S3E3: Africa Stack

October 21, 2021

This episode concludes our three-part fintech series this season. In the first two episodes, we tackled payments. In this episode, we explore the other layers of the financial services stack - namely, identity and data.

Africa Stack is a play on India Stack - India's pioneering platform of open APIs and digital infrastructure that underpins the country's rapid move towards a paperless, cashless, and digital future. But whereas India Stack was built in one market, with one currency and one regulator, and with significant government investment, how does Africa Stack get built across a fragmented continent?

[04:33] - What is India Stack, why is it important, and what does it mean for Africa Stack?

[07:20] - We explore one layer of the stack - identity - with Smile Identity's Mark Straub.

[08:51] - Identity is a distinct challenge in Africa due to the gaps left by governments. According to The Economist, in countries like Tanzania, Ethiopia or Malawi, for example, less than 20% of births are registered.

[12:50] - Another important part of identity is address verification - something that OkHi's Timbo Drayson is attempting to improve upon.

[19:25] - One reason why Africa Stack is important is because of the opportunities created by data layer and open banking startups, like Mono, as discussed with its CEO, Abdul Hassan.

[23:14] - Whereas Mono is tackling bank customers in bank-led Nigeria, Pngme is focused on USSD transaction data, the telco rails that power mobile money. We hear from Pngme's Brendan Playford.

[27:40] - Beyond data aggregation, there is a need for data empowerment, to create opportunities for real-time, customized credit, for example.

[30:25] - So how will Africa Stack come together across such a fragmented ecosystem?

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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Mark Straub: It was just clear that the problems were crying out for a technology solution.

Justin Norman: That's Mark Straub, the Co-founder and CEO of Smile Identity.

Mark Straub: But to build Africa Stack was going to require working under a couple of key constraints.

Justin Norman: Africa Stack is a play on India Stack, India's pioneering platform of open APIs and digital infrastructure that underpins the country's rapid move towards a paperless, cashless and digital future. It's IndiaStack that has unlocked abundant opportunity in the fintech space in the country.

But whereas India Stack was built in one market, with one currency and one regulator, and with significant government investment, for an Africa Stack to be built, it's invariably going to look different than its Indian counterpart.

Mark Straub: Anything that was going to get built would have to work across many, many different countries, different environments, technology environments. The policy environments were going to be different, the data availability was going to be different. And of course not to mention things like culture and language. So I knew that was one constraint. Anything that got built would have to be very interoperable across different markets. And then the second constraint was that if you're going to build something new, you couldn't sort of start with the assumption that you're going to spend a billion dollars.

Justin Norman: This episode is the third and final episode in our three-part fintech series. In the first two, we explored payments - which is one layer of the stack - and in this episode, we get into the other layers, to explore why Africa Stack is important, how an Africa Stack can be built for the continent, and what it means for our endeavor to user in a cashless, financially inclusive world.

Justin Norman: Before we start, we'd like to thank MFS Africa for their sponsorship and support of season three of the. MFS. Africa is also supporting and investing in the ecosystem through their Frontier Fund. And one such investee is the Ugandan digital finance institution, Numida. Later in this episode, we're going to talk more about data and the data points that are useful to underwrite loans to small businesses across the continent.

And it's something I talked to Numida’s Co-founder and CEO, Mina Shahid, about as well.

Mina Shahid: We did start out building a really simplified financial management bookkeeping app for micro-entrepreneurs. The goal of that exercise was to collect cash flow data on these businesses, then create a profile of information about these businesses and share that information with partner microfinance institutions that we had signed up to incorporate into their underwriting processes. And after the nine months, not a single one of them was actually successful in getting a loan from one of these institutions. Not because the cash flows said they couldn't afford a loan or that they were not fundable, but because the institutions were still unwilling to change their loan requirements.

So they would automatically reject people because they didn't have collateral, they didn't have two guarantors, they didn't have audited financials, very traditional underwriting rules got in the way. If you look at the traditional underwriting approach, it relies heavily on, I guess you would call it repossessable assets to determine what size loan over what period of time, at what price can you provide to a customer. It's not really based on if I give this business owner $100 or $1000, what will they turn this money into after one month, three months, or six months or a year. It's much more about protecting that value that's been dispersed and asking the question if I give this person $1000, will this piece of collateral be worth more than that if I need to repossess it?

And as a result, none of our app users actually got a loan. That's essentially what led us to becoming a lender and starting to do it ourselves.

Justin Norman: Later on in this episode we'll hear more from Mina on the data that Numida uses to determine their borrower's creditworthiness, and actually disperse loans to micro-entrepreneurs in Uganda.

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

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

India has seen a meteoric rise in its tech ecosystem recently - this year especially. The first half of 2021 saw Indian startups raise over $11 billion, with 16 reaching the vaunted unicorn status. Many, if not most, of these companies, are built on top of and are enabled by, India Stack.

India Stack is - and I quote from their website - a set of APIs that allows governments, businesses, startups, and developers to utilize a unique digital Infrastructure to solve India’s hard problems towards presence-less, paperless, and cashless service delivery.

Cashless economies are something we talked about throughout the first two episodes of this season - as a north star for building more inclusive economies than current ones, in which cash-based markets are excluded from traditional financial services. While in a saturated market like the US - digital neobanks, for example, are providing a superior customer experience for many digital-natives, there's a separate opportunity in India and African markets and indeed most of the Global South, for fintechs and digital solutions to not only offer a superior service but to offer a service to customers that may not have previously had access to a service in an analog world.

But the problem for an unbanked individual in the markets in question is not just that they can't get inclusive finance, but maybe that there's no one who can give it to them.

There's the consumer's problem, but then there's the problems consumer-facing fintechs face when trying to offer services for their consumers. And underneath the consumer-facing fintechs, are the B2B fintechs that are building solutions that make possible all that consumer-facing fintechs promise to their consumers.

The promise of India Stack is that it's the set of APIs that enables the consumer-facing fintechs to solve problems for their customers, and ultimately to usher in a world with more financial inclusion.

But India is one market - and in this episode, we wish to explore how Africa Stack gets built - across fragmented markets and currencies and cultures and regulators.

But before we start - what exactly is India Stack? It consists of 4 different layers that make this range of innovation possible.

Mark Straub: That is an identity verification layer, like biometrics or ID verification. The consent layer, so that's consumer giving consent to what information can be verified. What can be permissioned to share? A payments layer, so payments being able to be facilitated that make use of either identity information, or bank account information. And then lastly, the document layer, so digital documents being able to be verified or permissioned or federated.

Justin Norman: The payments or cashless layer, is UPI, or the Unified Payments Interface, developed by the National Payments Corporation of India, a division of India's Reserve Bank. Its equivalents on the African continent include NIBSS or GhIPSS - the Nigeria Inter-Bank Settlement System and the Ghana Interbank Payments and Settlement Systems, or BankServAfrica in South Africa, whose Head of Modernisation, Bishnen Kumalo, we heard from in episode one.

Meanwhile, its identity layer is Aadhaar, a pioneering biometric identity system, which has been called by the World Bank's Chief Economist "the most sophisticated ID program in the world". And on top of Aadhaar, India's identity authority launched an eKYC platform, enabling businesses to perform Know Your Customer verification digitally.

So why is this - and indeed why is all of India Stack important?

In the last two episodes we explored the digital payments infrastructure, but to move to a truly cashless and wholly digital ecosystem requires other parts of the payments and financial services value chains to be digitized too. Let's start with the identity. Here’s Mark Straub, who we heard from in the intro.

Mark Straub: So whenever you build a financial institution or even just a financial app, you're starting to touch money. And when you touch money, you begin to deal with risk, whether that's the risk of taking somebody's money and losing it, or it's the risk of taking the wrong person's money or giving it to the wrong person or giving money to people who aren't supposed to get it. And so for all those reasons, when you start to touch money, you need to be able to verify identity.

Justin Norman: Every regulated financial institution needs to verify the identity of their customers. It's what's known as KYC - Know Your Customer.

Mark Straub: Ultimately for regulated financial transactions, identity - what's called Know Your Customer or KYC, it's part of the ecosystem. And it's really a requirement to be operating in an ecosystem legally.

Justin Norman: But how do you identify people who technically have no identity?

An article from The Economist, which I'll link to in the show notes, talks about the challenge Africans have to prove their identity. While in markets like Kenya or South Africa, 60 to 80% or more of births are registered, in Nigeria or Uganda, that number is between 20 and 40%, and in Tanzania, Ethiopia or Malawi, that number is less than 20%.

While birth registration is different from the issuance of identity documents, that can be a challenge too. According to the article, Nigeria, for example, has 13 federal and three state ID schemes, and the country’s National Identity Management Commission, a body set up in 2007 with the purpose of issuing identity numbers and cards to Nigeria’s 200 million people, has so far reached less than a fifth of the population.

Whereas Aadhaar in India is one centralized entity attempting to identify 1 billion Indians, to identify 1 billion Africans requires entities across the continent's 54 countries, some of which have more than one group responsible for the task.

And so if you're a rural Nigerian trying to open an account, notwithstanding the fact that you might not live anywhere near a bank, how can you open an account in this context?

Mark Straub: We integrate with and aggregate different ID authorities and ID sources from across the continent. And we can verify a whole range of credentials, including ID numbers, names, dates of birth. We can also confirm whether or not a user is who they say they are by doing a biometric check, basically matching a face against an ID card or an ID photo inside of an ID authority or a database from a financial institution. And the combination of all these things provides KYC or Know Your Customer solutions for a range of financial institutions and financial startups across the county.

Justin Norman: In the context of the fragmentation we just described, Smile sources identity data from a variety of systems.

Mark Straub: In some cases, there are ID systems that we can rely on. The challenge sometimes is the uptime of those systems. So, you know, we'll frequently see downtime or an availability gap. But, very often there are, at least in some of the larger markets, there are ID systems with capabilities to do this kind of verification that we can integrate to, or that we can rely on.

Justin Norman: And where there isn't as reliable identity infrastructure or data is another problem that Smile has to solve for.

Mark Straub: The challenge then is as you get out of sort of the largest economies you get into the smaller, mid-size markets where there's still been building infrastructure, or where there maybe there's a variety of legacy infrastructure in place. So there's maybe three or four different ID systems, not a single one, then you've got to aggregate, you've got to qualify and test with all these different ID systems, And when they're not reliable or when there's nothing there, you have to have a fallback mechanism. So what we've tended to fall back on is ID cards in some places or in other places alternative data sets. So, datasets that come from, for example, a banking system or telecommunication system.

Justin Norman: Now, there's two problems here - one is on customer experience - making it hard for the consumer-facing fintech to fulfill their promise of "open an account in 5 minutes or less", when the identity infrastructure in a given market is subpar. But worse still, is when subpar infrastructure precludes a consumer from opening an account at all, giving you, the consumer, less access than you might have been promised.

Then from the fintech's perspective, this makes scaling your business extremely cumbersome, if not impossible altogether.

Mark Straub: Time and time again, I saw fintechs that should be growing faster than they were, but they were limited by the rate that they could onboard and verify new customers and they would throw what I call the three P’s at it. So they would throw either people, process, or paperwork at the problem.

So a company that might be able to onboard 500 customers a day was limited to 50 because the back-office staff could only work through that much paper in one day.

Justin Norman: Now, identity is one aspect of KYC - and the other is address verification. That's a challenge too.

Timbo Drayson: The challenge for half the world is that most buildings don't have physical addresses. So what that means is the building doesn't have a number or a name, it's not tied to a road that has a name and there certainly isn't any zip code or postcodes to identify the area.

Justin Norman: That's Timbo Drayson, the Co-founder & CEO of address verification platform OkHi.

Timbo Drayson: And the reality of that is that it causes a huge number of problems across the market and economy, it makes it incredibly difficult for delivery businesses to find your door and for financial services that need to have a verified address as part of sort of KYC, there is no database to be able to verify that address against.

Justin Norman: In these markets, and for fintechs that need to verify addresses as part of KYC, doing so becomes cumbersome and expensive.

Timbo Drayson: Today, if you're a financial service and you want to offer certain services, you have to, by the regulator, have a verified address. And really there's three ways that that is solved today. One, you send a physical agent to someone's door. Now that can take weeks and it can cost up to about , 2000 Naira. That's about $4. The other is that you try and manage to get utility bills from your customer that has an address. The challenge is that actually most people do not have utility bills in their name. And even if they do, there is an issue around fraud because it's very easy to just copy and paste these utility bills. The third is that you potentially don't do anything and you just take on the regulatory risk. And so that's kind of where things are looking at today.

Justin Norman: And so much like analog identity verification is a barrier to scale, and a problem that Smile Identity is trying to solve with technology, so too is this physical address verification a barrier to scale, and a problem that OkHi is trying to solve with technology.

Timbo Drayson: Our digital software essentially replaces where perhaps a bank is asking for an address from a customer. So you can imagine if I'm a banking customer, I've downloaded their app and I'm signing up for onboarding. So this new banking application and normally the banking app asks for your address and it's just the text box and that's where I'm typing in, you know, my text directions. Which is problematic because obviously, it's inaccurate, there's no way to get a digital GPS from it. And as I said, you actually don't know whether that address is real at all. And so we replaced that text box with some software that ultimately enables the customer to create their OkHi address. So that means they're able to drop a pin on the map. They're able to find a photo of that property, we partnered with Google street view, and then they're also able to add any other text information that might be, you know, the specific floor or apartment number that they are at.

And what that results in is an address verification that is 30% more accurate. We can do it four times faster and we do it at half the cost.

Justin Norman: Coming up more on KYC and regulation. And after the break, we'll move on to the next layer of Africa Stack. But first, a quick word from our sponsor MFS Africa.

Earlier in the show, we heard from Mina Shahid, the Co-founder and CEO of Numida and at MFS Africa investee, about how they got into microfinance lending in Uganda. As their experience shows, it's not just about data, but about underwriting practices that work better for the borrowers in question.

Mina Shahid: So we built our initial credit scoring model without any verified transactions. And so we collect self-reported cash flow information in our app, and we care less about the actual values that are recorded, and much more about the behavior of how the entrepreneur actually reports this information. And that's one input of many inputs into the underwriting model, which has proven to be quite effective in predicting repayment rates.

It's not about the quantity of data that you're getting, but it's about the quality of the data and how the data works together. So in our credit model, we only use 15 key features to determine somebody's creditworthiness. For example, what does it mean when somebody who has a current loan is coming due and the day before that loan they open the app to record and backdate a bunch of information. Or what does it mean that somebody opens the app everyday at 9:00 am and puts in the information from yesterday's results..

It's quite nuanced. But we have found that the behavioral information, is a very interesting insight into, not necessarily into the size of the business and you know, what their margins are and all of that, but the credibility of the entrepreneur.

Justin Norman: Now, there's one question I had for Timbo, about why address verification is important in the first place. If people don't have addresses, isn't it problematic that banks have to ask for it?

Timbo Drayson: The way I see regulation and the address verification is that it's a good thing. You know, if you are a financial service and you are offering financial loan products to your customer, it is really important that there is some level of due diligence and to try and mitigate fraud and money laundering, et cetera.

Justin Norman: So the reality is, these financial institutions need to manage their risk, and in the context of financial inclusion - entrepreneurs like Mark and Timbo are finding ways to include those, within the parameters of existing regulation, who have previously struggled to verify their identity or address.

Timbo Drayson: It's very critical that these levels of KYC are managed. The regulation is there to protect the end customer and, you know, ultimately the businesses. It needs to be done in a way that is not cumbersome to the end consumer and not expensive and high friction for the business. And, you know, obviously, this is where technology can come in and disrupt. And we're seeing that across the KYC stack.

Justin Norman: So when the goal is financial inclusion - and an important opportunity within financial inclusion is the availability of credit and lending, to both businesses and consumers, the next level of the stack beyond identity is data.

Whereas a well-served bank customer has a credit score and financial transaction history, the problem for the un- or under-banked is when their transaction history is scattered across multiple different apps, operated by multiple different companies - not to mention the lack of digital data in cash-first economies.

Even if they get through the identity requirements, a consumer might still have less access to financial services, if, for example, an underwriter doesn't think they know enough about your creditworthiness.

This is where the data layer comes in, and the many API-first infrastructure companies building as part of the open banking wave.

Open banking is a term to describe the process of APIs that enable third-party developers to securely - and with the customers' permission - access data, better connecting financial services providers, other sources of data, and technical providers - all for the customer's benefit.

A pioneer of open banking globally is Plaid, the US fintech whose core product allows consumer apps to connect to a customers banking institution, enabling customers to, for example, transfer money from their bank account into a fintech app, without having to leave that app, or share financial information that can be used for something like credit scoring.

The Plaid-esque experience is undoubtedly a superior customer experience in developed markets, but in emerging markets, these data layer fintechs have the opportunity to garner access for users that previously had less access.

And comparable company operating in African markets is Mono. Here's Abdul Hassan, its Co-founder and CEO.

Abdul Hassan: So at Mono we are enabling digital businesses in Africa to access customer data and identity data through a single API.

Justin Norman: Mono is building the infrastructure making it possible to connect to a variety of financial institutions in Nigeria. And the number of connections has continued to grow, since the time of our recording.

Abdul Hassan: We've connected to about 20 financial institutions in Nigeria, where we can retrieve financial data from. So bank statements, transactions, written balance, income credits, and debits, right? So this financial data can then be used by businesses to maybe perform credit scores, or maybe you want to build in new experience in your application, in your web app. So you can use this financial data.

Justin Norman: In order to reliably transfer the data from where it originates to the end-user of the data, and in order to do so reliably, Mono employs a process called reverse engineering.

Abdul Hassan: Banks generally are well-known for having bad API documentation. It's not like they are the ones giving us the API, right? So what we've done is we actually get access to the private APIs of the financial institutions. So what I mean is like, we actually use the API using the mobile application and their web app. So it's like us calling their service directly. So people call it reverse engineering. So that's what we've done today and that's why our APIs are very stable.

Justin Norman: Now, access to data, and data aggregation is one part of the puzzle, then data analysis is another part of the puzzle. But for data to be maximally useful to Mono's customers requires network effects. For Mono in Nigeria, that's meant starting with bank accounts.

Abdul Hassan: How can we enable access to all these bank accounts that people have already? But right now my focus and our focus as a company is like, there's a market right now for people that have internet banking, people that have bank accounts. How can eat that market? That's what we focused on.

Yeah so if we have a lot of merchants on board and then those merchants have millions of customers, everything then could get connected. That's why I say like we are a data company to be honest like Mono is a data company. There’s definitely a network effect.

Justin Norman: Let's take a step back for a moment - to talk about an important consideration in the context of data approvals and open banking.

Mono's ability to perform these functions comes down to user permissions. When a user is on a fintech app and is asked to login to their bank account within the app, they are granting permission to Mono to access their data on their behalf. That's an important part of the open banking movement - who owns the data? Previously, the banks or the telcos would say that is their data, but open banking, and open banking regulation, says that it's the consumers' data to share with whomever and however they wish.

The idea is, if data can be aggregated across a myriad of data sources, it can be more useful and better utilized by third parties, for the benefit of the consumer.

Brendan Playford: So what we're seeing is those walls, those data moats, those moats they've built are gradually coming down. The walls and the silos are coming down.

Justin Norman: That's Brendan Playford, the Co-founder and CEO of Pngme.

Brendan Playford: The reason is because we're going direct to the user to give permission to access that data. Not only is there this kind of wave of innovation with open banking technology in the way that Plaid has sort of been able to get to the user states with use permission, we've got that wave happening in Africa, but additionally, there is both an on the ground wave happening of paradigm shift with people thinking that or wanting to own their data. Then there is a regulatory shift with GDPR-like regulation coming out too for these institutions to open their data and then open banking where fintechs like us are finding ways around, to be honest with you, the walls that these companies have put in place and allowing the users to share that data.

Justin Norman: Now, where Pngme comes in slightly adjacent to Mono at the moment, but also a crucial element of the data empowerment stack. Whereas Mono, which started in the bank-led market that is Nigeria, and have initially been focused on banking data, Pngme is focused on USSD, the telco rails that power mobile money. Which is important in the context of financial inclusion, and how most consumers on the continent transact digitally.

Brendan Playford: Essentially a huge amount of Kenya's GDP and other countries’ GDP are transmitted and transferred or settled in USSD. What that means is a lot of the data that we're familiar with in banking terms in the US or credit records in the US are confined outside of banks into this kind of mobile money layer. And a lot of the settlement and a lot of the confirmations had been done using SMS. So SMS records hold a huge amount of transactional data. The way that we approached the market was we decided that we would go down the USSD kind of scraping route, which is a completely different approach where we decided that USSD was the primary channel of choice for those that had the least access today. What we're trying to do is unlock that data and allow any developer to use it and offer financial services using that data pool.

Justin Norman: Ultimately, the data empowerment layer is about painting a clearer picture from the data that already exists.

Brendan Playford: When you look at this mobile money ecosystem, every service on top of it is different. In Nigeria, it's roughly seven to eight accounts a user has. That could be a mobile money account, a bank account, maybe a couple of digital lending accounts. Similar across the other markets. And that creates an incredibly fragmented financial picture.

Justin Norman: As we talked about with Mono, data aggregation is one piece of the puzzle, but data analysis is then an important capability to build on top, to increase the utility of the data.

Brendan Playford: How do you go from data to end product that uses data? There's a connection there. We use machine learning and natural language processing to essentially extract all of the financial information. So it comes in as this unstructured kind of mess. We do a lot of machine learning, through one of our pipelines that comes out the other end structured and it looks like full balances and transactions.

Justin Norman: The idea here is to make it easier for other fintechs and developers to use this data without themselves having to have a robust team of machine learning engineers or data scientists.

Brendan Playford: It means that out of the box, a developer or an engineer can just go straight in and use those machine learning features, those credit aggregations, the raw transactional data, if they want to. And it gives them that kind of leg up where it can otherwise it's cost a lot of money or take months to build that infrastructure.

And we saw that as a big barrier to adoption, and we really thought that addressing that barrier early on for our platform is a really kind of good value-add, we hope, for developers.

Justin Norman: Taking another step back for a minute, to the topic of why Africa Stack is important. An explicit goal of these platforms, and the open banking movement, is financial inclusion. Globally, the population of unbanked is 1.7 billion, according to the World Bank's Global Findex Database, with Asia, followed by Africa, as the regions with the largest unbanked population. In that report, the number one reason cited for why was having too little money to use an account. And as we heard from in the first two episodes of this season, select fintechs are trying to overcome the cost and accessibility problem through models like agency banking or fee-free transfers. But data - and the proliferation of open banking platforms like Mono and Pngme - make it more feasible for financial service providers to improve their lending decisioning, new product development, and ultimately reach greater revenue potential.

And this is perhaps a key difference between a company like Plaid, operating in the data layer in the US, and what data layer startups are doing in emerging markets. Plaid, and its frictionless user experiences, is nice to have. Availing the utilization of transaction data of financially excluded customers - that’s a need to have.

Brendan Playford: I think it's one of the huge benefits of this technology and what everyone is doing in the space, you know, in general, when it comes to data-focused fintech solutions or fintech solutions that are focused around data, in terms of what that means for the end-user. The reason why it drives such huge growth for the institution is because it gives the institution this ability to customize credit in a real-time way for every individual where they just haven't been able to before.

Justin Norman: You see, here's what the status quo is like.

Brendan Playford: If you imagine seeing a thousand people coming through your door on a Monday morning, asking for a loan, you have to be incredibly discerning. If you've got a team of five people manually collecting together with your data, you're going to have a very high threshold with one heuristic, which may be you're a government worker. And if you're a government worker, you go to the top of the underwriting pile. If you're not, you get rejected. So that simple heuristic increases efficiency.

Justin Norman: Whereas a digital, data-driven future, and one in which more consumers have access to financial services, looks like this.

Brendan Playford: Now, as soon as you go digital and you add pre-qualification to it, you then can sort people into more specific buckets. So you can spend more time in each one of those buckets providing a specific product specifically to that person. So I think that's the most exciting thing actually about where this innovation is going to go, is that it means that you're not going to have that 70% of people that aren't government workers excluded from the system. There will be someone that is going to find a great product that fits with them, the business is going to make them, and the individual is going to see a huge benefit and value. And that's really, really exciting.

Justin Norman: But what else needs to happen, for Africa Stack to reach its full potential? We can already see how Africa Stack is going to come together through a range of private and public initiatives, across various regions on the continent, and across various layers of the stack.

Here's Smile Identity’s Mark Straub again.

Mark Straub: It's not going to get done sort of, with one stroke of a pen by a government body. It's going to happen in pieces. It's going to happen regionally first. And I think there's some good to that because usually, innovation doesn't happen top-down. It happens kind of bottom-up. But it does require a policy environment that is open-minded and that is flexible, but also that's clear.

Justin Norman: This is where the collaboration and interplay between public sector and private sector is crucial.

Mark Straub: I think that the sort of the foundational piece that governments and central banks need to provide, which is, you know, clear laws and rules about what information is required to conduct a payment, what information is required to open up a bank account. And it also needs to be up-to-date. So the rules, you know, should be able to incorporate technology solutions and not just physical or legacy solutions. And we are seeing some very forward-thinking policymakers get ahead of this and try to create, whether it's open banking initiatives, whether it's new data privacy regulation that takes into account modern technology and the internet. And I think what you'll see is ultimately the markets where there is sort of the best policy framework and that incorporate or allow for technology and innovation, but also that make clear what the rules are and they kind of lay out the rules of the game, that's where you're also going to see the most innovation happening

Justin Norman: So like so much else on the continent, Africa Stack is going to happen slowly, over time, and with explicit intention from the builders and innovators and regulators working to improve upon the status quo.

Mark Straub: It's gonna take time. And, you know, it's going to be a bit messy. Probably not as clean a story as India, where you had one, one market, and one set of policies. But I do think that over the next 3, 4, 5 years, you know, this identity piece is going to start becoming clearer and clearer. And the payments piece is kind of already there. So as those two pieces come together, you really start to have the foundation of the stack, and then everything else kind of falls into place.

VO: That's it for this episode of the flip As always. If you like this episode, please do share it with a friend. Hit subscribe on your favorite podcast app. Follow us on social media @theflipafrica and for episode show notes and additional written content, subscribe to our newsletter on our website, theflip.africa. Thanks so much for listening and we'll see you next week.