How We’re Cracking the Code to Financial Inclusion in Africa

Ritika Puri
Aug 30, 2018 · 6 min read

Traditional financial institutions have long-been unable to reach the unbanked throughout Africa. The World Bank estimates that of the 2 billion people without access to the modern financial system, more than 20% live in Sub-Saharan Africa. These populations operate in a way that’s different from the rest of the world with formal financial services.

They experience the following:

  • Transact exclusively in cash
  • Lack access to investment
  • Rely on personal networks for credit.

But there’s a subtle paradox. The demand for financial services in Africa, through mobile money solutions, is growing.

The power of this economy, in action

Multi-Billion Dollar Economic Opportunity

Because of this disconnect, there are major areas of economic opportunity that are going to waste.

For one, according to the World Bank, Africa leads the world in mobile adoption. In 2014, for instance, the Ethiopian government created an advice hotline connecting small farmers to agriculture experts. Within the first six months of the program, there were 3 million calls. Not to mention, Africa as a whole is undergoing major demographic shifts, including population booms among younger people and a continent-wide push towards economic diversification.

Currently, the biggest emerging players have been telecommunications companies. The reason is that these large entities already have inroads into Africa because of the plans that they offer to consumers.

Deploying mobile money products, telcos are collecting billions of dollars in transaction fees as middlemen, with interest rates as high as 10% and money-sending fees as high as 17%. The top five telcos in Africa have a collective market share of 60% of all customers. However, concentrated services move slowly in decentralized economies.

“Africa is the continent of the future,” write Rabah Arezki and Amandou Sy for a Brookings Institution report.

Atlas Agent Penda demonstrating the app

A Tough Jigsaw Puzzle

But getting to that future has been a perplexing journey. The biggest challenge that Africa must overcome is its constrained domestic revenue, according to Arezki and Sy. In other words, there isn’t enough available money to fund the continent’s economic aspirations, despite there being abundant intellectual capital and people-power to build it. People face challenges everywhere.. For example, in places like Senegal, rural banks require that people deposit large sums ($300+) in order to even open an account.

To build towards the future, Africa needs to tap into better financial services. That means creating pathways, through both cryptocurrency and existing financial infrastructure, for the continent’s unbanked population to gain access to critical services.

To date, no institution has been able to crack the code at scale. That’s because African banking systems, unlike the mainstream financial world, are decentralized. The connections that exist are built on individual people and communities rather than institutions.

The key to creating a lasting impact in a decentralized market?

Tap into it. That’s the approach that Access is taking.

Our Path to 30,000 Users: Metrics & Story

The Access platform will launch with 30,000 weekly users in Ghana and Senegal from local provider Atlas Money. We launched the vision in 2017 through Atlas Money. Across this user base, we began deploying microloans with nearly 100% payback rate. All users have passed Know Your Customer (KYC) regulations. This has set the stage and foundation for Access.

An agent visiting a client who runs a thriving printing business

Here’s how Access Network’s founding team arrived at this point:

  • Spending time in Ghana and Senegal with no pre-formed expectations of what to build. Instead, the focus of these trips was to understand the status quo of existing financial systems — what’s going well and what needs improvement. For example, we learned that people within communities self-organize and make democratic decisions around the needs of everyday life, including how money gets distributed and who gets voting power. But a woman who provides for her whole family on $150 a month by selling wares, who needs an upfront loan, only has the option of a 300% year rate for a $100 loan. People work together but have limited options for financial services.
  • Working with communities to learn about their money management needs, financial pain points, transaction habits, and money-making best practices. During the trips, the Access team learned how community leaders allocate funds to groups and subgroups. There is a heavy reliance on collaboration, voting, and prioritization of small business and infrastructure projects. All livelihoods in these groups and subgroups matter.
  • Learning how on-the-ground banking agents work with members of the community and distribute funds. Access Network works with 500 agents and super agents who are responsible for distributing funds on the ground — sometimes door to door. These individuals have close relationships with individuals within communities, helping them reach their financial goals. These agents and super agents provide mechanisms for enforcing trust, eliminating fraud, and ensuring accountability.
  • Figuring out to bring technology into existing, everyday economics. One of the biggest mistakes that companies make when entering Africa is choosing the wrong business and incentive models. Let’s say that your business offers cell phone plans. If you require a monthly subscription rather than a prepaid SIM, your business model will be limited. The reason is that people don’t have financial services (i.e. credit cards or consistent paychecks) to make payments.

Trust in Community

Connecting with local economies on their terms, Access Network leverages banking agents as ideal distribution partners. These individuals are digitally empowered and able to exchange both fiat currency and cryptocurrency. They have a high degree of trust with community members, manage shared capital, facilitate loans, and protect against fraud. Agents are distributors and administrators of Atlas, a local 3rd party partner with close ties as the flagship Access Network app.

Deployable Financial Infrastructure for Economic Development

Thanks to the token economy, mobile banking, early viral growth, and interest from investment partners all over the world, Access Network is rapidly building a model for financial infrastructure that is deployable anywhere in the world. The long-term goal, through cryptocurrency and fiat currency, is to build a platform for lending and financial services to support global economic development.

Ops in Africa, on the ground

Join Our Journey

We’re spearheading a financial revolution, and building decentralized financial infrastructure for emerging economies. Become a part of the movement:

Twitter: @ACX_Network

Contributors Statement
This work was a collaboration between the entire Access Network team, ranging from the CEO to CTO, COO, Chief of Staff, and other members of leadership.
Emily Burchill, Shannon Wu, Ritika Puri, and Karissa Domondon created this story.

The opinions expressed are those of the authors and are no guarantee of the future performance of any Access Network fund or service. This information is for educational purposes only and is not intended as investment advice.

This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.


Community Driven Financial Services Powered By Developers…

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