Digitalising the informal financial sector in Tanzania

Thursday June 24 2021
Digitalising pic

Sele Mduda is a co-founder of the Norway-based firm and shares their vision for Africa in this interview.

QUESTION:  First and foremost, briefly outline Wakandi historical background and the brains behind its digital vision and strategic mission.
ANSWER. The idea behind Wakandi came from one of the company’s co-founders, Seleman Mduda, a Tanzanian living in Norway. His struggle with sending money home to Tanzania laid the foundation for many of the solutions we have developed over the last two and a half years.
During this time, we moved into other areas than international remittance, but the idea of integrating with services that deal with international remittance is still a strong and valid one.
Also succinctly highlight the role being played by the company in driving financial inclusion in Africa in the context of why Tanzanians should use regulated financial services to save, borrow, transact and mitigate money risks.
For us, the success of mobile money in East Africa has already established a strong foundation for driving financial inclusion. There are also good policies and regulations in place in Tanzania. We build on this established infrastructure and ideas and make products that drive innovation and increase financial inclusion for our users.

Financial inclusion has been one of Tanzania’s success stories of the past decade yet including the unbanked into the formal money systems remains one of its biggest growth and development challenges. Why is this so and who should be doing what to elevate the country’s financial inclusion journey to the next level?
By offering products and services that build on the current success stories, we will push this further. The work we do with digitising the informal Finance Groups such as SACCOS is a key driver to financial inclusion.

How ambitious is the national financial inclusion agenda and where do companies like Wakandi fit in when it comes to helping the country realise its digital dreams and growth ambitions through technology transfer?
We have met with many banks, Mobile Network Operators and the government in various settings. My impression is that “everyone” is looking for ways to drive the uptake of financial services. Our mission is to contribute to digitising the informal economy, which does not necessarily mean adding more bank accounts but instead offering products and services that make sense for the users. One example is how a user with a loan with a SACCO or a microfinance company in an uncomplicated, fast and simple way can pay back on this loan using mobile money.

Are investments like the capital injection Wakandi has earmarked for Tanzania relevant and important in fostering bilateral relations between countries?
Innovation and development costs money. For us, we are partly funded by the Norwegian government through the national development bank Innovation Norway. This makes it easier for us to invest in the local market and ensure that our offering can add as much value as possible for the users of our system. At the same time, investments create jobs in Tanzania, and for many companies, it’s hard to survive the first period when revenue is still low but growing. In
that aspect, capital injection, like what Wakandi does, makes it possible to work on establishing the company over a longer period compared to a bootstrapped company that needs revenue from day one.

What should Tanzanians expect from the company when it formally sets up shop here and how is the national economy going to benefit from the investment?
Wakandi Tanzania LTD is already an established company in Tanzania that currently is completing the work in acquiring the needed licenses to operate locally. When all the practicalities and formalities are in order, we plan to be a strong player in the local market both for younger startups to help succeed in the financial space and for more established companies that need what we can bring to the table in terms of innovation. But at the end of the day, we are only as good as we can make our products for the end-users that will use what we make.
Secondly, we believe that we can be a driver for more transparency, which, in turn, will bring a lot of positivity to both the members of the informal economy and government.
Comment on Wakandi’s credentials in helping to drive digital transformation in Tanzania and the impact its operations will have on the local payments industry, digital lending, e-commerce and readily availability of both public and social services.
We plan to be a serious player in the local payment industry with a big local presence. Our innovative platform will be hosted within Tanzania, built on modern technology, and will drive financial inclusion on multiple levels.

How will Wakandi support the growth of Africa Free Continental Trade Area succeed and make it beneficial to Tanzanians?
Sub-Saharan Africa has long been one of the financial inclusion sector’s top success stories.
Despite strong gains in inclusion across the region, the overall impact of that newfound financial access needs newer technology that can interact and talk together such as Open API for National Identifications to speed up the payment process across the region and allow government policies to adjust and enable the Africa Free Continental Trade Area (AFCTA) to take place across the region. Wakandi will allow affordable connectivity for startups into the
Wakandi Platform to help the financial inclusion across the region

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Why should SACCOs in Tanzania and other informal financial groups quickly go digital and how is Wakandi prepared to serve this market segment and enable the social saving groups to better manage their finances and operate more efficiently?
Our offering in the market for the SACCOs is called CAMS. That is short for Credit Association Management System. The most important aspect of CAMS is that it is for both the group administrators, the backoffice and the members of the SACCOs. We make it more convenient for the members by integrating with mobile money that they already use; secondly, by making the SACCO more transparent, it will be easier for the members and other stakeholders to gain insight. We are working on automatic reporting and many other features that allow them to apply automation and digitise the experience the group is offering to its members. This in terms leads to the SACCOs easier being compliant with the current regulations they are under.

We gather one of Wakandi’s founders is a Tanzanian. Is that not an added advantage and qualification for making the country the hub of your operations in Africa?
One of the most challenging things is building a service for a market that you don’t know.
Having a Tanzanian as part of the founding members has been a pivotal contribution to our success. We are looking at multiple opportunities to set up the hub for Africa; Tanzania is of course, a strong contender in this.

Last but not least, do you buy the idea that in this part of the world, financial inclusion is not about including the unbanked in formal money systems but striving to serve the un-bankable?
 Yes, I buy that idea. The financial inclusion is already happening big time with mobile money as the driving factor, not necessarily by banking the unbanked.