Technology will continue to offer great opportunities for millions of unbanked people including groups of women, Muslims and governments in Africa, Middle East and South Asia (MEASA) and new companies who design financial services in these space.
These are the findings from a report by the Economist Intelligence Unit that was sponsored by the Dubai International Finance Centre which highlights that:
- Findings Gaps in financial services present an opportunity for financial companies—both traditional and non- traditional players.
- Overcoming a strong preference for cash in the MEASA region will be imperative to move towards a cashless economy
- Blockchain has the potential to change the financial architecture in MEASA, particularly for banking.
- New business models are being developed to reach the “missing middle” of retail investors and medium-sized businesses.
- In Islamic finance, the approach is shifting from “sharia-compliant” to “sharia-based”
- Governments and regulators have a crucial mandate to drive financial innovation.
It notes that there is a prevalence to use cash in the three continents (to receive wages, pay school fees and for utilities etc.) and that current regulations which require the use of ID cards are a barrier for women who need ID cards and other documents to receive these services.
The 3 billion people on the three continents will be a source of demand and supply for better financial services, and governments have a role, regulators should balance prudence with innovation, and financial service providers should collaborate for everyone to benefit.
There are opportunities for wealth and private equity funds and individuals (through crowd-funding) to support the growth of new players to take on financial sectors such as insurance, whose levels of penetration can be increased through the mobile phone as has been seen for banking and Islamic financing, by promoting sharia-based products, more than ‘sharia-compliant’ ones. Technology has the ability to address financial exclusion and scale services to millions while reducing costs and creating new revenue models; this can be through smart data to improve credit scoring models and the use of bitcoin to replace money transfers (with banks and currency conversions to international dollars).
The Economist argues that women are now the most powerful engine of global growth!
- The future of the world economy lies increasingly in female hands
- In rich countries, girls now do better at school than boys, and well over half of all university degrees are now being awarded to women.
- Almost everywhere, more women are employed and the percentage of men with jobs has fallen. In the emerging East Asian economies, for every 100 men in the labour force there are now 83 women, higher even than the average in OECD countries.
- Since 1970 women have filled two new jobs for every one taken by a man.
- Women make perhaps 80% of consumers’ buying decisions—from health care and homes to furniture and food.
- In years to come better-educated women will take more of the top jobs
- Researchers have also concluded that women make better investors than men
- In poor countries too, the under-utilisation of women stunts economic growth.
- There is strong evidence that educating girls boosts prosperity.
- Countries with high female labour participation rates, such as Sweden, tend to have higher fertility rates than Germany, Italy and Japan, where fewer women work.
1. Interest Rates: Much has been written about interest rates this week, and it is all very confusing. In simple terms, interest rates have been rising due to increased government borrowing to bridge the budget deficit. And the final word is that 1) if treasury rates continue to rise, then bank rates (your mortgage, personal loans, auto loans, credit cards) will all rise. (2) The Governor should resign to restore confidence in the Central Bank, and the Government in the market and the banking sector.
2. New Board at KWS: Julius Kipngetich, who gave a great speech last month on investment, has been named the new head of the Kenya Wildlife Services, along with a new board of trustees. It’s an inspired choice, for once, by Minister Tuju, however, I hope he followed all proper procedures. I’d hate to see the new team at KWS halted from taking up their posts by a judge when the previous MD/Board file a lawsuit.
3. The Economist: I finally got my copy of the end-year Economist (18 December). The article about Kenya is nothing new, just a summary of what has appeared in the daily papers all year – the fight (or lack of) against new corruption, dishonest greedy politicians, the difficult lives of wananchi etc.
The Economist actually reports more rumors than a Nairobi street tabloid e.g. (i) an MP allegedly threatened patrons of a golf club with a gun was banned from the club (ii) a stash of cocaine has been found in the boot of an assistant minister’s car (iii) other colleagues (parliamentarians?) are said to run narcotics rings in Mombasa (iv) serving ministers involved in corruption scandals have gone unpunished (v) many city dwellers are poorer thanks to the agriculture minister’s efforts to help fellow farmers by using state funds to bid up the wholesale price of maize.
What offended me about The Economist is a 3-page piece they did on the power and behaviour of African first ladies (presidential wives). I hesitate to call it racist but it’s definitely in poor taste.