the heavy solid infrastructure but now make it very bespoke and very user friendly So that then, you know, you can also begin to transform how she’s doing business. And then you also allow that data to fintechs. As long as she opts in GDPR and all that must be respected. So we’re working within frameworks. But then you’re saying, okay, now, Madame, tomato seller or madame? Vegetable seller? we know that maybe by three in the afternoon you run out of your wells.

Dr Robert Ochola 00:24:44 But if somebody could give you some working capital for from from 3:00 till 7 p.m. so that you can increase your, your interest or your, your income. Would that make sense? 90% of them would say yes. Okay. This is how you can do that. So that’s what we need to do for transformation purposes okay.

Jens Seidl 00:25:02 Can can I take another quick detour maybe. And that is and I might have the wrong perception. Unfortunately I never made it to Kenya yet. I hope to go there soon. but my impression always was that M-Pesa is ambiguity is everywhere. It’s ubiquitous and people can use M-Pesa initially for person to person transfers, but now also to make these kind of small value payments at the market. Is that not as widely available then as I imagined it would be?

Dr Robert Ochola 00:25:31 It is extremely widely available, especially in the urban areas. And, you know, one of the things I didn’t tell you is I worked in Safaricom for a couple of years. Okay. Innovations on M-Pesa, actually the merchant payment.

Dr Robert Ochola 00:25:43 but but but what you’ve got in Kenya, first of all, you still have 6 million people who are financially excluded. That’s a big number. Okay, that’s number one. Then number two, you still have a cost issue. and that’s across with any mobile money. I think at some point you reach a certain level and then what you also find is people are doing person to person and then cashing out.

Jens Seidl 00:26:03 Yes.

Dr Robert Ochola 00:26:04 Yeah. so, so if you don’t keep that within the digital space, then there’s very little opportunity for credit, enhancement and affordable credit. and this is not really about looking at M-Pesa and saying here the challenge is with M-Pesa, but he’s saying, how do we collectively do more? As a country number one, but also as a continent? Because indeed there was a 85, 80, 87%, financial inclusion in Kenya, right? But, but but you still have a big number of people who are disenfranchised today. Okay. Yeah.

Jens Seidl 00:26:38 Okay. Well, that’s especially when you’re saying this is really changing about how payments are made on the continent.

Jens Seidl 00:26:47 you must be looking at strategic partnerships as well. Right. And who you can team up with to drive these kind of changes. Are there a few examples you can give us where you have been partnering and plan to partner maybe with sectors that that will make a difference there.

Dr Robert Ochola 00:27:04 So so if I take a step back and just tell you what our core mandate is as African and we see as we see ourselves as a catalyst for change. so so we work with the regulator, usually the central bank, to and our theory of change around the 400 million people who are financially studied says if you build interoperable, affordable and usually low cost solutions, then you can see a transformation today in India. Person to person is free today in Brazil. Picks person to person is free when they do person to retail using merchant payment. I think they crashed it from about 2% or 3% to 0.3%, or payments at merchants. Those are significant drops in the cost of how customers would interact with the solution. So on the continent today, when you’re doing some of the transactions, it’s still very expensive.

Dr Robert Ochola 00:28:03 You’re doing a cross-border transaction. It costs anything from 8% up to 24% for sending $100. SDGs are talking about 3% by 2030, right? Global average is about 6% for cross-border. So you can see the a significant cost today that the African business person or citizen is incurring when they’re doing transactions, not just cross-border, which are giving you numbers, but also at the retail and local level. So so that continues to be a challenge. And we need to see that number drop so that people who are sending small amounts of money don’t feel that it’s expensive. They feel like if I’m sending you the equivalent of $1, you get your $1, you don’t get 99 or $0.95, because that $0.05 multiplied over many transactions is a big number for some people. Yes. Yeah.

Jens Seidl 00:29:04 Absolutely. And well, while we’re on on cross-border, then do you have a strategic vision for how to resolve cross-border. What I mean specifically is when you look to to South Southeast Asia, they started with a lot of bilateral agreements where one country with the other would have an agreement to enable QR code payments, typically, for consumers when they travel.

Jens Seidl 00:29:30 that then widened into a larger network. And now Nexus, of course, is is being founded as a company and is beginning to implement infrastructure, to have a hub and spoke model where that one hub connects all of the different countries. Do you have a vision or a similar vision like that for Africa already, or is that a work in progress?

Dr Robert Ochola 00:29:52 So there’s some good, initiatives that are on the ground and taking place. momentum is still not where it needs to be. So let me start off, at a continental level, there’s a regional I mean, there’s continental play called pubs, which was built and developed by African Bank. Yes. there is also the regional arrangements that are in place. Comesa is building a platform. Buna, of course, covering North Africa but also Middle East have already built and their platform is ongoing. PCL launched, I think September, October of last year. Sadc. the TGS then built their TSF, which is transfer cash on immediate basis for low cost payments. you’ve got the Mac in the back region.

Dr Robert Ochola 00:30:40 continuing to to do some, some, some transactions. so yes, you really have some both continental one continental and a couple of regional arrangements. So the question is how we can probably avoid duplication and pull this together. And most of the challenges today is really about the currency convertibility. from a, from a, from a, from a continent perspective. You’re sending money from Kenya to Uganda. It’s a dollar transaction in terms of exchange rate. So that would usually be settled in US dollars. So that’s where some of the cost is built in. So I think what needs to happen is you know, we’ve got to look at ways of of reducing the friction and maybe looking at a multilateral, net settlement arrangement and see how that can help us, bridge, you know, the, the one on one transactions today so that maybe you look at a multilateral at end of day or even end of week or the end of month to say today, country X, old country Y, and then you settle that amount in dollars, and build a position.

Dr Robert Ochola 00:31:44 So, look, there’s a couple of models that have been there, but there’s still a long way from a technology perspective, I don’t think that is the issue. I think it’s going to be regulation. Then, as you said, piloting some winning case studies. So is it a use case? Sorry. Yes. Use case in QR code for example. And we use that as a starting point. Yeah. Okay.

Jens Seidl 00:32:06 And maybe if we can talk briefly also about stablecoins. because I was here in Frankfurt yesterday at the Frankfurt Payments Network and, JP Morgan, who hosted a discussion around cross-border. And of course, there was a lot of talk about stablecoins. personally, especially when looking at Africa, I see the same issue that 99% of stablecoins are US dollar denominated. You. So you would still, when wanting to send money from one African country to the other, have to make two foreign exchange transactions to convert to dollar and back into the other local currency. Do you think stablecoins will play a big role in this new payment landscape, or is it going to be niche or somewhere in between? Maybe.

Jens Seidl 00:32:50 I don’t know.

Dr Robert Ochola 00:32:52 Yeah. Again, a very good, good and complex question. And maybe, as I answer that is the issue of CBDCs. where, you know, you’ve got almost central bank digital currencies, which then maybe get, control. So, so, look, I have seen a couple of things which I think are interesting, where there’s two corridors that I know of today where they’re piloting and not stablecoin, but in terms because for me, the technology beats stablecoin be the CBDC, be it actual, legacy systems. The question is, if the regulator says, okay, let’s stabilize. And what is Mauritius? I believe and we piloted something with India. I’m not sure at a small scale, but they’ve tried to peg the Indian rupee to the Mauritian rupee and keep it stable for for six months to try and deal with currency fluctuation. And I think there’s another country that try to do something with Dubai as well. so, so an African country, can we keep some stability? So I think if you can create the monetary tools to, to create some stability, then the underlying instrument that does the transaction, would would succeed.

Dr Robert Ochola 00:34:03 And of course stablecoin is, you know, would be a very good opportunity for cross-border arrangements. But as long as the regulation and the cross-border monetary teams align on, on on what that is, then the underlying because I think it’s obviously a much more effective and cost cheaper way of, of of of moving money. but yes, today, as you say, it’s dollar denominated. So if you start seeing an an ECA, if I call it that, an African exchange rate mechanism currency, and everybody agrees that this can move within six, 6 or 10%, like what the European exchange rate mechanism did when you move the euro. And that’s going to be our trading currency for cross-border. then you’re, you’re maybe onto something. So I see more as a regulation than a technology. play.

Jens Seidl 00:34:51 Yeah, I think that’s that’s very fair. And yeah, I think you’re right about CBDCs as well. if they are, I mean, there have been solutions piloted already to do cross-border payments with CBDC. Enbridge in Southeast Asia.

Jens Seidl 00:35:07 Years ago by now. So I think the concepts are proven. Now it’s a matter of what’s going to happen next. Right. and I don’t think there will be one single answer for all of Africa. I think Africa is too complex as a continent to have a one size fits all solution. To agree with that.

Dr Robert Ochola 00:35:26 I agree with that to a certain extent. but but you know, I agree with that. But I sometimes feel that that sort of replication and duplication leads to, to, to too much, loss of economic opportunity. You know, so if you’re looking at if you have a dollar today and you want to spend it, how best would you spend it? Because part of the challenges and I speak very with a lot of humility on this one. But I tell you what happened with the work we have done because we’ve been doing what we do. We can replicate solutions, and as we replicate them, we reduce the cost of scheme rules. Sometimes countries we’re building paying for scheme rules up to $400,000.

Dr Robert Ochola 00:36:12 We’ve reduced that now. And in fact, one of the things we’re going to do this year is launch a centre of excellence, where we’ll have certain items that we’re making free on our on our website. so those can become replicable. Instead of spending $100,000, you either spend 10,000. Integration costs for for DFS onto payment systems. You cost anything from $100,000. So if you talk about interoperability, how are you saying let’s be interoperable and cost effective, but only the big players can integrate into a national switch because the integration layer is not. So again, is there a ways that can be built so that, you know, within five or an hour, five minutes to an hour? I mean, companies can actually, you know, code and they basically link to the APIs and that cost them all of one hour of somebody’s computing time. So, so the challenge with with too many multiple. And it means that some at some point you cannot replicate and then take learnings. And that doesn’t choke innovation by the way.

Dr Robert Ochola 00:37:14 Because you know, today I like I want to say something silly. But you know today the tie is round. So you’re not going to innovate on the tire, right? You might have a hovercraft. You might do something else with the car. Right. But but so while we’re innovating, let’s also not over innovate and maybe say, listen, this thing is as simple as, you know, doing P2P in this manner. It’s ISO messaging and this is what it is or. And then you standardize and bring down the cost because we should be innovating on other things. So if you’re saying yes, 54 countries and you want to have multiple systems, you have a challenge even on the technology and the people and the resources that will be needed. So these are some of the challenges of, of of making everything, open, you know, and I have no problem with innovation. I believe I’ve spent, like, almost 25 years of my life innovating, in different tech, telco and banking. But there is some efficiency in trying to standardize and saying, listen, here’s the problem.

Dr Robert Ochola 00:38:14 Let’s solve it with the best and most efficient way so that we all move at the same time.

Jens Seidl 00:38:19 Yeah, I like that that vision and that outlook and that ambition as well. I think that’s, Yeah, it’s the right ambition. And I think, you are certainly someone who’s doing this with a lot of passion and, and also a good forward looking way of, of attacking things. So, I’m rooting for you. I’m sure you’re going to see a real good success with with what you’re planning to do there. but before we wrap up, let me just go back to, to one thing that we touched on the roles of different stakeholders in the payment industry to actually deliver what you are trying to deliver, what you just described. So we talked about the central banks and their role. You briefly mentioned how important fintechs are in innovation and bringing in new challenger technologies, but also challenges user experiences. but also then what about the banks, the classical banks? What what role do they have in this process? And if you also want to expand on the role of the other stakeholders, please feel free to do so at the same time.

Dr Robert Ochola 00:39:33 Oh, absolutely. And you know, I think the banks continue to to grow their balance sheet, continue to be very key players within the financial, space, financial space. And then of course, financial inclusion space, because I think at the back end, money will always go to the banks. And if you digitize more, then there’s actually more sitting in the balance sheet. And hopefully they can use that to grow, you know, affordable, credit, etc. and at the end of the day. any credit underlying will still need a bank at the end of it, whatever form, because I think microcredit is at some point. So you still need the bank to, to immediately. I mean, you have to be part of the process. So that to me is the first thing. So banks will continue to play a very important role. The question now is how do banks, realize that there’s a big opportunity for them to also participate and support those who are underserved today? Because it’s a very big number, because once you do that, you crowd in some of that money, that’s sitting in cash, hopefully into the banking system.

Dr Robert Ochola 00:40:34 So I think we need to and we do work with banks, and we hope that they can also continue to support fintechs and partner with fintechs, because without that, you know, then the fintechs don’t really have the financial muscle to, to, to, to to to create scale mobile money players as well. And we’ve seen that and we’ve seen some very exciting models where, yes, the underlying credit is done through a mobile money account, but the balance sheet is sitting in a bank. So what you’re doing is a distribution layer is through mobile, but then the balance sheet is mostly within a bank. So you’re going to still see that. But what we’re hoping and pleading is that they reduce on the margins that are being charged to customers, because right now they’re quite, quite expensive. And I think there’s new technology that can provide better credit history and things like that. and I want to be naughty just to say something. You know, you you asked me a question, and I want to bring it back to the question of of of of data.

Dr Robert Ochola 00:41:33 But you asked me a question on data sovereignty. Now today I use WhatsApp, I use, Gmail, and probably I, you know, I’m an apple. That means probably 60% of my data is actually sitting in an American company, right? In terms of what they know about me, including visa when I travel. Right. So maybe even 80%. Now we are here trying to close the data and say, listen, let data of citizens and continents sit in the continent. But today, you know, most people are on WhatsApp and you can tell me and sometimes you can even link where the person went and pictures on Instagram and people who do that. So, so the question is when you are talking about using data, I also plead with the African banks especially to partner and really use as much data as they can to look at, you know, where customers reside, because as recently as maybe ten years ago, you were still being asked for a payslip and a P.O. box. How many people have a P.O. box?

Jens Seidl 00:42:43 Yeah, absolutely.

Dr Robert Ochola 00:42:45 Yeah. So? So already you’re constraining your your customer in terms of the know your customer data. So there’s new ways of, of of of building that. And that’s where you link up with fintechs to support. So really to me it’s it’s supporting and creating an enabling infrastructure. And I believe you’ll see the uptick. But you see, the bottom line is, as the economy and citizens become more economically empowered, there’s more for you as a financial player as well. So, you know, I think everybody wins.

Jens Seidl 00:43:15 Interesting. And in, in India, digital, public infrastructure I think, also played a big role in preparing the success of UPI. So providing a digital IDs, for instance. do you see similar opportunities in Africa that by providing better government funded, of course, but also government promoted digital public infrastructure.

Dr Robert Ochola 00:43:45 And our, our theory of change is exactly that And hopefully, you know, to summarize that actually everything I was I was trying to say by, you know, I like the DPI terminology, right.

Dr Robert Ochola 00:43:58 Because I think it’s, you know, it’s, you know, it’s a great terminology to it’s coined by the, you know, the India stack, Aadhaar and UPI and phenomenon. I’ve seen some of the stuff there. We and it’s brilliant. What I don’t want to do is discourage countries who may have already have certain assets, already. So yes, to answer your question, in short, that is definitely the way to go. And when you heard me talking about once you build this stack, then how do you start layering various industry verticals on top of that, that stack, then technically, as you call it, as a DPI stack. And that’s what we’re looking at. And making really as much of a public infrastructure as we can would definitely enhance, how citizens interact. And also, as you mentioned in India, you know, the numbers that you’re seeing in terms of financial inclusion, the growth numbers in terms of GDP growth, they all speak to consolidating around building stronger financial resilience of the citizens.

Dr Robert Ochola 00:44:59 So that is that story. Is there to be told. Yeah.

Jens Seidl 00:45:02 Right. Robert, this conversation went exactly as I thought it would be. We will quickly running out of time. this has been super, super interesting. But before we wrap up, I’ll give you one more chance to maybe share some some final thoughts, with our listeners. any any final points you’d like to make?

Dr Robert Ochola 00:45:22 Well, thank you. And like I say, I really, humbled to have this opportunity, where a small team, of Africans who are spread out across. I think we’re now in about 24, markets physically in terms of the team that we have. and every day we wake up because we’re passionate. And why are we passionate? Because I think every single one of us know somebody today who keeps money in a box, or indeed doesn’t even have money at the end of the day. So they hold it. All their cash flows are used, and these are the people we want to transform. And therefore we’re really calling out for a movement to, to to shift the dynamics.

Dr Robert Ochola 00:46:04 And every day we do that and, you know, we want to see if we can get partners who are in the payment ecosystem to reach out to talk to Africa and India. We don’t know everything. We’ve learned a few things, but we’re keen to to take some of those learnings that we have and also partner with the broader stakeholder. It’s been a very interesting journey, but we’re just getting started. So thank you for giving us this opportunity to share the little work that we’re doing. And, you know, really excited about the journey ahead.

Jens Seidl 00:46:32 That’s great. Well, likewise. Thank you so much for taking the time to come on to our podcast. I feel humbled. And as a European, I can say that Europe, to me at least, is feeling a little stale. And when I look at what’s happening in Africa and some other parts of the world as well, that’s where the future is being made right now. We can watch it live. And it’s amazing to to hear directly from you about this.

Jens Seidl 00:46:56 So thank you so much for being with us today.

Dr Robert Ochola 00:46:59 Thank you so much. And I’m hoping we continue to interact and support each other on our journeys. Thank you.

Jens Seidl 00:47:04 Likewise. Thanks. Well, that concludes our episode for today. Thank you all for listening. Do your usual like follow whatever you need to do on your podcast platform to make sure you don’t miss any future episodes. hopefully we’ll see each other soon. Bye.

Intro & Outro 00:51:46 Thank you for listening to The P.I.T. Exchange, a podcast by Currency Research. Check out our upcoming events and publications at Currency Research. And join us for our next episode to hear what’s trending in payments, innovation and technology.