Minimising risks in Africa’s tech-driven financial inclusion

Africa has made huge strides over the past decades towards financial inclusion. The digitisation and simplification of money management has especially proved to be a sturdy vehicle in making headway in this regard.

Yet, more work needs to be done as only 34 percent of adults in Sub-Saharan Africa have a bank account and 350 million people are still unbanked. In Kenya, financial inclusion as of August 2020 stood at 82.9 percent, a vast improvement from 26.7 percent in a decade, while the commercial banking industry is the fourth largest in Sub-Saharan Africa. But there’s still room for growth.

Technology has been at the heart of financial inclusion in Africa and today we are seeing how trends are evolving much faster than imagined. The pandemic has accelerated the pace, and we have seen digital transformation initiatives within the sector compressed from years to months.

With the evolution of technology, banks are pivoting their platforms towards open ecosystems and the secure sharing of data with third-party applications from fintechs and online financial service vendors to increase access to banking services to the masses. The 2021 IBM CEO Study – that drew on input from 3,000 CEOs across 26 industries and nearly 50 countries – has found that such ‘platformification’ of banks is here to stay.

Home to over 150 fintech companies, Kenya has one of the biggest and most developed fintech ecosystems on the African continent, owing to the proliferation of mobile phones and the rise of mobile money alongside technologies such as hybrid cloud and AI to name a few.

In highly regulated industries like the financial services sector, increasing financial inclusion for the unbanked is a juggling act between security and compliance together with innovation, and hybrid cloud is the answer to the conundrum.

Hybrid cloud can help banks and fintechs cope with the hurdles of compliance, security, and innovation while meeting customer expectations and venturing into new services. As banks become platform providers, hybrid cloud adoption lowers the total cost of technology ownership and improves operational efficiency - promoting innovation, aiding in the development of new business models and supporting more fulfilling customer engagements.

While the cloud offers clear advantages to banks and most are actively using cloud services, few have actually moved mission-critical regulated workloads to the cloud to date. In many cases, this has been due to concerns about whether cloud environments comply with stringent security and regulatory requirements.

If banks are going to guard against fraud and criminal activity while delivering on their promises to digitally sophisticated customers, they have to build their platforms on technology solutions designed to meet regulations of the financial service industry.

In response to this, IBM launched Cloud for Financial Services – a financial sector specific cloud offering – which features built-in security, regulatory and compliance controls that help minimise risks for banks integrating with third party independent service vendors (ISVs), fintechs and software-as-a-service (SaaS) providers.

IBM has also been investing in confidential computing research and technologies for over a decade, and the solutions provide greater assurance that data is protected and visible only to its owner and no one else. This means banks can now be as compliant on the cloud as they are within their own data centres, and they can demonstrate compliance on a continuous basis.

As we continue in the journey to financially include more of our people across the African continent, the future of banking across Africa is dynamic and exciting.

With the right technology partner such as IBM and being cloud-ready, financial services institutions can build a strong ecosystem of partners – be it fintechs, startups – to offer an array of services at a quick pace and lower cost to entice the unbanked to the digital economy.

Mukiira is the General Manager, IBM East Africa

• The Lancet Commission on Global Surgery estimates that 98 percent of people residing in emerging countries, including Kenya, lack access to multi-specialty surgical services.
• The commission further describes this access to the services as including timeliness, safety, affordability for patients and an adequate capacity by providers.
• This gap forms a good starting point for pursuing the implementation of a multi-specialty growth strategy by clinics and hospitals.

It is an inherent ambition for most healthcare facilities to, over time, increase their scope of services in order to serve a wider catchment population whilst providing a broader array of clinical services.

However, the conundrum that most healthcare managers grapple with is on how, where and what specific activities to pursue in order to actualize this desire in a cost effective and, ultimately, productive manner.

The Lancet Commission on Global Surgery estimates that 98 percent of people residing in emerging countries, including Kenya, lack access to multi-specialty surgical services.

The commission further describes this access to the services as including timeliness, safety, affordability for patients and an adequate capacity by providers. This gap forms a good starting point for pursuing the implementation of a multi-specialty growth strategy by clinics and hospitals.

It is important for healthcare managers to digest available datasets in order to elucidate the characteristics of the disease burden surrounding their health facilities. Such datasets are available both internally and externally.

Internally, records of disease profiles attended to in the facility will be of use; especially of cases that eventually required referral to another center due to non-existence of the needed clinical services.

Externally, the Kenya Health Information System is a freely available online database that contains information on disease burden by type and location in the country. Also, there are specialty-wise medical journal publications that bear extensive information on various disease burdens.

As an example, one may establish that a general outpatient clinic in a hospital setting saw many patients with backaches and of these, the MRIs done showed that most of the patients had spinal compressions but were not definitively attended to due to the unavailability of a neurosurgeon or an orthopedic surgeon specializing on the spine.

The next step would be to consider setting up a spine clinic running on specific days wherein patients presenting with such back problems can be booked into. At this stage, a consideration may be made to invite a visiting specialist doctor to run the clinic on those specified days.

It is worthwhile that during this introductory phase, patients are informed on the need to subscribe to a health insurance scheme so as to limit their need for out-of-pocket expenditure and increase the affordability of such highly-specialized care.

As these occur, the healthcare manager should be forecasting on the supportive services that are required along this specialty line and making plans for the accompanying capital and operational expenditure.

If these cases require surgical interventions, this planning should be around ancillary requirements such as the availability of surgical instruments and implants, staffing cadre, rehabilitative services such as physiotherapy and so on. It helps a great deal to involve input from a specialist in the particular field.

Whereas this example covers a surgical specialty, the same data - driven approach can be applied in all other facets of medical specialties to ensure that an iterative and productive growth approach is undertaken.

The writer is a healthcare leader and geospatial epidemiologist

• The High Court has dismissed a suit filed by minority owner of Bluebird Aviation who accused his partners of siphoning more than $1 billion (Sh108 billion) from the airline through tax evasion, fraud and money laundering.
• Justice Alfred Mabeya brought to an end the five-year court battle pitting Adan Abdi Yussuf against three other owners of the 29-year-old airline.
• The judgment came after the Director of Criminal Investigations (DCI) cleared three shareholders and executives of Bluebird — Hussein Farah, Unshur Mohamed and Mohamed Abdikadir — from financial malpractices after a nine-month investigation.

The High Court has dismissed a suit filed by minority owner of Bluebird Aviation who accused his partners of siphoning more than $1 billion (Sh108 billion) from the airline through tax evasion, fraud and money laundering.

Justice Alfred Mabeya brought to an end the five-year court battle pitting Adan Abdi Yussuf against three other owners of the 29-year-old airline.

The judgment came after the Director of Criminal Investigations (DCI) cleared three shareholders and executives of Bluebird — Hussein Farah, Unshur Mohamed and Mohamed Abdikadir — from financial malpractices after a nine-month investigation.

The investigation followed a criminal complaint from Mr Yussuf against his fellow shareholders, accusing them of fraudulently channelling massive funds out of the company as part of a money laundering scheme.

Justice Mabeya dismissed Mr Yusuf’s allegations, saying he failed to prove claims of fraudulent accounting, tax evasion, fraud and money laundering.

“In the present case, all that the plaintiff did was to make sweeping allegations without any backing by way of evidence. He only stated that he had carried out investigations and made discovery of the allegations he made,” said the judge.

“The documents that were produced were not authenticated to prove any of the allegations made against the defendants.”

Mr Yussuf, who claims to own 25 percent of the charter airline, argued that more $1 billion (about Sh108 billion) has been stolen and put in offshore accounts and investments in Western capitals after being transported physically out of the country without declaration. He said the three directors were using the airport passes granted for restricted areas in airports to move the billions.

The DCI dismissed the secret movement of cash at the airports, arguing its investigation and probe by Kenya Airports Authority (KAA) found no evidence of money laundering.

The Financial Reporting Centre through the DCI said it failed to detect breaches while tracking the flow of cash in and outside Blue Bird Aviation.

Mr Yussuf claimed that his partners were stashing proceeds from the airline in international banks under Amazon International FZE. But Justice Mabeya said his partners had sufficiently showed that their relationship with Amazon was purely commercial.

“That the plaintiff had failed to demonstrate the directorship or shareholding of the defendants at Amazon or that they had stolen money from the Company and deposited the same at Amazon’s accounts,” he said.

“No faithful director exercising independent judgment would take any of the said measures, none of which are beneficial to the Company. In fact, all the steps taken by the plaintiff were contrary to the success of the Company. They were meant to sound a death knell on the company,” he added.