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Beyond the Transaction: Every Transaction Has a Story

Entrepreneurship vital to Africa’s growth

Editor’s Note: The visit of U.S. President Barrack Obama to Kenya for the 6th Global Entrepreneurship Summit (GES) has created renewed focus on the importance of entrepreneurship on the continent.  During the two day event various topics were highlighted including the need for technology innovation and the importance of creative solutions to support the growth of Micro, Small and Medium Enterprises (MSMEs).

Digital payments can deliver the next level of growth for Africa’s entrepreneurs

The first GES to take place in Sub-Saharan Africa created a platform for entrepreneurs at all stages of business development to connect with business leaders, mentors and influential government officials from around the globe.

Personally, GES left me inspired because in many ways it was a celebration of innovation and resourcefulness, and thanks to President Obama’s attendance, drew much-needed attention to topics like youth unemployment, poverty and access to education.  I engaged with young entrepreneurs who are passionate to make a difference in their chosen fields.

What I found remarkable was the exceptional focus that entrepreneurs place on business plans, access to credit and defining a market, yet without a thorough consideration for how they will get paid for those goods and services – Generally speaking, entrepreneurs’ business plans lack a crucial component: a payment strategy that leverages existing technology.

This is confirmed by research that shows that most entrepreneurs operate with cash; in fact more than 95 percent of micro, small and medium-sized enterprises (MSMEs) operate solely with cash, which is untraceable, costly to handle, transport and store, and is unsafe. Cash also means that entrepreneurs do not meet most of the lending criteria (e.g. five c’s of credit) and as a result, are declined credit.  Interestingly, it is estimated that only 22 percent of enterprises in Sub-Saharan Africa have a loan or a line of credit.  This lack of access to a formal payment infrastructure limits the businesses growth because of the lack of insight into the owner’s track record.

Rather than limit the scope and scale of one’s business to customers who are able to transact with a certain amount of cash at a time, electronic payments taps into the power of the Internet to extend the geographical scope of clients who can transact digitally, whether in Kampala or Kuala Lumpur.

One of the solutions that we are rolling out across Africa to help MSMEs is the MasterCard Payment Gateway Service (MPGS) and mobile point-of-sale (MPOS). The secure and robust Internet payment solution and affordable MPOS devices help entrepreneurs accept payments on their website from cardholders around the world and physically in remote locations, not to mention the fact that these merchants can capitalize on local business opportunities that previously weren’t fully explored.

During my engagement with entrepreneurs at the GES, I came across an inspiring story of true innovation, coupled with the ambition of ‘doing good’.  A female entrepreneur, who is a national of Republic of Benin, has developed a scalable solution to help curb the impact of child malnutrition with a highly nutritious cookie.  Her dream is to roll-out the initiative by targeting displaced communities due to unrests, famine, etc.  Additionally she will need to be able to have a smart digital payment solution to pay suppliers across the continent in various currencies.

Her story reminded me once again how important conversations are, because until we understand the challenges, how can we possibly create solutions that meet people’s needs?  The MasterCard Lab for Financial Inclusion in Kenya will help us create further opportunities to engage with entrepreneurs on a daily basis, something I personally am looking forward to be part of.

Female African entrepreneur