Regtech Africa Magazine Spring Edition 2022 by RegtechAfrica

Special Feature

Meet Chinwe Esimai, Nigerianborn MD and Chief Anti-Bribery Officer at Citigroup

Magazine Spring Edition

ways Artificial Intelligence is revolutionising African businesses

Central bank digital currencies and their far-reaching consequences

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The African Continental Free Trade Agreement Can Succeed With Bitcoin

Pg 38

The relevance of Regulatory Technology for businesses

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10 Banks That Have Invested In Cryptocurrencies And Blockchain

Unlocking the transformative power of mobile money

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Featuring +

4th Industrial Revolution Prospects For Africa Eve Christine Gadzikwa SAZ Director General

w w w . r e g t e c h a f r i c a . c o m

Editor's Note of the Standards Association of leadership of Dr. Eve Christine Gadzikwa who doubles as the Director General Zimbabwe. Delighted to welcome you to this special Spring edition of the RegTech Africa Magazine. The Fourth Industrial Revolution (4IR) is a vision of a future in which emerging technologies change “the very essence of our human experience”. It was initially introduced at the World Economic Forum’s (WEF) 2016 Davos Conference. The idea has since been used to promote a wide range of emerging technologies.

Lest I forget, the 2022 edition of RegTech Africa Conference, Africa’s biggest regulatory event, was a HUGE success with lots of learning points and insightful feedbacks, too numerous to feature in this edition. The summer edition of the magazine will therefore be specially dedicated to the sights and bites of the RegTech Africa Conference 2022.

Without letting much out of the bag, be rest assured that there are more exciting things coming in the Amongst other very insightful and inspiring articles, we invite next couple of months. So, stay you to share from the incredible Tuned and enjoy the moment! work of the African We look forward to your feedback Organization for via our social media channels or Standardization (ARSO) in harnessing the potentials of the email: info@regtechafrica.com, Fourth Industrial Revolution to especially if you’ve got news or great article you would like to transform Africa into a global share. powerhouse, under the For now, stay safe!

CYRIL OKOROIGWE

EDITORIAL TEAM Cyril Okoroigwe

Chief Executive Officer

Obiyomi Blessing Chief Tech Officer

Joy Dieli Business Development Director

Alabi Opeyemi Social Media Analyst

Samuel Olaniran Creative Designer Creative Team

Smith Okoro Faith Mpara

Connect with us: Editorial Enquires: info@regtechafrica.com UK - Liverpool: +44-7553761773

Nigeria - Lagos: +234-8127105857, +234-8034225060

Table of

CONTENTS 01

4th Industrial Revolution Prospects For Africa The Fourth Industrial Revolution and digitization will transform Africa into a global powerhouse 09

Omni-channel Approach: Redefining Digital Consumer Experience 12

How a young Ghanaian is set to ease transfers through a global payment platform

What drives financial Inclusion? Economic growth or financial services supply Top 5 future trends in data analytics in 2022

Top 10 cryptocurrencies that will make big impact in 2022

10 Banks that have invested in Cryptocurrencies and Blockchain

RegTech Predictions for 2022 32

How Embedded Finance is Driving Financial Inclusion in Nigeria 5 ways Artificial Intelligence is revolutionising African businesses 5 African fintech companies listed among the world’s Top 100 Cross-Border Payments Companies in 2022

Central bank digital currencies and their farreaching consequences Meet Chinwe Esimai, Nigerian-born MD and Chief Anti-Bribery Officer at Citigroup A day of innovation with the Central Banks

Biometric Cards: A Contactless Technology with High Security Bank Sandbox

Unlocking the transformative power of mobile money The Central Bank regulatory sandbox: A risk-appropriate response for Fintech start-ups in Rwanda The relevance of Regulatory Technology for businesses

The African Continental Free Trade Agreement Can Succeed With Bitcoin

4th Industrial Revolution Prospects For Africa BY EVE CHRISTINE GADZIKWA // (SAZ DIRECTOR GENERAL)

The Fourth Industrial Revolution (4IR) was characterized by the fusion of the digital, biological, and physical worlds, as well as the growing utilization of new technologies such as artificial intelligence, cloud computing, robotics, 3D printing, the Internet of Things, blockchain and advanced wireless technologies, among others, presents significant opportunities as well as challenges for Africa (Landry Signé, 2020), and the African Continental Free Trade Agreement offers a unique opportunity to enhance governance around the 4IR. This with aligned policies and procedures, the continent can adapt to the rapid changes of the 4IR and leverage it to accelerate participation in global value chains. From poverty reduction, labour transformations, Agriculture, Medicine and many other fields, Policy Makers and Experts believe that the Fourth Industrial Revolution and digitization is transforming Africa into a global powerhouse with many African countries taking the opportunities of 4IR to transform their economies (Njuguna Ndung’u and Landry Signé, 2020). In an event presided by H.E. Albert M. Muchanga, the African Union Commissioner for Economic Development, Trade and Industry and Mining, ARSO and the Standardisation Stakeholders,

Virtually, launched the ARSO African Fourth Industrial Revolution Strategy on 9th December 2021. ARSO has an opportunity to provide the required solutions through standards to address this identified challenge to facilitate the integration/interoperability of systems. The African Fourth Industrial Revolution Standardization Strategy (A4IRSS) seeks to provide direction on standardization for the well-being of Africans in the global economy. The strategy also seeks to bridge the gap between the physical and

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digital world, through collaboration of standardization experts, technology communities, stakeholders and regulatory agencies in assessing industry standards and policy harmonization that enhances trade within the Africa Continental Free Trade Agreement (AfCFTA) single market. The Fourth Industrial Revolution (4IR) provides organizations with opportunities for not only optimizing and enhancing internal operations, but also to innovate and optimize business models. Through the preferred Theory of Change (ToC), the strategy identifies activities that would contribute to improved approaches and coordination of standardization in the 4IR in Africa. The development of the strategy brought together standards organizations, standards development contributors, research organizations, regulatory agencies, technology producers, and software developers represents the shared vision and aspirations of a broad cross-section of and diverse standards stakeholders in Africa. This will help to quicken integration of systems across the business value chains and thus allow easy clearance of goods and collection of taxes by governments supported by appropriate standards. purchase complex manufactured goods via digital commerce with no training. Organisations that are among the first to adopt it in their industries see substantial competitive advantage and cost savings. Recent improvements in technology, such as improved photorealism, are leading to rapid growth and wider adoption of visual configuration among digital commerce businesses.

The “Hype Cycle for Digital Commerce, 2021” is just one of over 90 Gartner Hype Cycles covering a wide range of innovations, technologies, business trends and key vertical industries, noted Gartner. The 2021 Gartner Hype Cycles help organizations to make innovation a core competency and shape and prioritize their approach to innovation. Central to the A4IR Standardization Strategy are the following: Balanced standardization policies and collaboration between state and non-state actors; Balanced data policies; Capacity building and skills development to enhance productivity; Continuous experimentation for cyber-physical systems; and Integration of measurements, learning and reporting, and information dissemination. About Eve has been the Director General of the Standards Association of Zimbabwe since 2008. She holds a number of leadership roles in society. In 2020, Eve was elected to serve on ISO Council from 2021-2023. She is passionate about women and is the Regional Gender Champion for Africa and the Arab States for the global Standardisation body. Eve is past President of the African Organisation for Standardisation (ARSO) having served the organisation from 2016-2019 and still serves on ARSO Council as ARSO champion for Southern Africa. In partnership with ARSO and IEEE-SA, Eve is Chairing the 4th Industrial Revolution Standardisation Strategy for Africa (A4IR), a project to support digital transformation of the continent under the single AfCFTA market. Eve serves on the Board of BancABC Board as Senior Independent Non-Executive Director and Chairman of the Risk Committee. Eve is Vice Chair of ZIMCODE Trust an organisation that developed the National Code on Corporate Governance for Zimbabwe and launch in 2014. In her spare time, Eve supports, mentors and empowers disadvantaged girls in society in her capacity as Chairman of Rafiki Girls Centre a charitable organisation based in Harare. She is a member of Rotary Club of Harare CBC. REGTECHAFRICA

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The Fourth Industrial Revolution and digitization will transform Africa into a global powerhouse NJUGUNA NDUNG’U AND LANDRY SIGNÉ

The Fourth Industrial Revolution (4IR)—characterized by the fusion of the digital, biological, and physical worlds, as well as the growing utilization of new technologies such as artificial intelligence, cloud computing, robotics, 3D printing, the Internet of Things, and advanced wireless technologies, among others—has ushered in a new era of economic disruption with uncertain socio-economic consequences for Africa.[1] However, Africa has been left behind during the past industrial revolutions. Will this time be different? So far, it does not appear that Africa has yet claimed the 21st century,[2] as it still lags behind in several indicators essential for a successful digital revolution (see Figure 5.1).[3] Improvements in Africa’s ICT sector have been largely driven by expanding mobile digital financial services: The region had nearly half of global mobile money accounts in 2018 and will see the fastest growth in mobile money through 2025. But artificial intelligence (AI) and blockchain are also attracting

interest in Africa, as they have the potential to successfully address social and economic challenges there. And there are so many other areas in which 4IR technology can be transformational.

The Transformative Potential of 4IR in Africa is Substantial Encouraging economic growth and structural transformation

In recent years, the ICT sector in Africa has continued to grow, a trend that is likely to continue. Of late, mobile technologies and services have generated 1.7 million direct jobs (both formal and informal), contributed to $144 billion of economic value (8.5 percent of the GDP of subSaharan Africa), and contributed $15.6 billion to the public sector through taxation.[4] Digitization has also resolved information asymmetry problems in the financial system and labor market, thus increasing efficiency, certainty, and security in an environment where information flow is critical for economic growth and job creation.

Failure to recognize and capitalize on 4IR opportunities, conversely, will impose considerable risks on African stakeholders: Without attempts to move beyond existing models of innovation, entrepreneurship, and digital growth on the continent, African businesses risk falling further behind, exacerbating the global “digital divide” and lowering their global competitiveness.[5] Going beyond the existing models requires discipline in governance to allow an endogenous innovative environment. At the same time, institutions must protect the market through consumer protection laws and regulations that encourage competition.

Despite the rollercoaster, it seems clear cryptocurrencie s are here to stay. So which ones will make it big in 2022?

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Fighting poverty and inequality

The spread of digital technologies can empower the poor with access to information, job opportunities, and services that improve their standard of living. AI, the Internet of Things (IoT), and blockchain can enhance opportunities for data gathering and analysis for more targeted and effective poverty reduction strategies. Already, we have witnessed the transformational power of formal financial services through mobile phones, such as M-Pesa, reaching the underserved, including women, who are important drivers for sustainable poverty eradication. These financial services allow households to save in secure instruments to enlarge their asset base and escape cycles of poverty.

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Reinventing labor, skills, and production

By 2030, Africa’s potential workforce will be among the world’s largest,[6] and so, paired with the needed infrastructure and skills for innovation and technology use, the 4IR represents a massive opportunity for growth. Indeed, the 4IR is dramatically changing global systems of labor and production, requiring that job seekers cultivate the skills and capabilities necessary for adapting rapidly to the needs of African firms and automation more broadly. Already, Africa’s working population is becoming better educated and prepared to seize the opportunities provided by the 4IR: For example, the share of workers with at least a secondary education is set to increase from 36 percent in 2010 to 52 percent in 2030.[7] Increasing financial services and investment

Digitization has impacted economic growth through inclusive finance, enabling the unbanked to enter formality through retail electronic payments platforms and virtual savings and credit supply technological platforms.[8] More broadly, digitization is enabling entrepreneurs and businesses to rethink business models that are more impactful, sustainable, and connected to other sectors of the economy. For example, with fintech, digitization has gone beyond the financial sector to affect the real sector and households, transforming product designs and business models across market segments.[9]

Businesses are able to design products and trade online, and individuals are able to operate financial services and payments for shopping and investments. The government is also migrating to online platforms to conveniently provide public services. Other 4IR technologies are also having impact. For example, in West Africa and Kenya, blockchain has enabled efficient verification of property records and transactions and expanded access to credit in some previously informal sectors of the economy.[10] Since blockchains are immutable, fraud—and thus the cost of risk—is reduced. There are also immense opportunities for job creation in Africa.[11] Given the informal sector is estimated to constitute 55 percent of sub-Saharan Africa’s GDP[12] (with significant heterogeneity across countries), these tools can be transformational. Their consequences can cascade: Increased financial inclusion contributes to greater capital accumulation and investment, hence potential for employment creation.[13] Modernizing agriculture and agro-industries

important in sub-Saharan Africa, where on-farm activities represent almost 50 percent of all rural income in countries like Ethiopia, Malawi, Nigeria, and Tanzania.[15] Information on competitive pricing, monitored crop information, disease prevention tips, and disaster mitigation support has the potential to transform the agriculture sector to improve income, production, and demand throughout the continent. Furthermore, as incomes rise across the continent, growing consumer demand for food and beverages will coincide with business-to-business growth in agro-processing. Ghana-based companies Farmerline and Agrocenta offer farmers mobile and web technology for agricultural advice, weather information, and financial tips. Zenvus, a Nigerian startup, measures and analyzes soil data to help farmers apply the right fertilizer and optimally irrigate farms.[16] The “Sparky Dryer,” a dehydration machine invented by a Ugandan engineer, uses biofuel to dehydrate produce and reduce food waste.[17] African entrepreneurs and startups are also using the Internet of Things to help farmers optimize productivity and reduce waste through data-driven “precision farming” techniques.

Africa has yet to harness the full potential of its agricultural sector, and 4IR technologies provide an opportunity to do so. Farming alone accounts for 60 percent of total employment in sub-Saharan Africa, and the food system is projected to add more jobs than the rest of the economy between 2010 and 2025.[14] Farm labor and income is especially

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Improving health care and human capital African countries face numerous health challenges exacerbated by climate change, limited physical infrastructure, and a lack of qualified professionals. 4IR technology can help mitigate these threats and build sustainable health care systems, especially in fragile states. Mobile technology has become a platform for improving medical data and service delivery: About 27,000 public health workers in Uganda use a mobile system called mTrac to report medicine stocks. The SMS for Life program, a public-private partnership, reduces medicine shortages in primary health care facilities by using mobile phones to track and manage stocks levels of malaria treatments and other essential drugs.[18] Rwanda became the first country to incorporate drones into its health care system, using autonomous air vehicles to deliver blood transfusions to remote regions. Technology has also improved disaster response: During the West African Ebola outbreak in 2014, WhatsApp became an easy method of dispersing information, checking symptoms, and communicating under quarantine.[19] Illness detection and pharmaceutical production have most immediately benefited from digitization. AI is being slowly implemented in Ethiopia to help medical professionals correctly diagnose cervical cancer and other abnormalities.[20] IBM Research Africa is also using AI to determine the optimal methods for eradicating malaria in specific locations and using game theory

and deep learning data analytics to diagnose pathological diseases and birth asphyxia.[21] (For more on the promise of artificial intelligence in Africa, see the viewpoint on page 69 of the full report).

Strategies for Overcoming Key Challenges Facing Africa during The 4IR Clearly, the 4IR presents significant opportunities as well as challenges for Africa. The key issue for policymakers is how to position their economies to benefit from the 4IR while managing the challenges that it presents. Below are three strategies that leaders should prioritize. Fixing the labor-skills mismatch Since creating jobs for the burgeoning youth population is a priority in most African countries, many governments are reluctant to support technologies that threaten existing jobs. Some of the current technologies tend to replace low-skilled workers—of which Africa has an abundance—with higher-skilled workers, constraining participation in the 4IR to economies with relevant skills. [22] African governments must invest in education and reskilling programs to ensure that technology supplements, instead of replaces, labor.

Most African countries lack a comprehensive legal framework and institutional capacity to address cybercrime. Instead, efforts to prevent cybercrime are appearing at the more local level or are implemented by private sector actors themselves. For example, between 2015 and 2016, there was a 73 percent increase in Information Security Management System-certified companies, from 129 in 2015 to 224 in 2016, with the majority in South Africa, Nigeria, and Morocco.[23] Adopting widely accepted and appropriate norms and regulations, such as these, is a first step to increasing cybersecurity. At the same time, companies should invest in their employees to develop cybersecurity skills and integrate cyber risk protection in their decision making process. The African Continental Free Trade Agreement offers a unique opportunity to enhance governance around the 4IR. With aligned policies and procedures, the continent can adapt to the rapid changes of the 4IR and leverage it to accelerate participation in global value chains. More broadly, the 4IR can actually empower service delivery, through, for example, national identification and a new generation of biometrics that can centralize data for a variety of uses and users.

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Enhancing agile governance for secure, effective management of the 4IR and integration into global value chains As innovation is at the heart of the 4IR, reinforcing state and institutional capacity to drive and support innovation and create an enabling business environment is essential for success. A major regulatory challenge involves increasing cybersecurity. Developing physical and digital infrastructure

Access to advanced technology in Africa is constrained by infrastructure parameters such as lack of electricity and low teledensity, internet density, and broadband penetration.[24] As a result, mobile phone and internet use remains low (Figure 5.2). (For more on strategies for upgrading Africa’s ICT infrastructure, see the viewpoint on page 71).

Other technological bottlenecks include a lack of standardized application programming interfaces and common data languages for the increased integration of largely selfsufficient systems as well as exposure to the dangers of cyberattacks. Accelerating the physical connectivity of fiber-optic networks as well as the interoperability of virtual platforms is critical not only for upgrading technology on the continent, but also for reaching and lowering unit costs for the underserved.

Closing the internet connectivity and access gap with advanced economies will enable more African countries to enter service export markets. Small-scale manufacturers in Africa may also become more competitive with access to digital platforms for research, sales, and distribution. To make the most of the 4IR, African governments and entrepreneurs need to recognize new niches for industry and leverage them to achieve sustainable, inclusive growth, and take decisive steps to close the gaps in digital skills, infrastructure, and research and development.

More broadly, adequate infrastructure development will drive and sustain economic transformation in Africa. With lower transport and communication costs, countries with suitable agro-ecological conditions can produce high-value products.

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Omni-channel Approach: Redefining Digital Consumer Experience KERIM ALAIN BERTRAND // CHIEF SALES OFFICER, SMARTMESSAGE

With technology’s fast advance, consumer profile has changed drastically. Thanks to Digital Revolution, mobile and empowered consumers demand more than just products and services. Thus, it is no wonder why creating the best customer experience has become the number one priority of today’s businesses. Furthermore, the pandemic accelerated digital transformation and increased interactions with digital channels The success of omni-channel communication is now essential for brands to stay competitive in the new normal.

The marketers’ responsibility in creating best experiences is expanding sharply. They are no longer locked in lead generation and creating just brand awareness. Since marketers steer the first interactions with consumers, brands expect them to deliver the best end-to-end experience which in return should lead to long-lasting and productive relationships.

Where to start in a data-driven world? In this article, we aim to explain the foundation of desired experiences and highlight steps marketers should take to avoid confusion when running customer-centric strategies. A landscape with unlimited resources, products and solutions, may look overwhelming, but simplifying the process before making decisions leads to sound results.

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Unification of the customer profiles In today’s world, everything starts with data. Bringing data together from all sources to understand the behavior and build a unified profile of each customer and unifying all events, available campaigns and transactions associated with them are the first steps of a seamless experience. The unification will maintain a 360° Single Customer View accessible across your company as a unique source of truth. You cannot achieve great results with information breaches across your channels. As an example, reaching a customer via call center to renew a subscription while he/she has already renewed a week ago after receiving your push notification shows you are not aware of your customer’s actions. You cannot build a stable relationship without knowing and tracking the preferences, behavior patterns, and real-time actions of your audience. Unifying the profile of each customer plays a crucial role in this first stage.

Optimization and automization of your content and messaging Especially for brands addressing large audiences, it is not always easy to handle communication as expected. The centralization and orchestration of your communication empower you with better management of your experiences. Since customers will look for quick responses and consistency, automizing the content creation and delivery processes will bring more efficient results while increasing customer satisfaction.

As an example, instead of making your customers wait in queue on a support call, delivering quick information via your chatbot will be more satisfactory for them. Even a single bad experience leads consumers to switch to another brand as soon as possible.

Hyper-personalized customer journeys Connecting all touchpoints enables brands to understand how customers behave in different stages of their journey. Once you understand the patterns and preferences of your customers, it is easier to deliver hyper-personalized offers and messages. Furthermore, adding real-time tracking increases engagement opportunities. On your customer’s birthday, wouldn’t it be amazing to deliver a special discount coupon as they pass by your new store? Creating and maintaining a holistic brand experience is marketer’s main duty and challenge today. Implementing a centralized and omnichannel approach accelerates success and creates desired customer experiences. In fact, this is the only way to satisfy today’s digitally empowered consumers.

About Kerim Alain Bertrand Chief Sales Officer SmartMessage kerim.bertrand@smartmessage.com

Kerim Alain Bertrand is the Chief Sales Officer in SmartMessage directing the Global Sales and Marketing teams. Prior to joining SmartMessage, Kerim worked for over twenty years for various technology companies, from fin-tech to martech to prop-tech and now back to mar-tech again. He has worked at Doğuş Group, one of the largest Holding companies in Turkey as COO and CEO of two new technology investments, and has lead the Turkish operations of two prominent constituents of the FTSE-250 index, Euromoney Plc, and UBM Plc. Kerim holds a Master’s degree in International Economics from the University Pantheon-Assas, Paris-France.

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How a young Ghanaian is set to ease transfers through a global payment platform BY JAMES REINHOLD // FOUNDER & CEO-GENIOPAY

A young Ghanaian is set to launch a new global payment platform called GenioPay, aimed at making money transfers easier and cheaper across the globe regardless of the currency. Registered in the United Kingdom, Lithuania, Poland, and Estonia, GenioPay according to Founder and CEO of the company, James Reinhold will provide multiple and flexible pay-out channels including mobile money transfers; an array of payment tools for merchants and SMEs; utility services; escrow and school fees services; migrant transfers and much more. The company’s flagship product, SMSPay, is a global first of its kind that will bring financial services to over 1.5 billion people around the world without a stable Internet. With GenioPay’s technology, clients can actually perform

cross-border payments without the Internet, powered by A.I. technology and not USD. Customers in Ghana and low-middle-income countries can send money across the globe at a fraction of the cost compared to traditional banks. The platform can save them close to 75 percent of transaction fees. The foundation of GenioPay is built on the premise that transactions continue to be high, and according to the World Bank over US$30billion is lost each year by migrants alone to ridiculous fees. “We consider ourselves as a company that understands customer pain points built around the singular idea of localizing international transactions. What’s more, we are planet-friendly,” Mr. Reinhold said in an interview with the B&FT.

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The payment offerings are broken into units: P2P Transfers (sending and receiving money from friends and family, mostly from two GenioPay customers); Borderless Payments or Transfers which allow customers to send money to anyone’s email address, phone number, or even Twitter username. A secured link is sent to the recipient and based on the location they can withdraw received funds through the 50+ pay-out channels, including mobile money. The fast and secured Cross-border Payments cover different payment schemes: European Payments (sending money to recipients in European and most especially for Single Euro Payments Area (SEPA) regions; and International Payments (sending payments through SWIFT, BACS, CIPS, CNAPS, etc.). Commenting on how safe and secure the GenioPay payment platform is, Mr. Reinhold, said all relevant security requirements have been met using modern technology; hence, users should feel comfortable transacting on it. “Our team has relevant experience in financial security requirements, using the latest techniques and approaches in data security. We have a well-designed architecture that ensures reliability and security. In order to gain extra protection, we combine various methodologies such as authentication, authorization, encryption, and more. “The sensitive data of our customers are replaced with a code (encryption) or generated number (tokenization). We restrict access to databases depending on users’ relationships to the organization. This way, we limit ordinary employees’ access to corporate information; thus reducing internal threats. Other solutions we implement are precise authentication technologies, such as the One-TIme Password system (OTP). Additionally, we are using a tracking system in order to analyze user behavior and detect suspicious activity. Also, we test our platform for any potential leaks and breaches. “We have extensively looked at a lot of payment solutions, but none of them address the ultimate needs of forward-thinking global clients. That is why we created GenioPay – a distinctive alternative that redefines how cross-border payments are done,” he said. He further stated that plans are on course to establish offices across Africa, with Ghana set to be the headquarters of continental branches. The GenioPay app, the Founder and CEO added, will soon be available on Play Store, App Store, and Huawei Store.

About James Reinhold Founder & CEO-GenioPay

James Reinhold is a all-rounded person who is passionately pushed by an unadulterated force to make a positive change to the things around. He is a campaigner for Change as he believe in Positive and Cohesive Change. To live by social standards and build an empire community of entrepreneurial excellence in various disciplines. At the moment, He is with a vibrant team building the next big challenge Bank aimed at localisation International transactions and by so doing, redefining the how global clients send and receive money worldwide.

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What drives financial Inclusion? Economic growth or financial services supply PATRICK OKWE // DATA ANALYST

Supply of financial services is important to boost financial Inclusion, but economic growth might be a bigger factor. Supply creates demand, a popular theme amongst the classical school of thought. Championed by Adam Smith, the idea was that the market will always be in equilibrium courtesy of price flexibility - a key tenet of the classical school of thought. Given this idea and the knowledge of Nigeria's financial inclusion problem, one might argue that improving the supply of financial services will eventually boost financial inclusion. This makes a lot of sense given that financial inclusion figures are stacked against Nigeria, as a large percentage of adults are unbanked or underbanked. However, we must not forget the lessons of history so soon. In 1945, the validity of the idea that supply creates demand became faulty, as there was not enough demand to meet supply. In simple terms, we call it "Depression". In the world of economics, we think of depression as a bad recession. Recession itself is a term that refers to negative economic growth for two consecutive periods. This is fueled by a decrease in aggregate demand. John Maynard Keynes had a solution, which was to stimulate demand. This eventually set the economy on a path to recovery.

Putting this into perspective, Nigeria's financial Inclusion problem might not be a function of financial services supply but a function of Economic growth. How? Nigeria's financial Inclusion problem might not be a function of financial services supply but a function of Economic growth. A quick look at world bank's data on the average bank branches per 100,000 suggests that Nigeria is well below this indicator. In 2018, the world bank estimated that Nigeria had an average of 4.8 bank branches and 19 ATMs per 100,000 adults compared to the world average of 13 bank branches and 40 ATMs per 100,000 adults. While these statistics might lead us to conclude that the supply of financial services (bank branches per adult) is definitely the cause of Nigeria's financial inclusion problem, a quick look at the demand side suggests something different. According to one of the findings of an EFInA report(EFInA's Access to Financial Services in Nigeria 2020 Survey), one of the biggest obstacles to having a bank account is little/irregular income - 34 per cent of the people surveyed claim. This finding has an implication from a macroeconomic perspective. When income is aggregated, the result is Gross Domestic Product (Income approach) and this might be the root cause of Nigeria's financial Inclusion problems.

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Number of Bank branches in Rural Area is low. Thus, agency banking is more popular. A woman using an agent in a Rural area. Source| Rest of the world

Using bank branches (Average of Zenith and First Bank) as a proxy for supply of financial services, data shows that bank branches increase as GDP increases (Economic growth). This implies that low GDP reduces the incentive to supply financial services. When a model (Regression Analysis) is fitted to the data, the result shows that bank branches will increase by 0.003 when GDP grows by 1 unit. The R-square value of 0.68 further supports the idea that the growth in the number bank branches is a function of economic growth.

Photo: Average bank branches VS GDP The scatter plot shows that bank branches increases as GDP grows. Source: Inclusion Times

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Revisiting an Economic Idea It will be safe to assume that in states where the number of bank branches are low, savings will also be low as there is no incentive to save owing to low income. This makes more sense when we look at the key tenets of the Keynesian consumption function. According to Keynes, marginal propensity to consume (mpc) falls as income increases. The reverse will be the case when income falls. Since Keynes posits that the sum of mpc and mps is equal to 1, mps (marginal propensity to save) will behave differently when income increases. In other words, savings increase as income increases. So, for low income states, savings will be low and for high income states, savings will be high. Given the fact that savings is low for low income states, the incentive for banks to create more branches in these states is low and hence the problem of financial inclusion persists.

With 22 commercial banks, 20 micro finance banks, and with over 200 fintech solutions in the country it is obvious that Nigeria's financial Inclusion problem is not a function of supply of financial service but economic growth.

About Patrick Okwe is a graduate of Economics at the University of Ibadan. Patrick is positive, and hardworking individual who strives to achieve the highest standard possible at any given task. His greatest strengths are my ability to adapt to different situations and his research skills. He takes pride in finding solutions to problems, he has successfully developed himself on reading price action and conducting technical analysis in the Forex market.

So, in a case where financial Inclusion is a problem, we must be quick to tap into the idea of Keynes. In other words, stimulate the demand for financial services by pursuing policies that will improve economic growth. Economic growth leads to an increase in income, increased income will lead to a fall in MPC and definitely an increase in MPS. This will boost banks incentive to create more bank branches and thus an improvement in financial Inclusion.

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TOP 5 FUTURE TRENDS IN DATA ANALYTICS IN 2022 Know the top future trends in data analytics to adopt digital transformation

Data Analytics is being increasingly leveraged by startups, SMEs, and large organizations to reduce costs, improve customer experience, optimize existing processes and achieve better-targeted marketing. In addition to these, many companies are showing interest in Big Data due to its ability to improve data security. So, how is Big Data evolving with the likes of new technological innovations like AI/ML, Blockchain, IoT in the fray? What are some of the most exciting Data Analytics Predictions and Trends for 2022? Keep watching to find out.

Rise of Cloud-Native Enterprises Businesses using analytics tools are increasingly shifting to the cloud for efficient business performance. Already, a large number of organizations and startups have migrated their functions to cloud infrastructure. Using cloud-native applications can enable enterprises to better contribute to business agility and innovation.

Automation of Data Analysis Automation of data analysis is considerably useful when a company deals with big data. Automated data analytics can be utilized for a variety of tasks, such as data exploration, data preparation, data replication, and maintenance of data warehouses.

DataOps for Better Data Analytics DataOps defines the streamlining of processes involving storing, interpreting, and deriving value from big data. It intends to shatter the silos that have traditionally alienated different teams from one another in the data storage and analytics fields.

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Data-as-a-Service will Become Strategic Data-as-a-service (DaaS) will become a more widespread solution for data integration, management, storage, and analytics, as more and more businesses are increasingly turning to the cloud to modernize their infrastructure and workloads.

Advancements of Real-Time Data Visualization Today, businesses are running at lightning pace producing vast data volumes. Thus managing these amounts of data becomes critical to deriving actionable insights. This is where real-time visualization comes into the rescue, managing daily operations and enabling businesses to access, analyze, visualize and explore live operational data and take control of overall business operations.

Conclusion New trends for data analytics are on the rise and will keep on rising in 2022 and beyond. If you don’t want the future technologies to catch you off guard, pay attention to these current trends and ensure inevitable success for your company.

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TOP 10 CRYPTOCURRENCIES THAT WILL MAKE BIG IMPACT IN 2022

Despite the rollercoaster, it seems clear cryptocurrencie s are here to stay. So which ones will make it big in 2022?

The crypto market has had a tough start to the year. The total market cap dropped below the US$2 trillion mark for the first time since September, and many major cryptocurrencies have lost around 15% or more. In 2021, Bitcoin hit multiple new all-time high prices over the past year — followed by big drops — and more institutional buy-in from major companies. Ethereum, the second-biggest cryptocurrency, notched its own new alltime high late last year as well. U.S. government officials and the Biden administration have increasingly expressed interest in new regulations for cryptocurrency. Cryptocurrencies in 2022 have immense potential to thrive even more than 2021. Thousands of cryptocurrencies to invest in in 2022 are entering the market to attract the eyes of crypto investors. This article features the top 10 cryptocurrencies that will make a big impact in 2022.

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Bitcoin

Solana

Bitcoin is still by far the most popular cryptocurrency, and its price movement has a strong impact on the rest of the crypto market. It is considered the original crypto, and its launch in 2009 is what started the whole cryptocurrency movement. The exposure to Bitcoin has instigated crypto investors to realize that Bitcoin is one of the top cryptocurrencies that will make a big impact in 2022.

Solana is easily one of the best-performing cryptocurrencies this year and has become a hot topic among crypto investors. It has grown more than 15,000 percent on a year-to-date basis. It is one of the best cryptocurrencies that will make an impact in 2022. Any asset that expands from less than US$1 billion in market capitalization to more than US$70 billion in a few months, should certainly be one to keep your eyes on.

Ethereum

Ripple (XRP)

Ethereum is another option for the most popular cryptocurrency to buy in the market, as many believe it has a higher price potential than Bitcoin. The platform offers dApp developers a medium to build their projects and implement smart contracts, potentially revolutionizing many industries. The imminent upgrade to Ethereum 2.0 is set to make waves, as it’ll see the platform transition to a Proof-of-Stake mechanism – significantly boosting speed and lowering fees.

Ripple is a money transfer network aimed at financial institutions. It is in the midst of a legal battle with the Securities and Exchange Commission, which has ramifications for a number of other cryptocurrency projects. As a result of the ongoing legal skirmish, XRP has been delisted from most U.S. cryptocurrency exchanges. It is one of the best cryptocurrencies that will make an impact in 2022.

Tether Unlike some other forms of cryptocurrency, Tether is a stablecoin, meaning it’s backed by fiat currencies like U.S. dollars and the Euro and hypothetically keeps a value equal to one of those denominations. In theory, this means Tether’s value is supposed to be more consistent than other cryptocurrencies, and it’s favored by investors who are wary of the extreme volatility of other coins. It is one of the best cryptocurrencies that will make an impact in 2022.

Cardano Somewhat later to the crypto scene, Cardano is notable for its early embrace of proof-of-stake validation. This method expedites transaction time and decreases energy usage and environmental impact by removing the competitive, problemsolving aspect of transaction verification present in platforms like Bitcoin. Cardano also works like Ethereum to enable smart contracts and decentralized applications, which are powered by ADA, its native coin.

Polkadot If you buy Polkadot, you might not be aware that it’s a project called Web 3.0. The network is known for growing, and when compared to Ether, it is better at charging low fees and having fast speeds. DOT can be the market leader and head the decentralized because of its top spot in the rankings and steady rise in market value. Crypto investors have a lot of faith in this cryptocurrency that it will make an impact in 2022.

Binance Coin Binance Coin is the cryptocurrency issued by Binance, among the largest crypto exchanges in the world. While originally created as a token to pay for discounted trades, Binance Coin can now be used for payments as well as purchasing various goods and services.

Dogecoin Dogecoin is an open-source, peer-to-peer cryptocurrency. It’s classified as an altcoin and a snarky meme currency. The Shiba Inu dog serves as the emblem for Dogecoin, which was launched in December 2013.

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Even though it was developed as a joke, Dogecoin’s blockchain still retains value. The technology that underpins it is based on Litecoin. It is one of the best cryptocurrencies that will make an impact in 2022.

USD Coin USD Coin is a stablecoin that is pegged to the U.S. dollar on a 1:1 basis. Every unit of this cryptocurrency in circulation is backed up by US$1 that is held in reserve, in a mix of cash and shortterm U.S. Treasury bonds. The Centre consortium, which is behind this asset, says USDC is issued by regulated financial institutions.

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10 BANKS THAT HAVE INVESTED IN CRYPTOCURRENCIES AND BLOCKCHAIN

The banks that have invested in cryptocurrencies are moving forward with digitizing finances When Bitcoin was first launched in 2009, financial institutions were spooked and were quite skeptical about its value and performance. Financial institutions like global banks kept warning initial cryptos investors regarding the fact that they are a new and unregulated asset class. One significant reason banks and other traditional financial institutions may have stayed away from cryptocurrencies and blockchain technology for so long is that they are a massive threat to them. In centralized financial systems, money always goes through the banks.

But since cryptocurrencies provide a new, efficient and decentralized method of payments and transactions, most individuals were getting attracted towards investing in these digital currencies. But despite the many arguments portrayed by the centralized financial institutions in the beginning, there are currently many banks that have invested in cryptocurrencies. Today, there are thousands of top banks in the world that prefer cryptocurrencies investment to provide the best financial services to their clients. Over the years, there have been many regulations that have prevented banks and traditional financial institutions from investing in regulated and unclassified assets. In this article, we have listed the top banks that have invested in cryptocurrencies and blockchain to reap the benefits of digital currencies.

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Standard Chartered Investments at the bank include blockchain network Ripple. XRP is currently one of the top cryptocurrencies in the market. The bank acknowledges the way cryptocurrencies have created a new ecosystem that cannot be replaced by fiat currencies. In July 2020, the venture divisions of the Standard Chartered PLC, which is also a part of globally systematically important banks, announced the creation of a cryptocurrency custodian.

Banks of Wells Fargo, United States After the recent crash in the crypto market, the central US bank planned to introduce cryptocurrency funds. Wells Fargo stated that it would establish a regular fund for extra wealth for clients. Its investment research team also mentioned that only qualified investors will be subjected to the treatment due to the risk associated with digital currencies.

JP Morgan JP Morgan has focused on developing digital blockchain assets. The company’s onyx division was under construction for five years when it was founded and employed more than 100 people. The division’s main product is the JPM coin, a bank token, and link, a blockchain-based interbank payment network. Earlier the crypto was skeptical about digital currencies, but slowly and gradually, JP Morgan and group decided on trusted digital currencies for the betterment of the clients.

Barclays Barclays is not any ordinary bank, it is one of the best banks in terms of investment, that has exposed cryptocurrencies and their potential. Barclays stated that Bitcoin believes that it has high potential in providing benefits from dispersion and extreme volatility.

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UBS UBS is making great strides with private stablecoins. UBS’ financial institutions Santander, Lloyds Banking have developed utility tokens for cross-border transactions. While investing in the crypto market, crypto traders and investors look for a comfortable marketplace to invest in. UBS aims to provide verified and legal means to invest in the crypto asset class.

BNY Mellon On BNY’s Fireblock is a platform that allows financial institutions to issue, move and store cryptocurrencies. Banks have been investing in the crypto custody domain or services under which companies look after their clients’ digital assets for a certain amount of the fee.

Morgan Stanley Morgan Stanley is the first US bank to offer its wealth management clients to access Bitcoin assets. Around March 2021, the bank announced that it was launching access to three funds that will enable owners of Bitcoin. But Morgan Stanley is only allowing its wealthier clients access to such a volatile asset.

Goldman Sachs Goldman Sachs has not always been on board with crypto. It denied considering cryptocurrencies as an asset class but finally reconsidered its decision. Its new report discussed extensively the potential of digital currencies as an institutional asset class by talking to several experts in crypto and finance.

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Citibank Citibank is the fourth-largest bank in the US by assets has invested in SETL, whose ledger technology is used to move cash and other assets. The bank has provided a blueprint for organizations that are considering adopting cryptocurrency payments or simply in such assets as a store of value stating the enterprises should carefully consider which digital currency they would like to choose for payments and transactions.

BNP Paribas BNP Paribas is a French financial group that owns its own crypto startup known as the Curv. The institution’s securities services are currently experimenting with the transfer of security tokens, taking a step forward to provide custodial services for digital assets.

RegTech Predictions for 2022 Financial firms will fully embrace the cloud Traditionally; The financial services industry has been conservative around moving to the Cloud. However, the Covid-19 pandemic and the rise of hybrid working has demonstrated to firms how valuable the flexibility of the Cloud is. In 2021, financial firms were already moving more data and compliance processes to the cloud, and this trend is set to accelerate in 2022. By the end of the year, it will be archaic to favor on-premise deployments to cloud based alternatives. Holistic compliance will be a priority to ease the burden of regulatory change It is ironic that a constant for the financial services industry is regulatory change. There has been a plethora of new and revived regulatory regimes over the past decade and this is certain to continue. However, what is changing is how firms approach change. Traditionally, financial firms have tackled different regulations and implementation deadlines as separate projects – creating different teams, solutions, and data sets for each obligation. This is an inefficient approach to compliance which is finally being addressed as many financial firms have audited their data and compliance needs and determined that they can use a single data set to power multiple obligations.

In the last year, there has been much talk about the value of holistic compliance in managing existing and future obligations. 2022 will be the year where this will turn into action and firms really start to invest in holistic or integrated data capabilities. Enforcement action will intensify Regulators globally are intensifying their search for negligent practices and market abuse through enhanced Supervisory Technology or SupTech programs. This is a real and true risk for firms that do not have robust operational oversight programs in place or that think that regulators are still being lenient because of the Covid pandemic. Because of the data-driven approach that the SupTech applies, there are no longer any firms that are “too small to get noticed.” In 2022, compliance teams can expect regulators to take a much harder line on areas like data quality, communications monitoring, and market abuse surveillance. Operational resilience will remain a key priority Although work on operational resilience by regulators and the industry pre-dates the arrival of Covid-19, the pandemic has accelerated its development and implementation. In 2022, firms can expect increased focus on operational resilience, including that of compliance and risk processes for remote and flexible working. The firms that struggled with manual or legacy solutions throughout 2020 or 2021 can expect regulators to become more demanding in 2022.

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Flexible working will continue to evolve As the pandemic crisis hopefully subsides throughout the course of 2022, it is likely that flexible working will continue for a lot of companies and teams. However, trading desks and the middle and back-office departments are likely to move back to being office-based gradually. In fact, many trading or dealing desks never left the office. This is because even with robust technology in place, nothing replaces the ability to manage risk or ensure that compliance processes are being met in a controlled office environment. As we approach the end of yet another turbulent year, it would be foolish to predict smooth sailing for 2022. We simply do not know what is around the corner in this ever-changing environment. What we do know, however, is that none of the themes above are new. The migration towards the Cloud has been at play for years. So has the need for holistic compliance capabilities and enhanced operational resilience. However, the speed with which things have changed over the past 24-months has exponentially increased the need for digital transformation within compliance. The industry must continue to evolve to make compliance departments function better. This is vital not only to ensure that financial firms continue operating within the confines of the law but also to help ensure stable and secure financial markets. Companies will continue to face an evolving, unpredictable landscape in 2022. The firms that think strategically about their compliance setup and start their journey to holistic compliance will be the ones that will thrive in 2022 and beyond.

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How Embedded Finance is Driving Financial Inclusion in Nigeria Adaobi (not real name too) moved to Lagos, Nigeria’s commercial capital in 2018 from Enugu hoping to secure a high paying job in 2018, but when none was forth-coming, she decided to embark on the entrepreneurship journey. To realise this, she approached her bank for a business loan. After weeks of filling all sorts of forms, Adaobi was eventually notified that her loan request had been declined. “I filled many forms, went to the bank a couple with the hope that they will give me the loan since it was N250,000 to start my business. But I was disappointed when I was turned down,” Adaobi said.

Her experience is one tale out of the many about the different hurdles Nigerians face when trying to access financial services. But the advent of financial technology is changing all of that as many non-bank businesses are springing up and offering financial services such as; quick loans, bank accounts, savings and investment wallets, payments and lending to a tech savvy audience (banked and unbanked) – without statutory documentation.

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The concept of companies offering bank or financial like services to the public is known as embedded finance. The aim is to simplify financial service processes for consumers, making it easier for the public to access money-related services they need, anytime, anywhere. Imagine not having to approach a bank physically for loans, paying cash when making purchases at a store, logging on to your bank app before making a money transfer, buying global stocks from the convenience of your phone apps, buying insurance on a product when making a purchase, investing your money without needing a fund manager, purchasing a product now and paying later. Those are some of the things embedded finance is enabling. According to a Forbes report, the estimated market value for embedded finance will be over $138 billion by 2026. It is therefore clear that it’s not just a financial trend, it’s the future of transactions.

According to Dataphyte, a media and research data analytics organization, N26.17 trillion was the total figure of unbanked money in Nigeria from January to November 2021. Most of these transactions happened outside of traditional banking systems through embedded finance services. In its own survey, EFInA (Access to Financial Services in Nigeria 2020) stated that 51% of Nigerian adults now use formal financial services, such as bank, nonbank, microfinance bank, mobile money, insurance, or pension accounts, up from 49% in 2018. The growth in financial inclusion has in part been aided by digital access, financial services and agent banking. This, therefore, underscores the need to explore the opportunities that will drive faster progress towards financial inclusion, particularly for groups such as young people, men and women in rural Nigeria.

Fintech startups like Piggyvest, Kuda, Bamboo, Flutterwave, Paystack, Paystack, RiseVest, FairMoney, Branch, RenMoney, Risevest are a few of the nontraditional finance entities offering customers embedded finance services in savings, loans, investment, money transfer, invoicing etc.

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Introducing

REGTECH AFRICA PODCAST Series The RegTech Africa Podcast Series provides a veritable platform for regulators and industry experts across the world to share insights and examine latest industry trends in innovative regulatory and financial technology across Africa and beyond. It’s a premium podcast and flash briefings covering business news, leadership lessons and CEO interviews that provides insights on key industry trends and policy developments that are shaping the regulatory and financial services industry.

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5 ways Artificial Intelligence is revolutionising African businesses DJU EB EM NN I FI EORKCWLEACRHKIEM E / / F O U N D E R , I Z I F I N

Credit Risk Assessment

According to Okwechime, A.I. can be used for creditrisk assessment, automating a significant portion of the credit-lending under-writing process, enabling lenders to offer loans more rapidly, and even extending services to more customer segments without needing to increase the workforce. He explained that by leveraging data, a Credit Decision Engine is built using sophisticated statistical methods to generate risk ratings for customers based on various data attributes.

Over the years, as digital channels for operating businesses have increased considerably, A.I. has emerged as an essential tool for preventing fraud and financial crime. Okwechime revealed that A.I. has the innate ability to analyse massive amounts of data and uncover fraud trends, which can subsequently be used to detect fraud in real-time. He explained that this is especially useful in identifying fraudulent bank transactions and detecting transactions that do not fit the normal behaviour of specific customers. “These systems can also self-learn, detecting transactions that have similar trends of previously identified fraudulent activities,” Okwechime said.

“Such methods can approve loans without visiting a bank branch or any other access points. This is whilst also being able to manage risks to acceptable levels and provide appropriate credit lending limits tailored to the customer’s circumstances,” he said

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He added that A.I. also plays a vital role in identity fraud prevention, enabling digital channels to verify identity via face matching to government-issued IDs, biometrics, and even voice matching.

Marketing Okwechime noted that A.I. is helping marketers with new levels of understanding and lasting commercial advantage, especially in an era where communicating to customers is easier, with several channels for dialogue and customer acquisition. He said, “A.I. uses customer data and profiles to learn how best to communicate with customers, then serve them tailored messages at the right time without intervention from marketing team members, ensuring maximum efficiency.” He added that businesses could also use A.I. to prioritise leads, particularly relevant when companies have hundreds of leads a day but limited resources. “Using data such as drop-off information gathered during customer onboard, A.I. can prioritise leads from the most likely to convert, ensuring efficient use of limited marketing resources, whilst maximising conversion rates.” Chatbot (Conversational Agents or Dialog Systems) A new wave of change in how consumers interact with services is on the horizon, driven by the growing demand for rapid responses from customers. According to Okwechime, AI-powered Chatbots leverage Natural Language Processing to understand conversations and their contexts to such an advanced level that appropriate responses can be generated. He explained that recent advances have gone beyond text-based chats, with companies like Apple (Siri), Google, and Amazon (Alexa), introducing voice-controlled virtual assistants, able to answer an infinite number of questions proficiently in natural language dialogue. “In a market like Africa where literacy rate falls heavily behind the world’s average, voice-controlled products and services will revolutionise how a consumer

interacts with technology platforms, reducing entry barriers and improving technology adoption,” he said. Operations Lastly, Okwechime explained that A.I. for operations combines sophisticated methods from deep learning, data-stream processing, and domain knowledge to analyse data gathered from operational pipelines to enhance efficiency, reduce costs, and maintain an optimal delivery and quality of services. Depending on the type of business, this covers several verticals, including but not limited to: Using images or videos to: 1. Do quality control on products or raw materials. 2. Count high volumes of stock. 3. Tagg essential information about a product such as visible license numbers, colour, make, and manufacturer. Using historical data to estimate prices when purchasing goods or services. Using macro-economic factors to forecast value and any pending appreciation or depreciation. Predict periods or high demand locations with sufficient notice to prepare accordingly to maximise returns. Liquidity management, forecasting future events of liquidity challenges based on predicted or projected growth. About Dumebi Okwechime is the founder of Izifin, an Artificial Intelligence focused embedded software provider, empowering all businesses of all sizes in many sectors to leverage data to improve customer service provision. The company’s mission is to ensure better use of data to help SMEs make a real difference in financial inclusion for both consumers and businesses. Okwechime, who previously led the Data Science team at Barclaycard and Infosys in the UK, spoke with Business Insider Africa on how data and AI can revolutionise the scaling of businesses across Africa.

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Central bank digital currencies and their farreaching consequences

The decentralised nature of digital assets has central banks worried, resulting in stricter action – and an ‘enticing’ alternative. The rise of the technology that underpins ‘crypto’ will bring about enormous disruption to the present-day technology-driven economy.

Dawie Roodt Chief economist, Efficient Group Dawie is a nationally renowned economist who specialises in Government finance and monetary policy and enjoys excellent relations with various role-players in the South African economic and financial environment. He is frequently quoted and participates in media coverage of economic and financial matters in daily and weekend newspapers, financial magazines including the "wires" (electronic media), television programmes and radio stations. Dawie has been a member of the Tax Advisory Committee of the Afrikaanse Handelsinstituut, represented Business SA at Nedlac, served as a committee member of the Greater Johannesburg Chamber of Commerce and currently lectures at The Gordon Institute of Business Science of the University of Pretoria. He holds a Masters degree in Economics (Cum laude).

This disruption will be especially profound in the world of finance since a modern economy is mostly service-orientated and increasingly ‘digitalisable’. The enticing attributes of the blockchain and its amazing potential even has central banks flirting with the idea of having their own digital currencies. Until recently, cryptocurrency was the recreational playing field of only a small group of computer geeks and anarchists. But today, a variety of digital ‘assets’ has become more mainstream. These include private money such as Bitcoin, but also other assets such as non-fungible tokens (NFTs). An NFT is a string of computer code often associated with a ‘smart’ contract, which grants the purchaser ownership of that specific code and the underlying work that the NFT represents – such as a poem, a painting, or an ‘avatar’ (which can be you, only a digital version). These NFTs can also be traded.

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Control Private money such as Bitcoin is like physical money but with the major difference that it only exists in digital form and is not issued by a centralised authority. Importantly, these new ‘assets’ live on blockchain technology, but unlike, say, money, are not under the control of a central ‘authority’. This is because an important characteristic of blockchain technology is that its control is typically decentralised in nature. This means that no single person or institution is in control of the blockchain. “Furthermore, the information on the blockchain can be extensively encrypted, which means that it makes anonymity for participants possible to a large degree”. As might be expected, ‘the authorities’ worldwide are becoming increasingly uncomfortable with the fact that the new technology is undermining the powers of, among others, central banks. This is resulting in stricter action against private digital assets such as NFTs, cryptocurrencies, and ‘stable’ digital currencies (the latter are cryptocurrencies that link their value to something external, such as the dollar or the gold price). However, central banks are now experimenting with their own cryptocurrencies, or ‘central bank digital currencies (CBDCs). Quite a few central banks have already issued their own CBDCs. CBDCs, however, differ greatly from private cryptocurrencies in that a central authority issues a CBDC, which gives it greater legitimacy than private money. With private money, you cannot complain to someone if something goes wrong, but with central bank money, there is always the knowledge that

the central banks will monitor things. Another difference is that this technology is not decentralised as with private money, but under central bank control. Consequences And this has quite a few other consequences. For example, the central bank can have full knowledge of all transactions. Unlike with physical cash, where transactions can be completely anonymous, transactions with a CBDC can be fully traced. “This means ‘the authorities’ will be able to police our movements and study our behavioural patterns to an even greater extent – something that I dislike”. But there is more. With a CBDC, the central bank will, for example, be able to push interest rates down to well below zero. Currently, central banks cannot lower interest rates to much below zero, because then people will simply keep their money in physical cash, which is not possible with digital money. The greatest danger with a CBDC is that it is programmable. This means a central bank will be able to determine that an individual may only spend their CBDC on, say, food, and not on tobacco products. Or the central bank may decide that since you are not tax compliant or you said something nasty about the government, you will, for instance, not be allowed to buy a plane ticket. “This should be a major concern for all of us because not only will the central banks (read governments) be able to trace all of our transactions, they will also be able to punish us if we do not follow their ‘rules’”. Clearly, we should be concerned about CBDCs and that is the main reason why I suspect that private money will have an important function in the future: they will provide us with an alternative when governments, as they always do, misuse their powers. REGTECHAFRICA

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The role of banks Another major change with the establishment of CBDCs will be the role of banks in the future. Banks currently have accounts with central banks, a privilege not afforded to individuals. Central banks use banks as an extension of themselves to apply monetary policy and to make other financial processes run smoothly, like the payment system. If a CBDC is introduced, it will mean that every person who uses a central bank’s CBDC will get an ‘account’ with the central bank. This could lead to serious repercussions for banks. People would much rather keep their deposits in a CBDC instead of in deposits with banks, as a CBDC (theoretically) poses no risk. Remember that a large portion of a bank’s service comprises taking deposits. If CBDCs become popular, banks may find it difficult to attract deposits, which could hold many other consequences for banks and the financial system. If a CBDC is introduced, it will mean that every person who uses a central bank’s CBDC will get an ‘account’ with the central bank. This could lead to serious repercussions for banks. People would much rather keep their deposits in a CBDC instead of in deposits with banks, as a CBDC (theoretically) poses no risk.

Remember that a large portion of a bank’s service comprises taking deposits. If CBDCs become popular, banks may find it difficult to attract deposits, which could hold many other consequences for banks and the financial system. The money of the future will be more digitalised – which means that money and other forms of digital assets will be nothing but information, and information has no respect for borders. CBDCs in which there is little trust or confidence will most likely disappear, and only those in which there is more confidence will remain. “It will also be the end of exchange controls. This could mean the end of the rand, the lira, the kwacha, and many other smaller currencies, which in turn would have consequences for the sovereignty of countries”. Of course, there are several ways to solve some of these problems. A central bank can, for example, restrict the issuance of a CBDC, which will, at least partially, keep the existing system in place. Or a central bank can use the banking system to distribute the CBDC, but then the central bank may have less access to all information. Either way, enormous changes are happening and no one is sure what banking will look like in the future.

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TOP 100 LEADERS

5 African fintech companies listed among the world’s Top 100 CrossBorder Payments Companies in 2022 Leading specialist provider of global payments data, FXC Intelligence, has listed five African fintech companies in its annual list of Top 100 Cross-Border Payments Companies.

Chipper Cash

Flutterwave

Customer focus: Consumers, B2B Payments

Customer focus: SMEs, Large Enterprises, Fintechs

Founded: 2018

Founded: 2016

Having raised $250m in 2021, Ham Serunjogi talks Chipper Cash's global expansion

Based in San Francisco, US, Chipper Cash builds software to enable free and instant peer-to-peer cross-border payments in Africa and Europe, as well as solutions for businesses and merchants to process online and in-store payments. In November 2021, the company raised $150m in a Series C extension round and was given a $2bn valuation, taking it into unicorn territory.

MPesa

MFS Africa

Mukuru

Customer focus: Remittances

Customer focus: Merchants, SMEs, Financial Services

Customer focus: Remittances

Founded by Vodafone and Safaricom (a leading telecoms provider in Kenya), M-PESA is a mobile phone-based money transfer service. It enables cross-border payments for more than 51 million customers across seven countries in Africa with secure international transfers via their mobile phones. More than $314bn in transactions is sent annually, with Kenya and Tanzania its two biggest markets.

MFS Africa is a pan-African company operating the largest digital payments gateway on the continent. In November 2021, the business raised $100m through its equity and debt financing round. It connects more than 250 merchant customers across 35+ African countries and 700 corridors.

Founded: 2007

Founded: 2009

Founded: 2004

Mukuru offers cash collections and bank and mobile wallet top-up services, allowing people to send money to Africa from the rest of the world. It recently partnered with WorldRemit to become its remittances payout partner in territories where it has an established network.

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Meet Chinwe Esimai, Nigerian-born MD and Chief Anti-Bribery Officer at Citigroup Chinwe Esimai, a lawyer, corporate executive, author and speaker is the current Managing Director and Chief Anti-Bribery Officer at Citigroup. Chinwe had her secondary education at Federal Girl Government College (FGGC) Owerri, Imo State. In 1995 she relocated to the United States with her mother, three brothers, and sister after her secondary school education in Nigeria. After relocating to the United States with her mother, she attended university at the City College of New York from 1996 to 2003, obtaining a B.A. in Political Science. After graduating from City College, she attended Havard Law School from 2000–2003 where she obtained a JD (Juris Doctor) degree. Career and corporate experience She worked as an intern at Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates for three years. After her graduation from Havard, she worked as a corporate Associate for LeBoeuf, Lamb, Greene & MacRae LLP for a year and six months. She resumed as Assistant Director, SEC/NASD Compliance at Met Life where she worked for a year and eleven months before resuming as Vice President for Goldman, Sachs & Co where she worked from 2006 to 2009. She later entered the academic field as an Assistant professor at the University of St. Thomas School of Law in Minneapolis, MN, where she taught Law & Finance in Emerging Markets, Securities Regulation, and Business Associations for a year and seven months. In 2011, she went back to work at Goldman Sachs for two years before moving to Citi where she currently works. She resumed working in Citi as the SVP Global Anti Bribery & Corruption after which she moved to the position of Interim head, Global Anti Bribery and Corruption. Then to the position of Director – Chief Anti-Bribery & corruption officer. Before resuming her current position as Managing Director – Chief Compliance officer, Legacy Franchises she worked as Managing Director, Chief Anti Bribery and Corruption Officer. Awards and recognitions She has received several awards and recognitions both in America and in Nigeria. She has been recognized among several notable women and men who are trailblazers in their fields. Her recognitions include; American Banker Most Powerful Women in Banking Crain’s New York Business Notable Diverse Leaders in Banking & Finance Diversity Woman Magazine Elite 100 Black Women Changing the Face of Corporate America Tropics Magazine’s Most Powerful Africans Shaping the Future of Africa Leading Ladies Africa Leading Corporate Women Award Ozy Magazine “Angelic Troublemakers” to Reset America and the World Leading Ladies Africa 100 Most Inspiring Women Face2Face Africa Corporate Leadership Award Nigerian Lawyers Association Trailblazer of the Year Award

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Speaking engagements She has had speaking engagements at the 10th Anniversary of the United Nations Global Compact on Corruptions in 2014, and at the United Nations 2016 Africa Week High Level Event: A Renewed Global Partnership for Entrenching Good Governance and the Rule of Law in Africa. She has also spoken at the South by Southwest conference & festival which is dedicated to helping creative people achieve their goals. She has presented at conferences and seminars discussing various issues impacting emerging markets, including trends in the Foreign Corrupt Practices Act (FCPA) and antibribery enforcement, private equity investments in Africa, financial regulation in emerging markets in the aftermath of the financial crisis, and the integration of emerging markets in global financial regulation. She has also been featured in Female Quotient, Time 100, Forbes, Knowledge@Wharton, Current History, Thrive Global, Medium, Black Enterprise, Real Business UK, Authority Magazine, and Business Intelligence Middle East. Charity and board membership She is an Executive Council Member of Ellevate Network, a women’s business enterprise which functions as a community of ambitious and supportive women who believe there is strength in numbers. She is Chair of the Board of Harambee USA Foundation, a non-profit organization dedicated to education and economic development in SubSaharan Africa. She created a site chinweesimai.squarespace.com to not only inspire high-achieving women leaders (American Dream Queens) who have come to the United States from all around the world and not only share a passion for excellence and success but also to accompany them on their leadership journeys. Published author and podcast host Her book, ‘Brilliance Beyond Borders: Remarkable Women Leaders Share the Power of Immigrace’ was released in March 2022.

She is also the host of the Brilliance Beyond Borders podcast which features inspiring conversations with highly successful immigrant women leaders, thought leaders and world-class experts. Personal life She got married in 2015, and now has three children: a 13-year-old son, a 10-year-old daughter, and a 7-year-old son. According to an interview she had with C-suite moms, her first child was born after she began practising law and had made the transition from being a corporate associate at a large law firm to an in-house role, while her second and third children were born while she was serving as a Vice President at Goldman Sachs.

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After Raising $4 million, Emtech Plans To Expand And Work With Central Banks In The Caribbean After A Successful Ghana Pilot Emtech, a Black female owned central bank digital infrastructure provider, targets emerging markets where payments infrastructure need aligning with digital innovations — to improve efficiency, introduce new products and services that are likely to promote financial inclusion, and in ensuring the secure movement of money. It’s solutions also enable collaboration among multiple regulators, for an integrated regulatory environment that is key to the opening up of cross-border innovations and opportunities. The startup, which carried out a successful pilot in Ghana, Africa, has signed five agreements with central banks in the continent and the Caribbean region. The company is reportedly already in production, according to TechCrunch. Founded by Carmella Cadet, the next stage of growth comes against the backdrop of a recent $4 million seed funding from several investors. Investors who participated in the round include Noemis Venture, Octerra Capital, Consonance Invest, XFactor ventures, 500 Global, Canaan Partners, and Andrew Lundsten (formerly of Stripe), who also serves as the startup’s advisor.

Her and the team are on a clear mission to build inclusive, safe and resilient financial infrastructures with digital currencies to unleash new markets and opportunities for everyone. Cadet started the company back in 2019 driven by her passion to build the infrastructure needed for stronger financial markets through the closure of financial exclusion gaps and helping people create wealth. She is a passionate advocate of Blockchain and Digital Currency Technology for payment modernization and financial inclusion efforts. In her last role after a 10-year career at IBM, Carmelle led the Global Business Development efforts in IBM Blockchain for Payments.

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A day of innovation with the Central Banks BY ORONZO MAURO, HEAD OF CENTRAL INSTITUTIONS SOLUTIONS AT NEXI

The timeless truths of retail are that consumers will always want better prices, selection and convenience. With the internet having already driven major progress on the first two customer needs, attention is now turning to convenience.” - Andrew Lipsman

All financial institutions and central banks are deeply involved in and impacted by waves of innovation, which are extremely visible and crucial for the future of the industry. In this scenario, one of the main topics of discussion is real-time payments. Instant Payment platforms are moving from “nice to have” to “must have”, not only because “instant” is a synonym of zero-time, but also because IP has prompted banks to rethink their digital DNA. Their introduction drives the operating model of banks towards a second-generation Real Time Gross Settlement process based on a 24/7 working model. The entire pipeline of an instant payment - from mobile app to centralized settlement - brings new "contaminations" to central banks with opportunities for market infrastructures. The continuous flow of payments initiated by people while walking down the street or parking their cars enables central banks to gain access to a relevant granularity of data that could be important for a country's monetary position.

Nexi is already known for being able to fully manage instant payments platforms through Jiffy, the mobile solution to send and receive money via smartphone in real time by simply selecting the recipient from one’s contacts list, and Express, the automated solution for the clearing and settlement of instant payments allowing payers and receivers to access their funds in real time, and the RTGS system. Due to the strong push from regulators such as BIS and CPMIIOSCO, mission-critical infrastructures’ resilience has now become a hot topic. The business continuity of these systems must be guaranteed and the availability of two disaster recovery sites with a near real-time recovery architecture is no longer enough. Central Banks, like other financial institutions around the world, need to be prepared for new, unexpected events such as disasters at regional level or cyber-attacks that could affect services and lead to extreme economic consequences. As a mission-critical, service-leading

provider, Nexi’s solutions are already implemented by major central banks, like Extreme Contingency Service (RECS) that can offer support in case of disasters in a wide range of possible scenarios. Rapidity in restarting the financial system is crucial to limit a country’s economic difficulties and restart core business operations. That is why more and more Central Institutions are evaluating the costs/benefits of a third disaster recovery site to be used in extreme contingency situations. Furthermore, in the near future regulators will probably recommend mission-critical infrastructures to feature multinetwork connectivity as is already the case at European level with EBA Clearing systems and Eurosystem services for access to ESMIG, where SIAnet the high-speed, secure and lowlatency network infrastructure offers unique expertise in the design, implementation and management of network

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services supporting applications deemed critical by the European financial ecosystem. Tech is increasingly driving and creating new changes, thereby offering the possibility to move forward. This is the case of the ISO 20022 global standard for financial messaging that, from the second half of this year and until the end of 2025, will positively affect financial institutions by creating efficiency in back offices and new products, thus enabling new business models for central banks. The adoption of IS0 20022 should bring standardization to the market with impacts on interoperability at cross-border and domestic payments level. The flexibility of the XML format, capable of carrying additional information compared to previous standards, should also

lead to the creation of new usecases leveraging on richer data – a payment’s value is indeed no longer linked to processing as such but to the conveyance of information. At Nexi, we are already working with dozens of central banks on their migration plans. If we look further ahead, the debate on the feasibility of Central Bank Digital Currencies and their implications is open and particularly dynamic. Through the Market Advisory Group of which we are a member, at Nexi we are monitoring this phenomenon and supporting institutions, principally in Europe, when considering the impact of new CBDCs in the field of payments to benefit citizens, businesses and institutions in order to make this innovation truly inclusive, sustainable and secure.

Oronzo Mauro Head of Central Institutions Solutions at Nexi From March 2017 to April 2019, COO of the Spafid Group, Mediobanca Banking Group Between 1998 and 2017, in Accenture in the role of Managing Director (partner, since 2012) for the Banking & Insurance sector with over 18 years of experience in various European and non-European countries. He gained his professional experience in important banking groups in different areas: large IT transformation plans, Core Banking (custom and package), Foreign Trade Business, Securities (Depo, Custody and Corr. Banks), Capital Markets, Mobility and Internet Channels , Sales Force management in IT & Ops. I am also recognized with an expert in the application of digital in cultural heritage

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Biometric Cards: A Contactless Technology with High Security Bank Sandbox BY NADINE GHOSN EID // DIRECTOR OF COMPLIANCE & REGULATORY AFFAIRS” AT AREEBA

As the payments industry shifts from plastic to digital, the need is more and more increasing to provide customers with the latest payment technology. Since the start of COVID-19, we have witnessed a decrease in the use of physical cards, and an increase in the use of virtual cards, which will continue to dominate in the future. A rise in digitization and related online services is now a major change in the industry, and something that will continue to grow in the future as businesses focus on digital transformation to adapt and innovate during these new tough and challenging times. In order to adapt to this new situation, businesses will need to MAKE MOST PAYMENTS TOUCHLESS; the fear of contact with contaminated surfaces has given a real boost to the use of contactless payments, cards and wallets based. One of the major innovations that the payment industry is implementing on the road to empowering a cashless world and to provide clients with the latest payment technology is the “BIOMETRIC CARD”, a combination of contactless technology, advanced privacy and security, along with a simple fingerprint!

WHY BIOMETRIC CARDS? The advantage of biometrics over other security procedures is that it is part of an individual and directly corresponds to his / her identity. Biometrics meet the requirements of authentication, nonrejection, confidentiality, and integrity. Traditional passwords are proving to be less secure, and the next level to authenticate a person / card is the use of biometrics to verify a person’s identity. Biometrics can be applied as a way to identify a person, and their utilization can help protect people from being a victim of identity theft. HOW? 1. The cardholder becomes the password Fingerprint recognition is a very reliable and accurate way of authentication, and is very popular because of its familiarity and usability. Fingerprints are unique to individuals and are therefore more reliable in verifying identities than a password, or asking various security check questions. In the cybersecurity industry, biometrics are now considered as one of the best ways of protection when it comes to securing identities.

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Protecting Business Data The rapid growth of the internet and the high usage of e-commerce applications have pushed organizations to look for stricter security controls, and to start considering identity based security (biometrics) as important as physical security, since business and financial data must be protected from unauthorized access. Biometrics are specific to individuals, which makes it very difficult to break biometric security protocols. Optimizing Security with Biometrics The advantage of biometrics over other security systems is that they are part of an individual and correspond directly to the individual’s identity. The application of fingerprint based biometric tools can notably increase the security of data stored on a card, or on an electronic device such as a personal computer or a company computer. Therefore, organizations and individuals aiming to strengthen the security of their networks, systems, and data can easily achieve this target by implementing biometrics.

Convenient and Fast: From a cardholder’s point of view, it is extremely easy and quick to use biometrics. Placing a finger on a card is faster than typing out a PIN. In addition, forgetting a PIN is a common mistake of many cardholders. The chances of someone forgetting his own biometrics are impossible. Non-Transferrable: Everyone has access to a Unique Set of Biometrics. A cardholder cannot transfer or share a physical biometric digitally, and the only way to apply biometric authentication systems is with a physical application. In conclusion, approaches towards digital ID and the perception of digital identity are fundamentally changing. Since security in banking is becoming crucial, financial institutions have to set much higher standards when it comes to secure ways of confirming a client's identity for authorized transactions. And there is no better way to do it than implementing BIOMETRICS.

Biometric cards and biometric authentication present several advantages from a Fraud, Security, and Money Laundering perspectives: High Security and Guarantee: Biometric Identification helps authenticate the identity. Most user’s passwords, PINs, and personal identifying information have likely been compromised with a data breach, and therefore scammers who preserve the answers to traditional verification methods can have access to billions of accounts. Implementing biometric authentication helps blocking the way on fraudsters and allows only a real, authorized user to access the account / card. In addition, biometrics can only be provided by living, breathing people, and a robot for example would have a hard time passing an iris scan. Hard To Forge or Steal: Biometrics such as iris scanning, face specimen, fingerprints, and others are almost impossible to duplicate with the current technology. There is almost no chance that someone’s fingerprint or face specimen will match up exactly with someone else's. Therefore, it is very hard to find a cardholder having the same fingerprint as a hacker trying to breach a card secured by biometrics.

Nadine Ghosn Eid Nadine Ghosn Eid is the Founder of BeyondComply, a consultancy firm established to help financial services companies understand and overcome the challenges arising from compliance, regulation, and market developments. Nadine is a Certified Anti-Money Laundering Specialist (CAMS) based in Beirut, with more than 26 years of Banking Experience, substantially concentrated in the fields of Compliance, Treasury, Capital Markets and Private Banking, in addition to 17 years of concentration in the Cards and Payments Industry. A Professional Consultant in Anti-Money Laundering, Governance Risk & Compliance, Regulatory Compliance, Data Protection, and Cards Industry Rules and Regulations. A Certified Trainer for EIMF (European Institute of Management and Finance). Certified in EU GDPR Foundation and Practitioner by "The Knowledge Academy UK" Certified in Financial Derivatives Module, Securities, and FSA Regulations by the "Chartered Institute For Securities & Investments - London, UK". Holder of a Master’s Degree in Money and Banking from "The American University of Beirut”. Nadine currently holds the position of “Director of Compliance & Regulatory Affairs” at areeba (a Leading Regional Financial Technology company specialized in the payment cards and electronic services and in offering issuing and acquiring services to banks, other financial institutions, merchants and retailers).

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Unlocking the transformative power of mobile money BY ASHLEY OLSON ONYANGO, HEAD OF FINANCIAL INCLUSION, GSMA

During the last decade, rapid digitisation has revolutionised the financial industry globally, through the advent of innovative services such as mobile banking apps or seamless transfer options. Driving this trend in low-and-middle-income countries, where over a billion people remain unbanked, mobile money has helped millions of unbanked people access financial services for the first time, tackling over-reliance on cash. Expanding from 134 million accounts back in 2012 to 1.35 billion last year – a more than tenfold increase – mobile money has evolved from a niche money transfer offering to a mainstream service that is financially empowering hundreds of millions around the globe. Since the early adoption and rapid growth of mobile money in East Africa, mobile money has branched out from its epicentre in sub-Saharan Africa to the rest of the world. Through this period, the industry has continued to innovate and has seen significant growth. Over the past 10 years, the GSMA has been tracking the ever-growing presence of mobile money in its annual State of the Industry Report. This year’s decade edition reveals that the value of mobile money transactions reached a record $1 trillion in 2021. Although the use of mobile money has become a global phenomenon, African users remain a significant driver – accounting for 70% of the $1 trillion in transaction value. As a result, businesses and individuals alike have benefitted from this fastpaced digitisation of payments, unlocking access to more products and services, building financial resilience, and bringing about commercial opportunities. We explore key trends and prospects for the industry, its users, and other stakeholders.

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FROM B2C TO B2B: THE ADVENT OF DIVERSIFICATION A key feature of the industry’s progress in the past years has been mobile money’s rapid diversification beyond its key traditional use case: person-toperson transactions (for example transferring money to family and friends). Most notably, 2021 saw the mobile money industry become instrumental in helping small businesses operate more efficiently and improve the customer experience. Mobile money-enabled merchant payments almost doubled in value from 2020, reaching a global average of $5.5 billion in transactions per month. The urgency to digitalise all aspects of day-to-day life at the start of the pandemic catalysed the number of businesses accepting and receiving mobile money payments, thanks to efforts from mobile money providers and regulators. Since then, thousands of businesses, both physical and online, have started using mobile money to continuously drive prosperity and customer growth. Despite this growth, there is substantial room for growth in mobile money-enabled online payments as many merchant payments in Africa remain offline. In 2021, new partnerships emerged between mobile money providers and payment technology companies such as Flutterwave to provide ‘Fintechas-a-Service’. Iterations like this are already being made to enable more mobile money users to pay for online purchases. But there is still work to be done to help businesses embrace digital payments.

THE PROLIFERATION OF FINANCIAL INCLUSION Since the onset of the pandemic, mobile money has helped women and other underserved communities in a variety of ways, from sending funds to families in need, to paying for essential bills and services. Ultimately, if women can access and use mobile money on par with men, they can flourish, bringing benefits to their households, as well as to the mobile industry and the economy. Despite the progress made so far however, women in LMICs are still less likely than men to own a mobile money account, with considerable gender gaps in a significant number of mobile money markets (71% in Pakistan, 68% in India, 52% in Bangladesh, and so on). But why exactly is this?

Understanding the gender gap and barriers at different stages of the mobile money customer journey is critical to informing action: from mobile phone ownership to mobile money awareness, account ownership, and regular use. To begin with, women are seven per cent less likely than men to own a mobile phone, with some regions having an even greater gap. Beyond this, other barriers such as lack of awareness of mobile money and lack of perceived relevance, knowledge, and skills should be addressed to encourage equal access.

WHAT IS NEXT FOR MOBILE MONEY ON THE CONTINENT? Looking back on the last year, the mobile money industry has seen significant growth, experienced vast diversification, and empowered financial inclusion. Behind the numbers and milestones within the mobile money industry are hundreds of millions of people participating in a more inclusive digital economy. But even so, more can be done to unlock the benefits of mobile money even further, driving not just financial access, but financial health. Making mobile money widely available and more beneficial to all, particularly for the underserved, requires a holistic approach: appropriate corporate strategies and investments and conducive policy and regulatory changes, with a focus on all barriers along the customer journey. This year the mobile money industry hit a milestone number of transactions and with continued collaboration between businesses, governments, operators, and the mobile industry as a whole, the benefits of mobile money will continue to expand and reach the remaining unbanked populations – delivering lasting impact to the world’s most vulnerable.

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The Central Bank regulatory sandbox: A risk-appropriate response for Fintech start-ups in Rwanda By: Jean Marie Ntakirutinka

The evolving technology landscape and new technologies becoming more diverse and sophisticated have not spared the financial sector. Developers of technological financial products, services and business models and implantation mechanisms face various challenges particularly in the first days of their venture. Risks associated with cybersecurity, data protection, service/systems interoperability, among others, compel the National Bank of Rwanda (the Central Bank) to continuously adopt responsive and risk-appropriate regulatory frameworks. The BNR has recently adopted regulation No 41/2022 of 13/04/2022 governing the regulatory sandbox. Defined as a live, contained environment in which participants may test their product, service or solution, the sandbox aims at enabling developers of innovative financial products test the products in a live environment, as well as fostering responsible financial innovations that benefit financial consumers by improving the quality of, access to and usage of the financial products and services; and solutions to be deployed and tested in a live environment prior to launch into the market place. It also informs BNR of which gaps need fixing before a license can be granted. The sandbox regulation will enable the Central Bank to assess and manage emerging risks facing new financial products and services. It further provides an evidence base to shape potential suit of changes to the regulation of financial services. Broadly, the sandbox sits within the government policy to assist innovation, development and competition in Rwandan financial market. The regulatory sandbox ensures that new products are licensed after analysing the interests of consumers as well as the market need. By testing new products in live environments, new regulations and guidance are informed by real-world instead of assumption. Under the regulation, an applicant seeking to participate in the regulatory sandbox must demonstrate that: • The financial product, service or solution is genuinely innovative with clear potential; • The Innovative financial products and services as well as related solutions do not clearly correspond to products or services currently regulated under existing laws and regulations; • The Innovative financial products and services are those that are likely to fall under the supervisory scope of the Central Bank; • They have conducted an adequate and appropriate assessment to prove the usefulness and functionality of the product, service or solution and identified the associated risks;

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An applicant wishing to participate in the regulatory sandbox must ensure that the purpose, scope and criteria specified are fully satisfied before submitting the proposal. Furthermore, the applicant shall identify potential risks that may arise and communicate them to the customers. The applicant proposes appropriate safeguards to mitigate the identified risks as well. The sandbox will enable participating developers to familiarise by the regulated business environment by live‐testing their products in a delimited setting with precise scope and scale, without attracting the full suite of regulatory requirements.

To wrap up, regulatory sandboxes are generally not 100 % risk free. Precaution is key when designing regulatory sandboxes for them to be effective. Stakeholders and regulator must have some understanding on how new technologies work, and assess associated risks even before testing in a live environment to protect consumers and as well as business owners.

It is worth noting that once permitted to participate, participants in the sandbox testing must observe certain requirements. In this regard, article 12 of the regulation provides that the Central Bank requires participants to submit interim reports on the progress of the test, and the reports must include: key performance indicators, key milestones and statistical information; key issues arising as observed from fraud or operational incident reports; and Actions or steps taken to address consumer complaints, emergent risks, or other issues relevant to Central Bank’s assessment of applicable regulatory requirements.

The frequency of reporting and specifics to be included in interim reports are agreed upon between the Central Bank and the participant, and depends on the duration, complexity, scale and risks associated with the test. The participant must submit a final report to Central Bank within 30 days calendar before the expiry of the testing period. This final report must contain (1) key outcome and performance indicators against agreed measures for the success or failure; (2) a full account of all incident reports and resolution of customer complaints; and (3) in the case of a failed test, lessons learned from the test.

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The relevance of Regulatory Technology for businesses The concept of digital transformation and Regulatory Technology (RegTech) innovation has emerged from being an enabler of existing procedures and processes to an essential component of the financial industry. This transformation has been enabled by start-ups who have introduced innovative digital products and services that have forever changed how businesses manage their regulatory compliance. Businesses that have adopted digital transformation initiatives for their compliance processes are often motivated to do so as an attempt to improve productivity and eliminate inefficiencies. This is due to the fact that automated RegTech solutions are designed to automate mundane tasks, standardise and enforce a single risk approach and raise alerts for sanctioned individuals. Automated RegTech solutions reduce your business risk by performing checks that are next to impossible for any human to do. A recent example being the changes made to sanctions lists due to the Russia vs. Ukraine war. It would take hours of work for an individual to manually screen and search every individual on various sanctions lists before onboarding them, and so there have been solutions created to ensure

shorter turnaround times, with higher levels of accuracy, leading to improved and enhanced processes. With the ease of access and clear benefits of such solutions, financial institutions across the globe have experienced a profound impact across business operations and customer engagement. However, the question that comes to mind is how readily available RegTech solutions impacted the amount of money being laundered. The truth? Implementing a RegTech solution isn’t going to magically make your money laundering risk exposure disappear. It has been found that globally only a very small amount of money laundering is being detected and dealt with, and as reported by The United Nations Office on Drugs and Crime (UNODC) it is estimated that there is still between 2 - 5%, or $800 billion $2 trillion in current US dollars of global GDP being laundered each year. The reason? Combating money laundering shouldn’t be a band-aid approach. As criminals and the economic environment evolve, so should your antimoney laundering practices. As per the Risk and Regulatory Outlook 2021 PWC report, the last few years have seen an ”Increased adoption of mobile banking, innovations in payments and acceptability of cryptocurrency globally have resulted in significant growth in transaction volumes. This increase in opportunities to do cashless and anonymous transactions has led to an increase in the overall volume of financial crime.”

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What it comes down to is that in order for financial institutions to eliminate the risk and challenge of the ever changing Anti-Money Laundering (AML) landscape, they need to not only turn to RegTech to assist them, but they need to “go all in”. This means financial institutions need to fully commit to the adoption of not only the technology but also partner with RegTech solutions that offer end-to-end services such as annual compliance reviews and training, to keep you up to date with the latest compliance requirements and AML news. Training and upskilling ALL your staff plays a large role in how successful your business can be at winning the fight against money laundering as all teams face some element of risk. To conclude, having a RegTech solution has many advantages such as enhancing customer experience, improving productivity and eliminating inefficiencies. However, having a solution alone is not enough to eliminate the risk of money laundering. Financial Institutions should seek to partner with end-to-end RegTech solutions that will provide frequent training, guidance and advice.

About Marc Roper is a Compliance Officer at DocFox Africa, a leading SaaS solution, that offers businesses an end-to-end FICA compliance solution. In particular, Marc’s role at DocFox involves providing hands-on FICA compliance expertise and certified training. Marc has a wealth of experience in legal as well as financial and regulatory compliance operations. He was previously a Candidate Attorney at Werksmans Attorneys before entering the Private Bank Transactional Monitoring space at Investec, giving him unique expertise into Anti-Money Laundering and Client Due Diligence.

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The African Continental Free Trade Agreement Can Succeed With Bitcoin By: Kudzai Kutukwa. The African Continental Free Trade Agreement (AfCFTA) is the dawn of a fresh start for the continent, and if implemented successfully, it will unleash a new era of prosperity on the back of increased intra-African trade. At present intra-African trade is very low, making up only 14.4% of the continent’s total exports. The United Nations Conference on Trade and Development (UNCTAD) predicts that the AfCFTA could potentially increase intra-African trade by 33% thus reducing the continent’s trade deficit by at least 51%. The elimination of tariffs, key infrastructure development and the harmonization of customs procedures are also core tenets of the agreement that are critical to its success. As the continent grapples with the negative economic effects of the pandemic, it became very clear that developing decentralized regional value chains is necessary. This pact aims to create a new borderless market that connects 1.3 billion people across 55 different nations with a combined gross domestic product (GDP) of $3.4 trillion, thus becoming the largest free trade area in the world according to the World Bank. This will potentially lift at least 30 million people out of poverty and add at least $450 billion in potential income to the region. This article will explore how the AfCFTA could benefit from Bitcoin adoption. Cross-border payments within Africa are very slow and costly. This is partly due to the fact that 80% of African cross-border transactions originating from African banks are routed offshore for clearing and settlement through correspondent banking relationships. With over 42 different currencies on the continent, currency conversion costs amount to $5 billion annually. Additionally, the majority of these currencies don’t have any value outside of their home country and, coupled with disparate regional exchange rate regimes and payment systems, transacting with African currencies becomes impractical. Without a uniform or robust payments network, the AfCFTA is unlikely to succeed, and this is where Bitcoin is a viable solution.

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One of the cardinal products of its subsidiary, Accelerex, helping to connect the payment gaps across Africa is Rexpay, an online payment gateway that helps online merchants receive payments in a fast, convenient and secure manner. The product has proven very critical to online sellers who use social media as their preferred sales channel. With Rexpay, their customers can pay via card, account, USSD or QR. They can also receive single and bulk payments without any additional API integration. For businesses selling their products across the African continent, Rexpay accepts payments from international cards. This takes away any limitation that could have arisen from payments between two countries, thereby facilitating the ultimate objective of AfCFTA. Accelerex Holdings also caters to the needs of the financially excluded through its agent banking subsidiary, Accelerex Network Limited (ANL). With close to 20,000 agents across Nigeria, ANL is fasttracking the Central Bank of Nigeria’s goal to achieve 95% financial inclusion by 2024. The company’s effort is being complemented by Accelerex Agent Network Platform (ANP),

a unique platform that facilitates the effective management of agent banking businesses. Although mobile money usage has increased with the rise of services like M-Pesa, most mobile money wallets are closed systems that aren’t interoperable and only work within certain jurisdictions. Bitcoin wallets, on the other hand, are interoperable and are not limited by geography or regional monetary systems. Merchants are able to transact with each other via their bitcoin wallets at a much faster and cheaper rate than traditional fiat payments. Layer 2 solutions like the Lightning Network have resulted in the reduction of transaction costs for bitcoin-denominated transactions, thus making micropayments possible and reducing the costs of remittances. This would greatly benefit informal traders who are currently unbanked. The Pan-African Payment Settlement System (PAPSS), a centralized payment and settlement infrastructure for intra-African trade was developed to allow for quicker processing of cross-border transactions and all the bottlenecks cited above. An initiative of the African Export–Import Bank (Afreximbank) in conjunction with the AfCFTA secretariat, PAPSS aims to connect African markets

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with each other by enabling instant cross-border payments in respective local African currencies for cross-border transactions. In other words, according to a description of how PAPSS works, when an individual or company initiates a cross-border African transaction, compliance checks between countries involved are done within the system instantly. Money from a sender’s bank would go straight to the beneficiary’s bank within minutes and not days. While this is a welcome development and would remove some of the friction associated with crossborder payments, it has a few major disadvantages. First, every payment company, bank, fintech company, etc. that wants to become a participant of PAPSS has to be individually connected to its central database. This is not only inefficient, but it also creates a single point of failure due to its centralization. Second, PAPSS in its current form does not incentivize financial inclusion on the part of traditional financial institutions in any way. This results in financially excluded informal sector traders being unable to reap the full benefits of the AfCFTA. Furthermore, the trade flows of informal cross-border traders will continue to be inaccurately recorded as they carry on trading with cash. Lastly, African currencies are generally weaker due in part to political instability and low economic productivity; this is something that PAPSS cannot hedge against that bitcoin can. In September 2021, when El Salvador officially made bitcoin legal tender, President Nayib Bukele, made it clear that the goal was to offer digital banking services to all the unbanked, who make up around 70% of the population. In the first 21 days, Chivo, the government-backed bitcoin wallet, had 2.1 million Salvadorans using it, that’s more users than the customers of any Salvadoran bank. The president’s target was met within 45 days with over 4 million new users being onboarded, out of a total population of 6.5 million people. Like El Salvador, Africa also has a huge financial exclusion problem with around 65% of adults being unbanked. The majority of these people are employed in the informal sector and the informal sector in Africa accounts for over 85% of all employment. The sector also contributes at least 55% of the continent’s $1.95 trillion GDP, according

to studies done by the UN and the African Development Bank. Traditional financial services providers have ignored this sector for decades, as their prohibitive cost structure makes it unprofitable for them to service it. Cash is the only means of transacting in the informal sector. In a local context, this is fine; however, it’s a huge drawback for taking advantage of the crossborder trading opportunities that are opened up by the AfCFTA. Bitcoin adoption would instantly grant informal businesses access to an open, permissionless and geographically agnostic monetary network that they can start using immediately. Bitcoin is fully decentralized and is not controlled by any corporation or government making it the ideal universal currency for settlement of cross-border transactions and contract negotiation. Furthermore, a universal pricing standard across the continent would emerge when goods and services are priced in bitcoin. This will ultimately lead to efficiency in production and competitive pricing for similar goods or services. Another benefit of Bitcoin is that it has immediate and final settlement, therefore, the need to route transactions via offshore banks for clearing and settlement is eliminated along with the associated costs. Not only will this reduce unnecessary delays, but the risk of exchange rate fluctuations due to exchange rate misalignments is also mitigated. Businesses operating in countries experiencing currency crises or hyperinflation are able to use bitcoin as a hedge, thus insulating themselves from these upheavals that negatively affect small businesses the most.

The AfCFTA is an intra-African trade agreement that offers opportunities to bring prosperity to Africa with the potential adoption of bitcoin.

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Armed with an international currency and the ability to seamlessly transact across borders, more informal sector businesses will be better positioned to export their goods, grow their businesses, and thus increase the rate of intra-African trade in line with the goals of the AfCFTA. Just like in El Salvador, financial inclusion will be rapidly accelerated as a result of the low barriers to entry of this strategy. Africa faces significant difficulties in securing finance for infrastructure development mainly due to political risk, underdeveloped local currency capital markets and weak tax bases. To add insult to injury, infrastructure investment was reduced significantly by African governments and their development partners in the 1980s and 1990s, as a result of structural adjustment programs that most African countries implemented under the “Washington Consensus.” Africa’s current infrastructure investment needs are between $130 billion to $170 billion a year, with a financing gap of $68 billion to $108 billion according to the African Development Bank. The AfCFTA’s main objective of boosting intraAfrican trade can only be achieved with adequate quality infrastructure, as goods and services do not move on their own. Energy infrastructure is the biggest major financing need in Africa, with approximately 600 million people in sub-Saharan Africa lacking access to electricity. This not only drives up the cost of doing business, but it also hinders the delivery of quality healthcare and educational services. In order to close this financing gap, alternative sources of finance are required. One potential solution is to take a leaf out of El Salvador’s book and issue “bitcoin bonds.” The bond structure could allow 40% of the funds to be used for purchasing bitcoin and the remaining 60% could be directed toward building renewable energy infrastructure like hydroelectric power plants or solar farms, and also for purchasing bitcoin mining equipment.

Once the plant is fully operational, some of the power generated could be used to mine bitcoin, which will be used to repay investors as well as to build transmission infrastructure connecting households and businesses. With a 6% coupon rate, a lot of fixed income investors would be incentivized to purchase the bond as it gives them exposure to bitcoin’s performance through a financial instrument that does not violate their investment policy guidelines. This could potentially unlock a large pool of capital from institutional investors like pension funds, sovereign wealth funds and insurance companies that have over $100 trillion worth of assets under management globally. Finally, Bitcoin adoption presents African central banks with a unique opportunity of accumulating and holding bitcoin as part of their reserves. As dedollarization gradually occurs globally and a multipolar future becomes imminent, Bitcoin adoption reduces exposure to and reliance on currencies like the dollar and the euro for trade. A recent report by Fidelity Digital Assets states the following, “If Bitcoin adoption increases, the countries that secure some Bitcoin today will be better off competitively than their peers. Therefore, even if other countries do not believe in the investment thesis or adoption of Bitcoin, they will be forced to acquire some as a form of insurance. In other words, a small cost can be paid today as a hedge compared to a potentially much larger cost years in the future.” Therefore, African central banks would gain a significant first mover advantage in this regard ahead of most central banks in the world. In conclusion, meeting the objectives of the AfCFTA is going to require a lot of creativity, tenacity and willingness to experiment with new ideas and approaches. While this article was only able to highlight a few areas that Bitcoin adoption would optimize, there are numerous other opportunities that can be unlocked by this.

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