African startups develop crypto tools for inclusive prosperity

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ImpactAlpha, November 10 – Nelly Chatue-Diop was a teenager in 1994 when her family lost much of their savings overnight with the devaluation of the currency used in Cameroon and other West African countries .

“It was the first and only time I saw my mother cry,” she recalls. “How could you do everything right and still be at the mercy of some random foreign countries – or companies or banks?” What could be done to make people more responsible? ”

Chatue-Diop launched the Ejara cryptocurrency platform to give Africans wide access to fast and inexpensive financial services that range from digital wallets and cross-border payments to investments in cryptocurrencies, including Bitcoin.

The crypto investment boom that is gripping the African continent sent crypto assets soaring 1,200% last year to $ 105.6 billion.

“There is a lot of frictions in financial markets that hurt the poor and the unbanked the most: high transaction costs for financial services, savings in unstable currencies,” says Dan Block of Mercy Corps Ventures, a investor of Ejara. Cryptocurrency platforms allow households and businesses “to facilitate fast and low cost payments, save in a more stable currency and generate a return is an interesting application in financial inclusion.”

Alliance for Prosperity

As with any type of financial service, the potential for impact of crypto lies in the design. Ejara is one of dozens of organizations involved in the Alliance for Prosperity, a global network of crypto players committed to ensuring responsible, inclusive and wealth-generating blockchain applications.

“The overall mission is to build a financial system that creates the conditions for prosperity for everyone,” says Umar Sebyala of Celo, the mission-driven blockchain protocol developer who started the network. “We provide the infrastructure and people build on it. We take an open source approach to everything.

Members include GSMA, T-Mobile, Andreessen Horowitz, as well as Mercy Corps, the women-focused coding bootcamp Laboratoria, African fintechs Pezesha and Pngme, and Kenyan enterprise tech firm MarketForce.

Use case

Kotani Pay in Kenya has tested crypto-based payments as low as $ 1 for gig workers in Africa doing data tagging for a Silicon Valley-based company. “Labeling images is an expense for companies, so they distribute these jobs to emerging markets where it’s quite cheap,” says Felix Macharia of Kotani Pay. “But the problem has always been what payment system do they use to pay workers? ”

The transfer via Kotani Pay goes directly to workers’ M-Pesa mobile money accounts and costs a tiny fraction of a dime. Kotani Pay has also tested a universal basic income system.

Mercy Corps Ventures worked on a similar pilot project with a micro-task company and Celo, using Celo Valora’s digital wallet. Celo has also partnered with JPMorgan Chase on a COVID assistance program for several thousand women entrepreneurs in the Philippines.

Ejara sees opportunities to reach rural populations and fill microenterprise financing gaps by partnering with microfinance institutions and other lenders.

Barriers to adoption

Emerging technology presents many challenges. Regulators, like the US SEC, are wondering how to regulate cryptocurrencies. Nigeria has suffered many downturns in deploying its stable coin, the eNaira. Consumers have lost millions in hacks and scams.

Kotani Pay tackles one of the biggest barriers to crypto adoption: the ease of investing and withdrawing money. Kotani Pay’s main product is an “exit ramp” that transfers crypto payments to mobile money accounts, like M-Pesa, which is ubiquitous in Kenya.

“M-Pesa has done very well with financial inclusion,” even though its transaction costs are high, says Macharia. “We realized that we needed to create an infrastructure that connects blockchain protocols to mobile money channels, because mobile money works for everyone. “

Ejara helps consumers invest responsibly through crypto education initiatives. Celo is hiring leading mobile money and financial services companies to help push crypto from margins to the mainstream.

“We hope that as we expand and get more of these entities within our ecosystem, we can unlock lines of credit from banks, for example,” Sebyala says. “It’s something that we see coming.”

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