S3E2: Follow the Money, Part Two

October 14, 2021

In episode one of this season, we explored how money moves within borders in Africa. In this episode, we explore how money moves across them.

[01:27] - Africa is the most expensive region in the world to send money to, according to the World Bank's Remittance Prices Worldwide report.

[07:26] - Why are there such limited cross-border payment options within Africa?

[08:30] - And why is sending money across borders in Africa so expensive? AZA Finance's Elizabeth Rossiello tells the story of investment in infrastructure and liquidity, or lack thereof.

[13:39] - How do you create liquidity across markets and between curriencies?

[18:12] - How are fintechs providing better rates and leveraging technology to reduce the cost of cross-border payments?

[24:32] - On the chicken and egg game of infrastructure and payment volumes across borders. Ham Serunjogi, Chipper Cash's CEO, shares the companies outlook on making cross-border payments more accessible in Africa.

This season is sponsored by MFS Africa.

All this season, we're exploring value chains. And in the payments value chain, no fintech has a wider reach on the continent than MFS Africa. Through their network of over 180 partners - MNOs, banks, NGOs, fintechs, and global enterprises - MFS Africa's API hub makes connects over 320 million mobile wallets across 30+ countries in Africa.

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Bank: Please hold while we transfer you to the first available banker... FNB Forex this is Refiloe, how can I help you?

Justin Norman: Hi, um, so I just want to get some information, um, with regards to pricing and settlement for sending money from South Africa to Nigeria.

Bank: Okay, sir, so on that we do have three charge options.

Justin Norman: I have to send money from South Africa to my b-mic Sayo in Nigeria. So I called up my South African bank.

Bank: We do charge a 0.55 percent of the commission fee on the Rand amount, and that will be from a minimum of 295 Rand to a maximum of 650...

Justin Norman: I got pricing, my bank charges 0.55 percent plus some markup to the exchange rate converting from Rand to Naira. Or I pay an extra fee if I don't want my Rands to be converted to Naira.

Justin Norman: And then, um, in terms of, uh, how long it takes the money to be delivered. So if I made a payment today, how long would it take for the counterparty, uh, in Nigeria to receive it?

Bank: So our payments are not the same so it can take one to five business days to reflect. It goes according to the bank on how long it takes to receive funds from South Africa...

Justin Norman: Still a bit slow and a bit expensive. But not bad actually. Though I must say, my experience as an overbanked customer in South Africa is certainly not representative of the average experience across the continent.

Here's a stat courtesy of the World Bank, from a report entitled Remittance Prices Worldwide, which I've linked to in this episode's show notes. The global average cost of sending a $200 remittance payment is 6.38 percent. But the average cost of sending $200 to Sub-Saharan Africa? Oh, that's 8.02 percent - the most expensive region to send money to in the world. More than a full percentage point more expensive than the second region. These costs, in spite of the fact that sending money to African countries is big business, with sums around $50 billion.

So while my banking experience is a bit misrepresentative, we can imagine that sending money across Africa is even more expensive, not only because of a higher unbanked population, but also because sending money across intra-African corridors has less volumes and more fragmentation than does sending from say the US to Nigeria. Sending money across borders in Africa means 41 currencies across 54 countries.

Last episode, we followed how money moves within borders. In this episode, Episode 2 of Season 3, and the second of our three-part fintech series, let's explore how money moves across them.

Justin Norman: Before we start, we'd like to thank MFS Africa for their sponsorship of the entirety of Season 3 of The Flip. And no conversation about cross-border payments in Africa would be complete without MFS Africa. Coming up in this episode, we'll talk about how money moves - across traditional payment rails like SWIFT, and between fintech apps, as well. Interoperability is a big piece of this - enabling money to move from a bank to a mobile money account, or from one mobile money provider to another, across borders. Money is moving across a lot of different rails, and MFS Africa is the digital payments platform connecting them all.

I sat down with MFS Africa's Director for Strategic Projects, Nika Naghavi, to talk a bit more about what's happening behind the scenes.

Nika Naghavi: We started in 2010 and initially we were focusing on the immediate pain point that we saw in the mobile money industry which was fragmentation and lack of interoperability across borders between these different mobile money services. And since then, we've played a key role as an ecosystem enabler and orchestrator. We now have over 320 million mobile money wallets across our footprint of 37 markets in Africa, covering 60 percent of all mobile money wallets in the continent.

And over the years we've expanded the number of use cases we offer. Today, if you are a business or a consumer, through a single API connection, you can send money or get paid across the content, through our hub and our network of networks. So obviously this is enabled by our diverse set of partners in Africa and the rest of the world, and in doing so we are enabling digital flows of funds across 600-plus inter- and intra-African corridors.

So today, we sit in between partners, between two different, let's say MNOs, if you're sending from M-Pesa to MTN Uganda. And from the consumer perspective, everything happens in the background. What we provide is to ensure that the money is reaching the end consumer instantly. And for that there are different activities that are happening in parallel in the background, such as, sanction screening, settlement of funds, providing FX rates to partners, et cetera, so we are the main connection between the two consumer-facing entities in this case.

Justin Norman: We'll hear more from Nika on cross-border volumes and infrastructure, later in the show.

VO: You’re listening to The Flip, the podcast exploring contextually relevant stories from entrepreneurs across Africa.

Justin Norman: Welcome back to The Flip, I'm your host Justin Norman.

I want to talk about cross-border payments, amidst the backdrop amidst some secular trends - as more companies broaden their presence across the continent, as regional initiatives like the African Continental Free Trade Agreement are meant to take effect, and as payments slowly but surely trend towards digital - it's still not very easy, nor affordable to send money from one African country to another.

Stone Atwine: Really how the whole thing starts and how I get into building is, I was working in Kenya and sending money back home to Uganda was always a massive, massive problem for me.

Justin Norman: That's Stone Atwine, the Co-founder and CEO of Eversend.

Stone Atwine: I basically had Western Union or MoneyGram or some of the other brick and mortar platforms. And, it was expensive. I have to pull money out of my bank account, go to a branch, so you move with cash. You're probably paying, 13, up to 15 percent, and then send that money to my grandma.

Justin Norman: What Stone is explaining is, I think, a problem that resonates with many Africans, especially as the rate of migration to the big cities increases. How do you send money to your grandma?

Stone Atwine: But the biggest problem was my grandma lives on a farm in western Uganda and what that meant was she had to get on a bus for like 50 minutes, so she could find an agent and pull out this money. It's insecure. She's probably holding $300, $400, $500 on a bus, in Ugandan currency, and really this pretty much pissed me off. And I said we have to do something about this.

Justin Norman: So Stone set out to solve this problem for his grandma, and build something that - just as we talked about last episode with domestic payments - is easy, affordable, and provides a better alternative to the status quo.

Stone Atwine: I started looking at all the options and we noticed a few things. One was that there's basically no way for people to move money across borders using technology within Africa. So I came up with what if we build a web-based platform, where I can connect my grandma's MTN mobile money to my bank account. That's how the whole story starts.

Justin Norman: But just like last episode, in order to understand how to solve this problem, we first have to understand how cross-border payments work and why the current system doesn't work for users like Stone when sending money to their grandma.

While there are ways to send money using technology to Africa, through major remittance companies like WorldRemit or Wise, these companies focus on the highest volume corridors - where money is sent from developed to developing markets, like the UK to Nigeria or the US to Egypt or France to the DRC.

They’ve invested the infrastructure in African countries as receiver countries, but not as sender countries.

For intra-Africa, two formal options are the brick and mortars or the banks. And neither are very good options. To run a network of physical locations and agents is expensive, and that cost is passed on to the customer. And notwithstanding the fact that a large population of the continent is unbanked, when it comes to pricing, well...

Stone Atwine: We've literally seen somebody charged 15.8 percent in foreign exchange because they use their Uganda Shillings account to pay for something online in Dollars.

Justin Norman: But why are things so expensive? Why?

Elizabeth Rossiello: I'm Elizabeth Rossiello. I'm the CEO and founder of AZA Finance.

Justin Norman: Much like last episode, in which we spoke of the infrastructure underpinning the domestic payments landscape, so too does infrastructure - or lack thereof - play an important role across borders, as well.

Elizabeth Rossiello: The story of payments on the African continent is the story of financial infrastructure, and the story of any infrastructure is a story of investment. And then the story of investment is incentives about where people want to go.

Justin Norman: In the African context, this has manifested in ways that are not necessarily advantageous for its countries and its citizens.

Elizabeth Rossiello: So when we talk about the financial system, that of course requires infrastructure, just like the power system does, or the water system does, or the oil transport system does, but there's been a low level of investment. And so a lot of the financial infrastructure goes via Europe, or it goes via the United States instead of through other African countries. And not to go super wide here, but it goes through the US Dollar.

Justin Norman: And any African who's made a cross-border payment might be familiar with the scenario Elizabeth describes.

Elizabeth Rossiello: When you send a payment from a USD account, those Dollars are technically held in the United States. And there's somebody named Susan in Texas who actually approves that transaction and says, “Ooh, what's this name? Olamide I don't know. It looks fishy, canceled.” Or, what I have to phone call this person. Okay. I'll call her at 2:00 pm Texas time. It's midnight in Kenya and oh, didn't get her, transaction canceled.” So these are the really silly little areas of friction that nobody thinks about because this is made via a system that's not for this continent just ends up making a lot of friction. And that's a small, tiny example of what happens when areas are not considered worthy of investing in infrastructure.

Justin Norman: Let's take a step back for a moment - last episode we talked about BankServAfrica, the domestic payments infrastructure in South Africa that sends transaction messages between banks. Globally, there is a similar system called SWIFT - The Society for Worldwide Interbank Financial Telecommunication - a messaging network that connects 11,000 banks across over 200 countries.

A good way to describe SWIFT's infrastructure is like airline infrastructure - there are many direct flights, but for less used travel routes you might have to take a connecting flight.

Many times, a payment made via SWIFT will have what are called corresponding banks acting as the intermediates as money moves not only across borders, but then within borders, across banks, as well. This means that making international payments via banks is both expensive and slow - as money moves through several intermediates and as each bank takes their cut of a transaction. And, of course, in the African context, it also means that the un- or underbanked are, once again excluded from the system.

Now, because of the inefficiencies of sending money via SWIFT, there are remittance companies that play a role in reducing the cost of sending money across borders. What these companies do are use the real exchange rate - not some marked-up version that banks provide - and then manage float on their own, holding money across their own bank accounts so money doesn't have to go via one or more intermediary banks, which also take a cut of the transaction.

So the main considerations to discuss around cross-border payments are exchange rates and liquidity.

Let's use an illustrative example to explain. In the context of development organizations lending to African countries, these organizations prefer to issue loans in US Dollars or Euros. Why is that?

Elizabeth Rossiello: So you lend in the currency where you have a comfort level of low risk. Now, you could go into Swiss Franc easy because it's liquid. At any time or any day Credit Suisse and the other Swiss banks will buy or sell your Swiss Franc. That's called liquidity.

Justin Norman: If less people want a currency, it's a problem.

Elizabeth Rossiello: So liquidity is a big problem. When you don't have liquidity, you don't know when you're going to be able to exchange it, the cost is high. So you can't do something called a forward. . You can do spot where you say, “okay, I'll sell you the Swiss Franc today, but I don't know if I'm going to be able to buy that back in a month or a year or three years,” so the liquidity issue is a problem. They don't know when they're going to be able to resell the currency and not a lot of people are playing the game. And so there's not a lot of people and competition offering it, so the cost becomes prohibitively high.

Justin Norman: And it's worth mentioning, as an aside, that my bank, which offered me a buy rate to buy Naira in Rands, doesn't offer me a sell rate, in which I can sell them my Naira back into Rands. With the Naira experiencing significant devaluation, they're not interested.

And this is where the story of AZA Finance starts, back in 2013, with Elizabeth deciding that she was going to play the game.

Elizabeth Rossiello: I met with a bunch of Somali traders who were struggling to create liquidity and they were trucking in, physically trucking in US Dollars. And that was just super fascinating to me. Even in Kenya, how can I go into Barclays Kenya and still be paying 10 percent to go to the US Dollar? And why is the Kenyan Shilling which 364 days a year never moves, why is it still so expensive? This doesn't even make sense from a risk perspective. So maybe it's just a competition perspective. And maybe if I entered the market and I raised my hand, maybe people would start making a better market.

Justin Norman: So Elizabeth and AZA Finance, which started out as BitPesa, began by making markets for cross-border trade in Africa.

Elizabeth Rossiello: So how do you create liquidity? It's like playing telephone. You need two sticks in the sand on either end. We can call them on-ramp and off-ramp, and you need something in the middle to make the price and to take the instructions and where it's going. Usually the stick and the sand is a bank account on one side and the bank account on the other side.

Justin Norman: But in an environment of low liquidity, Elizabeth was inventive. She used cryptocurrencies.

Elizabeth Rossiello: When we first started, I was like, “Let's use M-Pesa. It's so simple. It's instant.” That was our stick in the sand. People could pay me for Bitcoin. And I could sell Bitcoin and pay them and buy it, et cetera, easily over M-Pesa. It was instant. It costs cents. And it was easy for me to open up an account. We had friends in crypto land that would be the other stick in the sand, the other off-ramp. That made it so easy for us to start business.

Justin Norman: The most important thing for creating liquidity is the counterparty relationships. Who's going to be that off-ramp on the other side of a transaction?

Elizabeth Rossiello: So the counterparty relationships is something that a lot of people don't think about when they think about digital currencies. They think about the line between the two poles like, oh, wow, it zips across, you know, with a transaction. But they don't think about the on-ramp and off-ramp, and so I think that's what we first were really excited about, which is like, you can zip Bitcoin around the world without using SWIFT, but who's giving that on- and off-ramp?

Justin Norman: So AZA Finance built the on- and off-ramps itself.

Elizabeth Rossiello: So what we ended up doing was we had to slowly build those on-, off-ramps all across the world ourselves. We got our own license in the UK, in Spain, in Ghana, in Nigeria, just bought a company in South Africa. And as we did that, we were like, “Wait a second. If I actually have an account in South Africa and I have an account in Nigeria and I have one in Senegal, do I even need to use anything?”

Forget... crypto is more efficient, but I actually don't need to send anything. I can just pool a net, and that's actually beyond crypto more efficient. So when it's on my own balance sheet, I don't really even need to use anything. We've almost created our own network, our own infrastructure of on-ramps and off-ramps and wherever it's owned by us, we don't need to use anything.

Justin Norman: Looking at the payments value chain from the bottom up, it starts with the last-mile - the cash-in or -out step at the beginning or the end of the payments value chain. M-Pesa agents need float - they need to have enough cash on hand to pay out to a customer who is looking to exchange their M-Pesa credits for cash.

Now, this is where things get even more complex across the cross-border payments value chain - when managing the float of multiples of currencies comes into play.

Elizabeth Rossiello: If you're paying across, you know, 20 markets in Africa, how do you get enough float into the MTN account in Uganda that you need to pay thousands of people into M-Pesa, into the banking system in Ghana, into all these different areas of last-mile, whether it's a bank account or whether it's a mobile money account, or whether it's a cash payout network. Float management is the nerdy, nerdiest step of the ladder that nobody wants to talk about.

Justin Norman: And so if cross-border payments in Africa is expensive in part because there aren't many players in the space, perhaps there haven't been many players in the space because of how complex this all is.

Elizabeth Rossiello: Float management is something that prime brokers do in the rest of the world for bigger funds and things like that. And that doesn't exist. And that's who we are. And then how do you price the float? So yes, we can get the float where it needs to be, but then how do you charge people for that float and say, “You want float two days ahead or three days ahead? Well, then that becomes that foreign exchange product because I'm pricing out this currency that you want a few days ahead.” So then it becomes a pricing and a risk appetite issue, and you need a balance sheet for that. And the banks could be in that space, but it's too complex for a lot of them to get into that space. And then you have the straight-up spot FX, which is how do you buy the float at the same day? So, you know, as soon as you go up the ladder, you end up needing a very different skill set than you would to build out a last-mile agent.

Justin Norman: And we might as well take this complexity one final step further.

Elizabeth Rossiello: And then you go up to the top level, which is the regulatory level. Wherever you have a customer, you have to have the license to clear that customer. So if I have a customer in Canada, even if it's going to Africa, I have to be cleared by the Canadian regulator to accept that customer. Then that's an entire compliance and regulatory aspect, and that's a bit of a nightmare and also a chess game.

Justin Norman: So yeah, cross-border is complex and expensive, and expensive because of lack of liquidity, lack of competition and players in this space leads to anti-competitive pricing.

So that raises a question - how are fintech startups able to offer better and more favorable exchange rates when compared to big banks? On the one hand, I think bank pricing is a function of competition, or lack thereof, but the answer to that question also lies at the infrastructure level. Here's Stone again.

Stone Atwine: From day one, we are doing multi-currency. We know from day one that we can’t launch within one country, it doesn't make sense. And I think that's a massive, massive advantage that we have. Our main thing is mostly around the fact that we focus on cross-border business. Even if we are looking at paying your bill using Eversend, we're more thinking, how do you sit in Nairobi and pay for your mom's bill in Accra?

Justin Norman: Eversend is taking not only a multi-currency but also multi-product approach.

Stone Atwine: We noticed that money transfers as a business, it's just not enough, and it's basically a race to the bottom in terms of fees. So we said, “How can we make the product more valuable to our customers and therefore make our customers more valuable to us?” And so we chose to build more financial services beyond just money transfer. We start out in every market with money transfer as the main thing. And the plan is to add more financial services onto the product.

Justin Norman: Now a digital neobanking strategy of this kind means that, in part, where banks fees and margins take into account their overhead for things like bank branches, and in general their people heavy operations, digital platforms can compete on price. From a liquidity perspective they are managing float across the markets in which they operate, which, like the other remittance companies, allows them to offer more favorable exchange rates between currencies, and in so doing, they can also offer new products, like virtual cards in US Dollars, to further extend the utility of their mobile wallet.

And we've seen a proliferation of this practice, in which African fintechs partner with Visa for these virtual cards, so that users who would otherwise shop online, for example, with their local currency card can use this virtual card instead.

Stone Atwine: And they’re in Dollars for a reason. People have a need to pay for things online. So what we do is, “Guys here is a US Dollar account, a US Dollar virtual Visa card, and give us your Uganda Shillings. We'll change it at 2 percent, as opposed to the 7, 8, 15 percent.”

Justin Norman: So let's say Stone sends money to his grandma in Uganda and she wants to open up a Netflix account. Or let's say I'm a small tech company paying for my SaaS products in US Dollars.

How it works is Stone's grandma uses her multi-currency Eversend account to convert her Shillings into Dollars to fund her virtual card, and then isn't subject to paying the sizeable foreign transaction fees and unfavorable foreign exchange rates that a bank would charge. And that expensive fee that banks charge - and that virtual cards in US Dollars tries to avoid - once again, comes back to settlement and liquidity too.

Stone Atwine: Every time you pay with your local currency and you pay US Dollar amounts, they're going to get settled maybe four days later or a week later, and anything could happen to those currencies. So they have to hedge. So they are adding an extra 3 percent, 4 percent in case something happens. And then at the end of the day, they also abusing that because sometimes they know this currency is pretty stable, you know, but the minimum currency exchange fee on cards for African banks is 4.5 percent.

Justin Norman: So the fact that bank settlements take multiple days when the exchange rates might fluctuate significantly within those several days, is a problem that fintechs - who are managing their multi-currency float, and offering mobile wallets with real-time transfers - are attempting to solve, which ultimately enables cheaper payments for their customers.

Stone Atwine: So we want to take control of that and say, “If we make an extra percent in exchanging this money and our customer pays 2.5 percent, the customer is happy because they've not paid 15 or 8. We are happy because we've made an extra 1 percent on top of sending money for him or giving him a loan or giving him bill payments. And at the end of the day, we save people so much money.”

Justin Norman: After the break, we revisit the investment in payments infrastructure on the continent. But first, let's hear once more from Nika Naghavi, and our sponsor, MFS Africa.

Justin Norman: Earlier in the show, we spoke to Nika Naghavi on the role MFS Africa plays in making cross-border payments interoperable across the continent. But one question we have that underpins this episode is, how much trade is happening across borders in Africa? It's a question we'll talk more about just after this, and it's a question I asked Nika about, as well.

Nika Naghavi: One of the things that is a misconception is that if you look at migration trends, you see a lot of south-to-south migration and a lot of MTOs and a lot of even MNOs have really focused more on north-to-south, and the flows of funds from basically diaspora members who live in the US and Europe sending money back home.

Whereas the opportunity is opportunity in intra-African remittances is quite fruitful, but the issue is that a lot of markets that we deal with and we work in, they have the license to receive remittances, but they cannot send money out of, do outbound remittances. It's easier for them to get a license that enables them to receive money rather than sending money. Also, given that there are different monetary and economic zones, it might be that there's a situation that you can send money out of the country, but you can't send it to a different monetary or economic zone. So these are some of the basically pain points and hurdles that we see for south-to-south remittances to grow.

One of the things that, I mean, we all who are in this space rely on the data from the World Bank. And whilst it's a great resource, it has some certain shortcomings, especially when it comes to south-to south corridors and estimating the volume of transactions between different African countries. We know that what the World Bank reports is only formal remittances and what in reality happens is 5 to 10 times more than that.

That means that a lot of people, when they're doing their business planning, they disregard these cross-border remittances and they think the opportunity is not there. It is there, and also, we can see it to our hub, as well, that sometimes what we are processing for certain corridors is two or three times what's happening, what's being reported from the World Bank.

Justin Norman: Now, one more thing I want to revisit. something Elizabeth said earlier in the show - about the investment in infrastructure. Here is is again -

Elizabeth Rossiello: The story of payments on the African continent is the story of financial infrastructure and the story of any infrastructure is a story of investment. And then the story of investment is incentives about where people want to go.

Justin Norman: What's telling is that, initially, the infrastructure incorporating technology to send money to Africa, was only built to send money to Africa. Not within it. More money was invested in the remittance corridors - that is, a one-way movement of money from the diaspora to Africa - because of the volumes moving in that direction.

And back to the problem of liquidity. The more money that is moving between currencies, the cheaper it gets to do so at scale. And then on the other hand, the cheaper it is to send money between borders, the more volumes will increase, as well.

That's the chicken and egg game when it comes to cross-border payments and an investment in infrastructure. And that's where I started my conversation with another fintech founder, building the infrastructure for payments across borders in Africa.

Ham Serunjogi: My name is Ham Serunjogi, I'm the co-founder and CEO of Chipper Cash.

Justin Norman: Chipper Cash is a cross-border mobile payments platform in Africa. And they're betting big on the movement of money across African borders.

Ham Serunjogi: We're not sort of trying to convince people that you should send money across borders. People already have that need. That is a function of migration and globalization and economies being interconnected. And that need has been in Africa since the beginning of capitalism. There just hasn't been an easy way for people to do it.

Justin Norman: Whereas cross-border payments are a problem - what are the second-order effects when that problem is no longer a problem?

Ham Serunjogi: There's a piece of it that also is enabling a new type of use case where people before, who were locked out or didn't think about it, can actually not participate because it's easy and it's accessible.

Justin Norman: So Chipper has pioneered free transfers across borders. It's a bet on the long-term opportunities across the African continent, and like Eversend, it's a bet on a business model that will work better for consumers in the long term than the status quo.

Ham Serunjogi: At a fundamental level, we sort of told ourselves if you're going to do this thing seriously if you really want to move the needle with cross-border payments, you have to solve the problem of inclusion and accessibility.

We wanted to fundamentally shift the curve and shifting the curve, I think, is a function of having everyone being able to participate, lowering the barriers to entry in that cross-border space. It's very expensive. Africa is the most expensive place in the world to send money. It's not even funny. And so we told ourselves, the first thing you have to solve is accessibility. Everyone has to be able to participate, regardless of how much they're sending, and then once you can solve that piece, at least once you can address that piece, everything else can be figured out over time. Now, that's an expensive way to sort of start and we knew first-hand that this is going to be an expensive way to start, but we were long-term-minded on this. And when you think of things from a long-term perspective, you optimize differently, you make different decisions.

Justin Norman: It's really interesting in the context of pervasive narratives around African markets - narratives we've discussed in past episodes on The Flip about market size and depth, and expansion opportunities. Ham and Chipper Cash have heard these arguments, and have built a platform offering fee-free payments nonetheless.

Ham Serunjogi: In the short run, it might seem, you know, unsustainable, but when you look at it from a long-term perspective, it makes sense. And we try to push ourselves to think about things of that capacity, which is, you know, what would it look like in 10 or 20 years when you have, you know, 50 percent of people in Africa being able to participate in the cross-border space meaningfully?

What does that world look like and how do you drive value in that world and how do you optimize for something like that? And if you look at it from that perspective, it makes more sense. If you think about it from today's perspective, which is I have to make money today and everyone else is making money by charging fees then, yeah, you won't go very far. But you know, sometimes breaking out of old ways requires thinking wholesale magnitudes and in long time horizons. So it's expensive, but we've actually been able to think about how to do it sustainably.

Justin Norman: So what happens when a company like Chipper Cash offers free and accessible cross-border payments? How does that affect consumer behavior?

Ham Serunjogi: I think it's like communication, right? It was slow, expensive. It was hard. It wasn't fun. So you really only communicate when you must. And then it got easier and easier and easier. Now it's practically instant. It's free. So we communicate very differently now than we did even just 5 years ago or 10 years ago. And when you make something incredibly easy to use, you notice very many interesting behaviors and those behaviors inform insights about where people are going and how they're thinking and, and how you can drive value for them continuously. If it costs you, you know, an arm and a leg to send money, you become very selective when and how you send it. But imagine it becomes very easy to send money. We see people who previously, before it was too expensive or because they couldn't, didn't participate at all in the cross-border economy. But now they can and we look at that and say, what does that say about, you know, the next five years for the whole society and for the whole continent? Well, what does that say about migration for the next couple of years? What's the collective gain in efficiency or human capital or whatever other metric you have to look at as a function of people being able to move their money easier?

Justin Norman: So while that’s the future we wish to see in terms of our ability to move money across borders on the continent, a fully-realized digital financial services ecosystem requires even more infrastructure than what we’ve discussed in the first two episodes of this season.

And as we continue season on value chains, and our three-part fintech series, the final episode of this series will talk about the other layers of the stack - The Africa Stack.

But until then, thanks as always for listening to this episode of The Flip.

Don’t forget, you can find us on social media @theflipafrica, or join our newsletter on our website theflip.africa. We send out full-episode show notes and write-ups, as well as our weekly newsletter The Flip Notes, sent every Sunday.

Episode 3, on AfricaStack, coming up next. We’ll see you then.