Kawooya: future of fintech lies in multi-channel access for users

INNOCENT KAWOOYA is a Ugandan fintech enthusiast with over 15 years of experience in the digital financial services landscape through his HiPipo Foundation.

He is the brains behind the annual 40 Days 40 Fintechs initiative which seeks to highlight unique stories by fintechs in East Africa with the aim of changing lives of under-served populations. He talked to The Observer about the initiative, and digital financial services and inclusion.

How would you rate the growth of fintechs in the East African region as opposed to other continental blocs like the ECOWAS?

The East African region has emerged as a leader in the global fintech landscape, with a focus on mobile financial services and innovative solutions for financial inclusion.

This is evident from the success stories of mobile money services such as M-Pesa and MTN mobile money, which originated in Kenya and Uganda respectively. While the East African region has been at the forefront of the fintech revolution, other continental blocs like the ECOWAS have also been making significant strides in fintech innovation.

However, there are some differences in the rate of growth and adoption of fintech solutions between the East African region and other continental blocs. For instance, some ECOWAS countries are still slower in the adoption and implementation of scalable, affordable, real-time financial services powered by fintech.

Nonetheless, both regions have unique opportunities and challenges that require tailored approaches to drive growth and innovation in the fintech sector.

East African players recognize the importance of diversity and inclusion in driving innovation and growth in the fintech sector. The rest of the world has set up structures to ensure that women and other unrepresented groups have equal opportunities to contribute to strategic sectors such as fintech.

East African governments and fintechs can learn from these experiences and develop inclusive policies and initiatives to create opportunities for underrepresented groups in the region.

What drives your continued push for financial services inclusion and how much success do you think you have achieved?

We launched the 40 Days 40 FinTechs programme to encourage the development of a sustainable financial ecosystem that is geared towards meeting the needs of low-income users. Since the inaugural 40 Days 40 FinTechs season in 2020, we have profiled over 100 fintechs.

Working with our local and international partners, HiPipo has supported the nascent fintech sector by providing access to technical and business skills.

For example, we coordinate Mojaloop training that shows digital financial service providers (DFSPs) how to build interoperable digital payment systems that seamlessly connect stakeholders, such as individual users, banks, government entities, merchants, mobile network operators, providers, and technology companies. Additionally, we are immensely proud of our success so far.

For instance, the 40 Days 40 FinTechs campaign generated visibility and reach close to 247 million users in just two months, highlighting the growing interest in fintech solutions in the region.

What is season four of the 40 Days 40 FinTechs focusing on this time?

Season four of the 40 Days 40 FinTechs program is focusing on end-user experience to improve consumer trust, accelerate purposeful usage, and maximize the impact of potential fintech innovations. Through this program, we aim to improve the lives of underserved groups, with a particular focus on women. By acquiring user feedback, innovators can better design solutions that meet the needs of their target users.

Furthermore, we are showcasing impact stories that demonstrate the tangible benefits of our work thanks to the generous sponsorship of the Bill and Melinda Gates Foundation. In addition, we recognize the growing cyber threats and vulnerabilities facing financial solutions, which have increased the urgency of addressing cybersecurity concerns.

What role do you think women can play in this sector?

Women are overrepresented amongst the unbanked in Africa. As illustrated by the World Bank’s Findex in their recent research, with the exception of South Africa, women hold fewer bank accounts than men in most African countries.

Women inclusion /gender equality is critical because providing women access to DFS enables economic empowerment and thus development. Additionally, ours is a balanced view that considers practical and normative challenges to women’s access to and leadership in the dynamic East African fintech market as well as the ample opportunity to create, contribute to, and sustain change into the future.

What are some of the major challenges facing fintechs and developers currently in Uganda?

Despite their enormous financial inclusion potential, small fintechs lack the capacity to build interoperable solutions. Additionally, fintechs and developers in East Africa face several challenges that can make it difficult for them to innovate and grow.

Limited access to funding, a lack of supportive policies, and limited digital infrastructure are among the major hurdles that fintechs encounter. Additionally, low levels of financial literacy, stiff competition from traditional financial institutions, and cybersecurity risks further compound the challenges for the sector.

What do you think regional governments should do to ensure a good environment for fintech development?

To ensure a good environment for fintech development, regional governments can leverage frameworks like the Level One project, and its principles to foster supportive regulatory frameworks, develop affordable digital infrastructure, increase financial literacy, encourage collaboration, provide access to funding, and support skills development.

Governments can create policies and regulations that enable fintech companies to operate effectively and promote innovation. They can also invest in digital infrastructure, promote financial literacy programs, and encourage collaboration between stakeholders to drive financial inclusion.

Governments can provide access to funding for fintech companies and support skills development initiatives to equip individuals with the skills they need to work in the fintech sector. By implementing these measures, governments can create an environment that fosters innovation, supports financial inclusion, and drives the growth and development of the fintech sector.

How best can developers within the different EAC countries coordinate?

HiPipo’s Include Everyone program, including initiatives such as the 40 Days 40 FinTechs, is a gateway to a broad global community of leading innovators and leaders in the fintech industry. Additionally, there are fantastic open- source communities such as the Mojaloop foundation that offer free access to technology and tools that can enhance developers’ competence at no cost.

Many start-ups have great ideas but lack funding; how do you think these can position themselves to acquire the needed funding?

Africa is home to a wealth of great entrepreneurs and innovators. However, I urge innovators to ensure that their innovations are powerful in solving the most pressing problems in their communities.

While finding funding can be challenging, it is crucial to keep believing and innovating and explore all avenues for investment, including public crowdfunding.

It is unlikely that a start-up fintech will access the connections and knowledge they need to raise funding within just one year. However, by leveraging their networks and seeking out potential investors, fintech startups can build relationships
that may eventually lead to funding opportunities.

Which areas in day-to-day life do you think have largely been ignored by developers?

Innovators have yet to develop more solutions that kick-start users’ journey into onboarding onto formal financial services.

For instance, opening a bank account is still challenging, and there is a lack of simple-to-use solutions that cater for feature phone owners and non-phone holders.

While there are a few affordable card-based innovations such as KAWU that support students in managing their pocket money, more needs to be done to drive financial inclusion.