The Economist published two pieces last week about the African trend in SMS banking and general tech entrepreneurialism/”startup fever” in Keyna (read here and here). Again, the idea of financial transactions – from major money transfers to more minor, quotidien payments – through basic SMS is kind of amazing. Moreover, the contrast of cities and countries that, until fairly recently, did not even have solid or reliable connections to the internet, but are now the “next frontiers” in technological innovation and entrepreneurship, is quite impressive.
The articles bring up some important questions, namely:
The need for regulation
Many of the poor countries that would most benefit from mobile money seem intent on keeping its suppliers out—mainly by insisting they should be regulated like banks.
Yes, this is cumbersome and, yes, annoying for any company or organization trying to genuinely launch an honest and user-friendly payment system. But, yes, it is also necessary. Where would we be without regulation? The Great Recession, anyone? Hellooo. That said, governmental regulation can definitely go too far and become unnecessarily burdensome. The proper balance of what is protecting and hurting consumers, in the long run, is what should be targeted; this neither includes impenetrable government red tape nor a flurry of weak, insecure financial systems available to the often uneducated public.
Who are the users?
As one commenter noted:
Where do the inventors and innovators come from? Specifically, from which socio-economic class do they originate? How well-educated are they? If there were examples of technological innovations from the truly “poor”, it would be a real revolution. Or, instead, is the innovation mostly dominated by the already well-off?
The changes happening throughout Africa (and throughout the globe) covered in these articles are truly amazing as they would have not been possible, not even imaginable, 20 years ago. But this “bottom of the pyramid” issue is something that is not as smooth to tackle. There’s not such an optimistic outlook either as, looking at our own, “developed” economies, we see the same problems – wealth begetting wealth and the poor becoming poorer. We can’t trust that these technological and economic advancements will trickle down, as many development advocates want to think. Personally, I believe this begins with ensuring equal access to equal education for all socioeconomic levels of a population. But that’s another debate for another post…
The BoP issue is something that needs to be tackled head on. How best, exactly, is still unknown. But, who knows, perhaps 10 years from now we will be looking back at the next “leap frog”-enabling advancement in both developed and developing economies and contrasting how drastically different things were today.