Lessons Learnt in Africa: A DFS Perspective

Categories : Blog


Author: Digital Frontiers Institute

My personal purpose is to deliver digital technology that enhances the lives of the underprivileged. This mission has been my North Star, and a path of continuous learning and growth. The experiences gained from working on Digital Financial Services (DFS) projects in 19 African countries over 15 years have yielded invaluable insights into the development of effective DFS for the poor. The acronym SMARTER encapsulates key insights from these experiences and may serve as a useful guide when designing DFS that is both impactful and enduring. In my blog, I illustrate each principal using a DFS business model from Africa. 


S – Sustainability 

To drive meaningful and sustainable change, we need to create solutions that are self-sufficient, fostering continual usage and integration into the daily lives of users. If we start by studying the unmet financial services needs of our customers as they engage within families, industries and communities and create products that address these needs in an affordable, accessible, and relevant way, products should (theoretically) grow virally. I learned that this is easier said than done and requires more than strategy, resources, and marketing. It requires resilient leaders who think big, start small, refine incrementally and scale fast as market demand increases. These rare individuals have the faith to keep putting customer needs first and a deep conviction that solving customer problems will unlock exponential value in time. 

The remarkable surge in mobile money usage in East and West Africa exemplifies the principle of sustainability. Mobile money services evolved in line with customer needs – from basic airtime purchases and domestic P2P to utility payments, wallet-based salary payments, savings, loans, micro-insurance, betting, interoperable cross-border payments and e-commerce. This integrated approach addresses customer needs within the ecosystem while generating revenue through a high volume of low-value transactions. 

M – Market Centric 

Effective market research demands a deep understanding of the unique needs and behaviours of our customers. When South African (SA) fintechs copy and paste use cases from SA to the rest of Africa without considering local nuances, this can lead to misguided strategies. 

During my time at Visa in 2013, I embarked on a research trip to Nigeria to explore the potential for microinsurance for the poor. I was surprised by my findings: insurance penetration was less than 1%, and the individuals I interviewed were sceptical of insurance. Despite limited knowledge of formal DFS products, most were acutely aware of personal and business risks and saw them as a natural part of life that they already factored into their informal and formal businesses. The concept of life insurance was met with resistance since people questioned the value of a policy that benefits others after one’s death, and some even worried about relatives taking out policies for nefarious purposes. 

Interestingly, the sentiment shifted completely when I travelled to nearby Ghana. There, the community was more receptive to the idea of insurance, viewing it as a tool that safeguards their families and contributes to the welfare of the wider community. This contrast highlighted the diverse attitudes towards insurance within the region. While the results were unexpected, they inspired African fintechs to re-think traditional models and design market-based solutions with short-term incentives and multiple insured lives that are unrelated. 

A – Accessible and affordable 

Accessibility is critical in ensuring that DFS products reach their intended audience. This means designing services that are user-friendly and accessible through low-end devices, even in areas with limited 3G coverage. Sadly, many DFS innovations are primarily accessible through mobile apps which poses a challenge as most Africans do not own smartphones, cannot afford data, and may reside in areas with unreliable 3G coverage. Mobile Money Operators circumvented these obstacles by offering DFS through the USSD channel, which is accessible via low-cost feature phones and does not require data. 

While benevolent financial institutions often take months to deliberate on low fees, the concept of affordability goes beyond the published fees. When a woman from Mzambwe Village Malawi wants to withdraw the proceeds of her chambo sales from her bank account, the actual cost is the withdrawal fee + cost of transport to Lilongwe + cost of childminder + loss of income while travelling to the bank. Geographical reach is key! 

During my tenure as Senior Director of Financial Inclusion at Visa we funded a partnership between Women’s World Banking and Diamond Trust Bank to design a savings solution for marketplace women in Lagos. Despite having substantial daily earnings, the women were unable to leave their stalls to deposit the proceeds at the bank. To secure their income, they entrusted it to an “esusu” (often a trusted family friend) who would collect and safeguard their earnings daily, returning it at the end of the month minus a fee equivalent to one day’s earnings. Diamond Trust Bank adopted a similar model with the Beta Savings Account, where roaming bank agents or “Beta Friends” issued savings cards and collected savings daily from the women at the marketplace to improve their access to savings. 

R – Relevant 

Solutions must address genuine problems or seize opportunities. I have encountered countless Savings and Loans groups (“Stokvels” or “chamas”) in Zambia, Uganda, and SA who faced issues with treasurers stealing the cash saved by the group. Many fintechs have effectively reduced the risk of theft by digitising the collections and disbursements. CARE Kenya noticed that women contributed diligently for years but could not access more business credit than what they could collectively save in the box. In 2015, Visa collaborated with CARE to develop a credit scoring model for “chama” women. This initiative enabled chama women to secure loans, empowering them to start and scale micro businesses. 

T – Trusted 

Trust is a crucial (yet often overlooked) catalyst for the mass adoption of digital payment innovations. Across Africa, low-income consumers who traditionally distrusted banks have embraced agent-based solutions offered by familiar individuals in their villages. In my experience, adoption rates are higher when a trusted person recommends a product, provides education, and is available to assist with queries or concerns. Consumers also trust institutions that have consistently catered to their needs over the years. A Kenyan farmer I interviewed preferred SACCO (Savings and Credit Cooperative) loans over bank loans because his SACCO showed empathy, especially during family emergencies. I will never forget his words: “When a SACCO tells me something it’s like a Bible story, I believe it.” 

E – Ecosystem solution 

Kenyan SACCO’s leverage the industry knowledge of their members to create comprehensive financial and operational solutions across ecosystems, such as the dairy value chain. In contrast, the Cashless Matatu initiative launched in Nairobi in 2013 faced challenges due to the lack of industry consultation during the design process. Banks and fintechs developed digital transit payment solutions without consulting matatu drivers resulting in low adoption and usage. The legal prohibition of cash collection on minibus taxis meant that drivers found themselves without the necessary daily cash to cover expenses such as fuel, conductor salaries, and food. Additionally, the burden of up to 5% in Merchant Service Fees on their already limited earnings discouraged compliance. Consequently, drivers continued to accept cash payments and resorted to bribing police officers to oversee these transactions until the programme was eventually discontinued. 

R – Respect and Reinforce traditional business model strengths 

DFS innovators often prioritise disruption, inadvertently overlooking the ingenuity inherent in traditional, time-tested solutions. During my trips to Zimbabwe in 2017 I noticed that MFI’s discontinued face-to-face savings and loan group meetings after digitising contributions and disbursements. The unintended consequence of this change was a decrease in repayment rates. The efficacy of informal savings and loan groups in maintaining low credit risk relies on the collaborative responsibility and peer pressure fostered during regular meetings among acquainted peers who hold each other accountable for contribution payments. 


Concluding thoughts 

After 15 years in financial inclusion in Africa, my actions have barely moved the needle. However, Nelson Mandela’s words inspire me to keep trying. “Poverty is not natural. It is man-made and it can be overcome and eradicated by the actions of human beings.”  I am confident that if we collectively follow these SMARTER principles, we can make a meaningful difference in Africa. 

“The views expressed in this blog are solely my own and do not represent those of my current or former employers.” 



Accessed 8 April 2024 https://blog.mondato.com/cashless-transportation-kenya-rwanda/ 

Accessed 8 April 2024 https://www.afi-global.org/sites/default/files/publications/2017-09/AFI_FIS_bank%20on%20her_AW_digital.pdf 

Accessed on 8 April 2024 https://www.tandfonline.com/doi/full/10.1080/23322039.2016.1150390 Insurance penetration and economic growth in Africa: Dynamic effects analysis using Bayesian TVP-VAR approach. 

Accessed on 8 April 2024 https://www.care-international.org/stories/kenya-savings-groups-keep-families-fed 

Accessed on 8 April 2024 https://www.in-formality.com/wiki/index.php?title=Esusu_(Nigeria) 


By Natalie Baatjies 

Head of International Remittances at MTN South Africa 

COP Facilitator for DFI Community in SA and Alumni 


Established in 2015, Digital Frontiers Institute is a proud brand of Digital Frontiers. Learn more about the Certified Digital Finance Practitioner (CDFP) programme and find out how to enrol: https://cdfp.digitalfrontiersinstitute.org/