Momoh: Covid-19 Has Exposed the Huge Digital Divide

Senior Vice President, Mastercard West Africa, Ebehijie Momoh, in this interview, speaks about opportunities and developments in Nigeria’s fintech industry. Emma Okonji presents the excerpts:

Nigeria has defined a target of 95 per cent financial inclusion rate by 2024. However, a 2018 data by EFInA puts Nigeria’s financial inclusion rate at 63.2 per cent, meaning that as much 36.8 per cent or about 40 million adults still lack access. What can be done to fast track the achievement of this target?

There’s no doubt that this is an ambitious target, but I firmly believe that it can be achieved. The growth of digital technology and proliferation of mobile devices have presented people in Nigeria with unprecedented opportunities; from innovative,

affordable solutions that help them meet their basic needs, to greater access to capital that can scale businesses and increase prosperity. A collective approach that harnesses the power of partnerships is key to achieving this goal and reach millions of people that are still locked out of mainstream economies.

This collaboration is at the core of our vision to create a digital economy in Africa that works for everyone, everywhere. Everyone has a role to play, from the smallest businesses to the biggest corporations, governments to NGOs, traditional banks to Fintechs, from the older generations to the youth. The key to gather pace is to continue digitisation and expanding acceptance to support use. To do this, we must understand user needs and behavior through research, in-market assessment and cash journey mapping. Financial education is also very important, along with employing authentication technologies that respect user privacy. We must co-create with governments and enable innovation through close engagement with regulators, and run pilots to ensure commercial viability, while remaining focused on achieving scale.

Mastercard continues to be the single technology provider of choice that connects telcos, digital e-tailers and Fintechs to their consumers by providing technology solutions, platforms and propositions that enable a superior digital experience and drive greater inclusion for people across Nigeria and the wider continent.

Mastercard’s white paper indicates that close to 95 per cent of consumer payment transactions in Nigeria are still done by cash. How can governments overcome the heavy reliance on cash and ensure increased adoption of digital financial technologies?

Digitalisation is our ultimate tool for building a world beyond cash, while technology and innovation are key enablers for helping governments to overcome the burden of cash. By ingraining digital processes in key sectors, we will encourage everyone to participate. To make digital financial services appealing to the excluded, our solutions need to mimic cash in their ease of use, while also being readily accessible, secure, and used everywhere. In other words – we need ubiquity,

interoperability and scale. We are doing this by building solutions that are domestically relevant and drive greater inclusion so everyone can benefit from a thriving domestic ecosystem beyond cash. An example of this is Jaza Duka, which connects micro merchants to micro-credit opportunities. In the Middle East and Africa alone, we’ve already reached over 100 million consumers and 1.5 million merchants with our QR payments technology. In our white paper “Cashing Out: Economic Growth through Payment Digitisation”, Mastercard’s Global Cash Reduction Framework breaks down cash’s root causes into three components: Instrumental, Infrastructural and Institutional.

This is ultimately how we can address the heavy reliance on cash in favour of digital finance to grow financial inclusion – and Mastercard has made a global commitment to bring 1 billion people and 50 million small businesses into the digital economy by 2025.

Cash can only be displaced to an appropriate degree if there is an established acceptance infrastructure that is sufficiently trusted and offers compelling electronic payment value propositions for consumers and businesses. Governments, of course, will be critical in helping economies overcome their heavy reliance on cash. They have a strategic role to play in policy formation and creating the right enabling environment and business climate for digital payments to flourish.

Many experts say that there is no business case for implementing financial inclusion initiatives for the last mile, what is your take on this and what can be done to bring vulnerable populations into the formal financial system?

Nigeria’s greatest opportunity lies in its ability to develop inclusively. Success is lifting people out of poverty and building a more prosperous middle class that benefits everyone – people, governments and businesses alike. The pandemic has brought stark contrast to the reality of the digital divide. The fight against it has made it apparent how interconnected our world is. Our well-being is intertwined with that of others. This crisis has underscored just how important it is for individuals and small businesses to be connected to the digital economy.

As a trusted partner that has developed its secure, resilient and reliable network over many years, Mastercard is in a unique position to lead a response that offers value to consumers, businesses, merchants, financial institutions and governments. In fact, our commitment to our customers, partners and employees, has never been stronger. We are helping businesses and merchants to prepare for stabilization, normalisation and eventual growth by enabling commerce. We are doing this in so many different way – from partnering with Omaness to offer women a sustainable income as skinfood merchants, to growing Fintechs like Hello Tractor, which is positively changing the landscape for farmers.

Fintech players are perceived to be threats to financial institutions because of the disruptions in banking services caused by Fintech solutions. How will Mastercard encourage collaboration between Fintechs and financial institutions?

Collaboration between Fintech players and traditional financial institutions is opening up a host of opportunities across the financial and payments landscape. As this ecosystem evolves, it’s important that Fintechs are not perceived as disruptive threats, and instead viewed through a lens that looks at the additional value they can bring to products and solutions.

Mastercard’s approach towards encouraging collaboration between Fintechs and financial institutions is by offering solutions that connect the two, with the ultimate goal of advancing digital financial inclusion. We do this by leveraging our digital solutions and technology to bring together an ecosystem of key players at different touchpoints, ranging from fintechs and telcos to e-tailers and banks.When we do this, we are helping them diversify their business models by offering a full range of digital financial services to their customer base, and at the same time allowing them to keep ownership of the end-to-end customer experience. When we bring this entire ecosystem together as a single technology provider, we can empower millions of people across Africa by delivering innovative digital solutions that have a far-reaching impact and unlock the true potential of inclusive growth.

Nigerian government is keen on developing localised content among solution providers. How can Mastercard support government’s initiative?

When we talk about digitising economies or localised solutions to drive financial inclusion, we recognise that innovative ideas are needed – from governments, policy makers, corporates, businesses, as well as residents and citizens. Companies or governments cannot achieve this transformation journey on their own. Partnerships are critical and policymaking even more so. The role of governments and public-private partnerships is critical to bring to life the vision of an inclusive digital economy.

Mastercard is partnering with governments across the world to meet digitisation objectives, and to help them implement digitisation programmes through a global network of specialised partners. We have developed a range of programmes across a number of industries, including healthcare, education, agriculture, financial inclusion and humanitarian response. We achieve this by understanding the expressed and unexpressed needs of governments, and consequently engage with them to develop their digital payments economy blueprint through our proprietary advisory methodology, Mastercard’s Payments Ecosystem Design and Development (PEDD).

Fintech players still face the challenge of low patronage because most organisations still largely believe in foreign software and hardware. How can Mastercard help in driving local patronage?

At Mastercard, Africa is a significant region for us, and we are committed to supporting Fintechs and local companies to advance the digital transformation of the continent. We have invested in a number of African companies, including Jumia, a leading e-commerce platform and Oltio, a mobile payments technology company. We are also a limited partner in ApisPartners, a fund which invests in fintechs across Africa. Globally, we launched Mastercard Accelerate, an initiative that simplifies the way Mastercard works with fintechs, giving them access to everything they need to grow quickly. Offering a simple, single entry-point to our company’s wide portfolio of specialized programs, Mastercard Accelerate gives start-ups and emerging brands support and assistance for every stage of their growth and transformation, from market entry to global expansion.

One of our key programmes in Nigeria is Mastercard Engage – an initiative launched last year in Lagos and Nairobi. The programme connects financial institutions, merchants and IoT manufacturers with technology partners who can help them deliver unique and tailored payment solutions. Mastercard also continuously selects dynamic entrepreneurs to join its award-winning startup engagement program Start Path, with the most recent African fintech to join being Hello Tractor, which allows farmers in Nigeria and Kenya to access affordable tractor services, plant on time and increase yields.

What in your view are the likely factors that will attract more foreign investments into the Nigerian tech business space, and what must governments do to address it?

No one expects government to work alone to solve all of the economic problems that exist today. The role of private sector to positively impact socioeconomic development in Nigeria is an important one. When partnerships with the private sector are adopted on the basis of good business, not charity, the true value of public private partnerships come to bear for all parties, and the platform for trade are enhanced.

Partnerships and partner-centric solutions have power: effective collaborations with governments, the development community and industry players are key to driving electronic payments in Africa. Business cannot succeed in a failing world, there are too many problems to solve purely by putting philanthropic and government dollars to work, or by operating in isolation. By building partnerships and alliances that combine resources, we can think around corners, eliminate obstacles and make a seismic change.

Given the crucial role that Fintechs play in driving financial inclusion, what is Mastercard doing to support Fintech growth in Nigeria?

Globally, we launched Mastercard Accelerate, an initiative that simplifies the way Mastercard works with fintechs, giving them access to everything they need to grow quickly. Offering a simple, single entry-point to our company’s wide portfolio of specialised programs, Mastercard Accelerate gives start-ups and emerging brands support and assistance for every stage of their growth and transformation, from market entry to global expansion.

Accelerate comprises a range of award-winning programmes that have helped participants all over the world, including Nigeria, by offering access and benefits from Mastercard’s ecosystem, customers and innovations. One of our key programmes in Nigeria is Mastercard Engage – an initiative launched last year in Lagos and Nairobi that connects Fintechs to thousands of Mastercard technology partners, making it quick and easier for them to work together. Mastercard continuously selects dynamic entrepreneurs to join its award-winning startup engagement programme Start Path, with the most recent African Fintech to join being Hello Tractor, which allows farmers to access affordable tractor services, plant on time and increase yields.