RK: Good to have you gentlemen on the show. Thank you very much for agreeing to do this, this is one of the complex subjects that we mere mortals don’t understand. How are you and tell us about your companies.
NB: It’s one of those days. Mondays are usually tight. Trying to get the week in order. The company is called Savannah. Most people know it as Crypto Savannah. We call ourselves a digital transmission company. What we do, we leverage emerging technologies. In simple terms, we do tech.
SA: Thanks Robert, my Company is Eversend. We provide financial services across the board mostly to Africans in Africa and Africans in the diaspora.
RK: Let me ask you guys the question that I always ask every single person. For both of you, were you born with money and a computer in your hands?
SA: No. I would say it is the impatience. My journey in financial services begins with frustration sending money back home in Uganda, when I worked in Nairobi in 2011-2012. The usual stuff, it was super expensive and slow. But the most annoying thing is that my grandmother had to get on bus from Ibanda to carry the Usd200 to a distance of over one hour to have it changed to UGX. She needed an ID which she didn’t have and it was really frustrating for her. I thought we had to do something about that. That is how we ended up entering this space.
RK: Noah, were you born “cryptically”? What’s your journey?
NB: I loved technology right from a very young age. Every toy I got, I broke it to get the mortar and see what I could do with it. That grew into a passion for technology to telecom and cyber security where I have spent a lot of time. It’s being in hose cyber trenches earlier that got me into crypto. I heard about bitcoin in about 2011 or so. I have been curious and enthusiastic about it since. And here we are today, we started a crypto exchange in 2016. The oldest in Uganda to allow access to this thing that everyone is taking about because at the time, you couldn’t get access to bitcoin or nay crypto. Then we got into bloke chain and tried to build solutions t bloke chain so that we are not late to the party that the world is enjoying.
RK: I would like the two of you to spend a bit of time on what this is all about. In very simple English, what is Fintech? 2) what is the meaning of digital payments and digital money? What do they actually mean?
SA: I will keep it super simple. Fintech is basically a combination of two words;) Financial technology. It is how we look at computer programs, software and technology, and how they are used to support/ enable financial services. Anything that you do though technology to improve financial services will be referred to as Fintech.
RK: What is/are financial services that tech is trying to simplify.
SA: Let’s take it back to the traditional sense. Things like saving, lending, money transfer, wealth in terms of stock trading, sometimes they include insurance. Basically, how to deliver those services in an improved way using technology. It’s still an emerging industry, we haven’t scratched a lot of it. But I think the best way to look at it is how it has transformed. The best example is like the one I shared of sending money to my grandma. I had to go and take cash out, take it to a money transfer agent, open and count with them. Then I have to call my grandma who has to take a bus and pick up the money. With financial technology like what we built with Eversend, is that I can sit here in France or wherever I am in the world, create an account with Eversend, and then do it digitally on my couch in my house.
RK: Welcome on board, Allan. Can you describe your business?
AR: In brief Robert, my business is called Xente, it is a digital business account. It is like your bank account but 100% digital and about 100 times better.
RK: So you are a bank?
AR: No, not that.
RK: What would you say it is? Or how would you put it as an idiot’s guide to understanding Fintech?
AR: Fintech is financial services that you and I know today; payments, credit, insurance, investment but provided not in a brick and mortar location but on digital or technology platform.
RK: Does it matter in which part of the world you are?
AR: No, it doesn’t matter. I’d say that if you use mobile money, you use fintech.
RK: Let me ask Noah here, what are digital currencies/money?
NB: It depends on who is defining it. It can be something like mobile money. It can be what you have on your ATM/visa card. From my point of view, digital money is digital representation of money. It is a ledger/ a record of how much money you have in a bank. For example, when you get a text from mobile money telling you your balance, the phone does not have it, that money is seated somewhere quietly in a bank. We just move around with digital messages.
RK: What do you comment on rules that govern financial services in the fintech world.
NB: The rules were not there initially. But now they are. Before rules were designed for the banking system. In fintech, regulation always leads regulation. We develop these awesome apps. These platforms with such convenience to customers. And then the regulator comes alter. A case in point is mobile money which started almost two decades ago and then you have the national payments act which was passed this year. That shows you that the rules are always written after the facts. Then they can be progressive i.e. they take into account the new technology or they can return what the bible calls putting new wine in old wine skins. Trying to put new technology into the rules governing the banks. Usually that is regressive. So different countries try to deal with it differently.
RK: Allan, what is the current dynamic world between the old world of brick and mortar banks and you guys that are disrupting the way things used to be. How is that dynamic right now especially in Uganda?
AR: The way I see it, Robert, if you remember the cassette tape, when we were in high school we used to share tapes with our crushes with “dedications” on them. That is where we are today. A lot of businesses still relies on cash and cheques and sign here, sign there basically in cassette. What we are doing right now is building the I-pod. What Steve jobs used to call 1000 songs in your pocket. that’s the difference I would say. The finance doesn’t need to be that hard. You don’t need to wake in the morning and go to the bank.
RK: I need to go into the specifics of what you guys are doing. Let me start with you Stone, what does Eversend do and how has it contributed to bettering the lives of ordinary people?
SA: We are building an all-in-one payment platform. It’s been such a long painful journey. Unusually what happens with most of these start-ups is that you pick this one problem and solve it and get these many customers. We have a thesis around provision of financial services. And that thesis is that the more financial services we can provide to our customers, the more valuable our customers become to us and us to them. Instead of solving that initial problem which I began with of solving cross boarder money transfers. We are saying there is also another problem of how do you help people make payments online. How can they access things like stock trading? How do you help them access credit? How do you help businesses? We are doing a number of things with the platform but most importantly, it is online based. We do cross boarder money transfers, virtual cards, stock trading. Next year, we will get into asset backed lending but still with a focus on Africa.
So if someone would like to send money or the business would like to make collections or currency exchange, that’s where we stand. You can do this using your mobile phone or laptop without leaving your home at the best possible rates.
RK: Allan, what does Xente do and how does it improve people’s lives?
AR: Xente is based on reimagining business accounts. Today, a typical business will do work like this; they will have money in the bank account. If you need to pay someone, you will withdraw some and pay or write them a cheque. Thereafter, you will ask for a requisition voucher them. Then they will go to Nasser Road to forge receipts causing you and your auditors a lot of headache.
What we are saying is, let’s have an account where instead of using physical instruments (cash and cheques) to pay, use digital instruments (visa cards and mobile money) and then on top of that automate financial operations such that as people are spending, you are approving and reconciling. We are going to add synching your account on the platform. By doing that, we save companies what we call busy, time and also a lot of money. That’s what we do.
RK: Noah, how does the crypto world work. Tell us slowly so we can understand it.
NB: I will start from the definition of money. As we have been taught in school; money is a medium of exchange and a store of value. So money is a means by which we exchange value. For us to be able to do that, both parties involved in transacting need to mutually agree on the value. Money becomes the representation of that value. Overtime, it used to shells, then it became limestone, then it became precious metals until we landed on gold. Why gold, I don’t know because gold is not the rarest metal. As humanity we just landed on gold and decided this will be more precious to us. It could be even biblical because God chose it. But that, we agreed that it is precious to us and for a long time, gold was a standard by which we determined value. We had currency which represented the value of gold somewhere which we called the gold standard.
Until 1971 the world’s most popular currency, the USD, decided that it was no longer going to be weighed against gold. The value of money just increased exponentially. It was not backed by anything but debt. As we go along, trade increased, internet came into the picture. Then it changed things. It increased the speed of trade. Where you used to take months to complete a trade, here it happens in seconds. But imagine money to move from one physical bank to another physical bank.
So money was left behind in the digital transformation/ revolution. We have tried a number of methods like visa to represent. We have the likes of SWIFT which is only a messaging service. It tells the bank that this transfer has happened, you will get the money later. They trust that message because it is from a centralised party.
When you fast forward to where we are today, a crypto currency like traditional money, is supposed to achieve the same thing as normal money do. Meaning it has to be trusted by both parties to be of a given value and so instead of trusting the bank or the app that has those messages because the money is not backed by anything, here the mechanism of trust is that we can all see its inner workings. We can all see the ledger. We all have visibility.
Let me take you back a bit. Remember those savings accounts where you used to walk away with your ledger in a small book of your deposits? Either from Post Bank or Housing Finance Bank. You could not walk away with the ledger of the bank. So keep track of your accounts, they give you a copy that you would walk away with. But you had to keep going to the bank to make sure that the copy you had was the same as the one that the bank had. You had to walk there physically. In a nutshell, crypto currencies do the same thing without you having to walk there.
Here, you have the entire ledger on your computer. When you make a payment, anyone can see it.
RK: Why is it called Crypto?
NB: It’s called crypto because you can’t have that level of transparency without security. It deploys cryptography which is the science of complex mathematics or the science of hiding. It’s just like your passwords on email. You can’t just use plain text. You have to hide it in numbers, letters, symbols.
RK: So that people cannot come in and distort things
NB: Very good. So you employ cryptography which is the science of complex mathematics to be able to hide what would otherwise be plainly seen.
RK: Is that also the intellectual technology by which Stone’s Eversend and Allan’s Xente are protected or those are different transactions?
NB: Yes, they have to deploy cryptography at some level to be able to make sure that some level of transactions are secure and user data is safe. Cryptography is an advanced study and holds the internet together as we speak.
RK: So, the three of you, help us to understand, how much innovation in the fintech world is taking place in Uganda and what are the ground breaking things that people are doing in that place?
NB: I would like to quote Iyinoluwa Aboyeji, co-founder Andela said that the most underestimated innovations in Africa are in Uganda.
RK: Stone, you go first.
SA: Since Allan is on ground, I assume he knows better. But from my end, Uganda as a country we do have a massive advantage. What we need to do push harder and dream bigger as well. The advantage we have is that Uganda was one of the countries to build mobile money systems and that has really helped out with innovations. Kenya on the other hand is also doing very well, but they have a slight disadvantage. Their regulators are not as open as ours. We are getting into a space with the new national payments system regulations where Uganda is going to have a very enabling environment. We are going to be able to build all these super interesting things. The fact that we’ve grown up with mobile money is very advantageous and also our banking system is not also that bad. So just mixing up all these things allows to get solutions. We use the platforms thereafter we can build solutions to help solve some of the big problems that some of our customers have. That is a really big advantage that we have with the regulation in progress. We are going to see very serious projects in Uganda. But Uganda is a very small market. I usually tell my friends in the space to try and expand as fast as possible. It is easy to be very big in small place and miss out on the bigger picture.
If you are building for Uganda as well, you can imagine for the banks that are in the space. If you are building for a market on Uganda, that too is still a large market and that’s fine but if you are building for specific sections then you might have to think broader.
RK: Allan, what are those ground breaking things that guys are doing out there?
AR: Fintech is broad. Mobile money is fintech. We know how it has transformed our lives. From lining up outside National Water to now paying at the tips of our fingers. Banks too are doing interesting things as well. It will be very interesting to see how they can transform as they have legacy to deal with. In the fintech world other than us, we have an association of fintech companies called Fitspa. In there we have companies doing everything from payments to credit, lending and investing. I would also like to point out a few fellows who have doing amazing this in this space. One of them is Ham Sserunjogi, he runs a company called Chipper cash. It is one of the most valued fintech companies in the world. Also Luke Kyoheirwe from Beyonic.
Luke managed to do an exit. This means that he returned his investor’s money. And this is always a good thing.
RK: What solution did Luke come up with?
AR: Luke has something that is similar to Xente. He has an account that runs mobile money pay outs in several countries. It is always a good thing Robert, when companies scale out and become big, and return money to investors because it attracts money to us.
RK: Noah, what do you know that is happening here that you think the world needs to hear about?
NB: I will mainly talk about crypto. Uganda is on the map when it comes to crypto. As Stone mentioned, we have interesting sets of condition that have made us a favourable regulatory space. In Africa, I don’t know of any other country that recognises this crypto business except Uganda. By recognise, I don’t mean it’s a recognised spaced yet, but our financial intelligence authority changed the regulations to incorporate what we call virtual assets service providers which are crypto companies. By virtue of that, if you are registered here, you report to FIA as the overseeing body but that is recognition that the rest of the continent doesn’t have. In Kenya, crypto businesses cannot get business accounts. In Nigeria, its more or less banned.
Uganda is on the map given the speed at which our regulators have responded to this situation. So crypto is getting appreciated. All major payment platforms like MasterCard visa are now accepting crypto currencies. What we are doing is to give this access to Ugandans and Africans. It is a 2 trillion-dollar market. If we just sit back and cry wolf, we will wake up one day and it will be like Facebook and twitter asking where is content, where are we playing apart. We are creating a platform that the next 1 billion internet users will use.
RK: One of the reason I run this session on this platform is partly to highlight to people out there that there are opportunities you can take advantage of to help you leapfrog. What opportunities do you see and what would you advise a lot of young people out there who are building careers in finance, technology, cyber technology. Where are the opportunities that young people should position themselves?
NB: There is a report produced by the World Economic Forum called the Future of Jobs, in that report, it highlights about 53 million jobs that are going to be lost in the next 3-5 years and also 93 million jobs that are going to be created over the same period of time. With every shift in technology, there is opportunity created. In the set that is increasing, the 93 million, that is where you will find programming and all those things that Stone and Allan are good. But one of the things is building the infrastructure of the future of finance which is block chain technologies. As of 2019, a block chain developer is number 2 to an AI programmer as one of the highly paid people in the tech space because of the uniqueness of how block chain brings in finance. For Africa the quicker we understand these opportunities, the better we organise our young people. Because teaching them to be accountants is teaching them to be part of a reality that is not anymore. I am not against accountants but Quick books renders 75% of the work they do redundant. It is up to them to rescue. Machines are taking over so what is going to happen to the people. This is not the first time. We used to ride on horse carriage and then one-day automobile came and replaced the horse carriage. People were resistant because of their jobs around horses; fixing the carriage, changing horse shoes, cleaning horse manure from the streets. All those were jobs. When the automobile came which didn’t need manure, less maintenance, jobs were lost yet the automobile brought even more jobs. The same thing is happening now. Crypto is still in its early stages but its creating a lot of employment. Right now, any unique solutions you want to solve in the fintech space, and because you are not dealing with infrastructure of banks and middle men, you can create what we call smart contracts which is going to make execution of the commands.
RK: Isn’t that going to make lawyers irrelevant?
NB: It is. We are in a space now where you don’t need a bank. That’s the crypto side. You will deposit your money and you tell your code how you want your money invested. It gives you higher yields because it doesn’t have to pay salaries of bankers and advisors. You find that your money can grow faster, better and in a more secure way because it is not managed by people who get tired o have to be paid salaries.
You have an opportunity that was only reserved for wall street. That is what we are calling the democratisation of opportunity in finance specifically which is being ushered by these technologies. That is just one of them. there is more.
RK: You see the purpose of my conversation with you people is to catalyse; to get conversations to head in the right direction where we will be helped.
Stone, what opportunity do you see?
SA: I will reiterate what Noah said around jobs. I think this is the biggest opportunity. The best way for young Ugandans right now is to get involved into building these things because either there is massive demand. I used to sit at a place called Station F, google and Facebook alone are looking for about 180 engineers in machine learning and artificial intelligence. These jobs start from 70,000 euros a year. This is very good some of these things can even be self-taught. This is something I am very passionate about because it changes the lives of our people. Someone from the deepest village in Uganda, if they can get access to the internet can even teach themselves. These jobs don’t even need a degree. The need for skill is very high. In the crypto currency space, I saw that Noah entered the rabbit hole of smart contracts and all that stuff, but building smart contracts attracts about Usd 150,000 to 200,000 as entry salary for guys who can write solidity. For all the writers of solidity, none of them has been doing it for more than 6 years. there are no seniors. So, I would like to encourage people to take this on.
RK: Let me ask you guys, how many parents know about this stuff?
Stone, what is solidity?
SA: It is a software language that we use to write these smart contracts that Noah was talking about. while all this might be hard for the parents to pick up, the kids will understand it much faster than even myself and Noah. I think the information is out but we don’t have a big-enough microphone. This affects all of us building in the space because there is a scarcity of these engineers and you are fighting with some of the biggest players in the world to get these guys. The more engineers we can get trained, the better and the better the opportunity. We can literally change lives of very many people. If only we could get about 300 engineers trained every day.
These are things we need to be telling people because the opportunity is available. We can even leapfrog these advanced economies because all these engineers are on demand. Most of this stuff can be self-taught.
RK: Michael Niyitegeka, are you able to speak? What opportunities do we have at hand?
MN: I agree with Stone that because our levels of tech and internet integration, some of these ideas do not take off as much as they should because of the strength of the market. This year, we saw one of the guys who has really has been trying to build a core banking system for microfinances/ saccos raise a million dollars in this country called Ensibuuko. Gerald Otim has been at it for over 6 years. He has integrated mobile money and all the things Stone was talking about but as soon as he was able to get the investment, the next thing was that, you don’t have talent to take you to the next 10 million dollars. CK called me and said the stuff you are doing at Refactory; can you get me engineers. But we have only junior developers. For me to be able to move to the senior engineer category needs significant investment as well.
RK: What investment do we need to get to these level?
MN: There are a couple of things, the things that Stone was talking about, the crypto language. If you are to get somebody to build and facilitate that curriculum for you, probably, you won’t find one. We need to find those people who are willing to make the investment of time but also resources. We have been talking to an entity out of the US and they are working with us to set up a block chain training program. Because they are looking for engineers, they are willing to make the investment here. So the opportunities are there.
The other thing I have also seen is that the mainstream education system has told people that if you don’t have math, physics, chemistry, you cannot do anything science related. Now because software engineering is science related, people shy away from that. At Refactory, we have seen about 60% of the people who come to Refactory do not have any engineering or background and they are now working as software engineers on the market after only nine months. The opportunity is there. Our plan is to take it to the wider countryside. But the thing we are talking about Robert, access to devices is still a big challenge.
Also, majority of the people in the decision making spaces see the internet as a luxury, they have not seen it as a market place.
RK: What would be that one last message you would give?
NB: Imagine you are Jeff Bezos in 1995 and you have this great idea of buying everything online. That’s where we are in Crypto. Anyone who enters at this stage and they have to stay in power, will definitely be millionaires if not billionaires in the next 10 years. It’s about staying in power and building on these platforms because where the internet was in the 90s is where block chain is today. And anyone who built proper delivering systems in the 90s are the billionaires we have today. We just have to do that.
SA: What I have found recently unfortunately a bit late in my life is that education outside school is the most important thing like this space we are in right now. After that ambition and audacity and we can pretty much do anything.
AR: There is support coming in but we need to be strategic and deliberate about it and we will get to wherever we want to go.
RK: Share the information so you can lift up other people. Thank you all for joining us.