An interesting conversation is going on between two seasoned African bloggers - Erik Hersman (via Thought Leader) and David Oluniyi Ajao. The topic couldn’t have been more relevant: e-commerce and online payment platforms in Africa.
I’m attracted to Erik’s statement that “the solution for Africa needs to be bank and carrier agnostic” -this David opines, is feasible “if African countries had a tight economic union”.
There are similar Pan-African driven discussions as Erik-David’s debate on the blogosphere and mainstream media, but I feel given the socio-economic and political state of the continent - beyond their intellectual appeal, many of those conversations are dead on arrival: There are just too many limiting factors that make the realization of the vast majority of Pan-African concepts too diffucult - if not impossible. Don’t get me wrong, Pan-Africanism is a great and sweet concept - who wouldn’t want to have access to the second-largest and second most-populous continent in the world?
Even in Nigeria - a country I’m most familiar with, and it’s immediate extension, the West African subregion - the creation of an online payment system that is “bank and carrier agnostic” is still difficult but carries a better chance of happening and succeeding.
I think for such a system to emerge, the creators must look beyond the formal financial institutions and economy, after all more than a third of the workforce or productive age group in this region are still stuck in the informal economy. According to the BBC, “the informal economy really is the backbone of the Nigerian economy. It is the backbone because most services that Nigerians require to keep things running come from the informal sector.”
One “common denominator” characteristic of most Nigerians - including those in the informal economy - that I’ve discovered is that they all purchase airtime minutes. Could those minutes be used some how as legal tender for online transactions and e-commerce?
Interesting…I wonder if this isn’t as difficult to implement and take to market as the more traditional and readily available methods. However, this is frankly out of the box thinking because it totally excludes the need of users to own bank accounts. Also, transactions can happen right off the cell phones.
Eager to see what others have to say.
September 27, 2007 at 11:34 pm
Yes it can!
Take a look at this scenario:
Someone here in Ghana needs to pay me the local equivalent of $8.50. I am in Accra, and he is in a small town somewhere. Now, there is no bank in that town and travelling to Accra or to the nearest bank just to pay $8.50 is not economical at all.
What do I do? I asked him to load some airtime and send me enough to cover the money he was paying which he did. We have done this twice now.
Such a system is ideal for micro-payment if only the payee is willing to accept airtime as money, and if the payee can later convert such airtime to cash!
September 28, 2007 at 1:39 am
So what happens when the idea becomes successful? Lets take Davids example, the guy ought to be willing to accept airtime in his tiny village too right (currency). What happens when the idea becomes successful and there are more unused minutes than the average market demand at every point in time.
Looks like it may work on a small scale, but the successf of such a program is also a death sentence to it. Interesting.
September 28, 2007 at 8:42 am
The way I see this working will involve having recharge cards in several “denominations” to handle the trading and price decimals (e.g N100.70k). How will this happen when there are more than one service providers each with its own different airtime rates?
The question I think is being overlooked is what is the demographics of those needing e-commerce, its definitely not for everyone? The use of airtime minutes has a grassroots appeal…while this may be a plus in business, I doubt if it is relevant for e-commerce. After all internet penetration is low and computer usage is still somehow “elitist”. Well, maybe this is where cellphones (African PCs) come in…even with this there is need to build a lot of infrastructure and to make it work.
There is just too many “whats” and “ifs”…where are the IT gurus, anyone in the house?
September 28, 2007 at 10:18 am
See GCard in the Philippines, similar concept using all the ingredients - cellphones, airtime “aircash” enabled mobile transaction.
GCash enables any Globe or TM subscriber to send and receive money and make payments just through text/ SMS.
They are even using it to pay school tuition and utility bills.
GCash is most commonly used by Globe and TM subscribers for:
Sending and receiving money locally or internationally since GCash is a much faster, cheaper, and more secure alternative to traditional money transfer services- at the Speed of Text, No Membership, Maintenance, Remittance, or Bank Fees!
September 28, 2007 at 12:02 pm
Guys, actually I have figured out a solution and it’s sooo simpe just like many other things are about trading.
Let entrepreneurs start trading airtime like we trade currency. Like I set up a shop and provide cash in exchange for airtime. If you have US$ 10 worth of airtime you transfer it to me and I give you say US$ 7. I then make money by selling the airtime at US$ 10 or slightly reduced price.
September 29, 2007 at 4:53 am
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