The Myth Of Nigerian Mobile Payments Monopoly

“The unbanked have been unbanked for a very long time and there is a reason why they remain that way. Banks have been around for centuries and there is a reason why they don’t have everyone as customers”

The statement above was made by a speaker at the recent Mobile Money Connected World event in Dubai. It sparked a lot of debate between bankers and non-bankers like me and it was a healthy debate where everyone gained some knowledge and insight into each other’s industry.

Tunde Lemo a Deputy Governor at the Central Bank of Nigeria (CBN) has excellent credentials and has had my respect for a long time. He was brought into the CBN at a time banking was being ruined by bureaucrats who were out of touch with the industry they were regulating.  He has done well for his primary constituency “the banking industry” and continues to do well for them by protecting them against impostors like the telcos and others.

The first time I heard that he made a definitive statement about the mobile payments framework in Nigeria was at the AITEC banking conference in Nairobi last year. He was said to have pronounced that the Kenyan model where Safaricom is dominant will NEVER be allowed in Nigeria. I found it strange at that time that such a highly respected figure was making definitive statements about an industry still in its infancy. He was not having a debate, he was making a pronouncement. I thought that maybe he was misinterpreted the first time as I was not there while he was making the statement. I however heard him again the second time loud and clear when it was widely reported in the media that he said and I quote:

 “We cannot licence telcos to be operators of mobile money because they lack the capacity to do so. What we are doing in Nigeria is to licence mobile money operators and then ask them to go and discuss with the telco who will provide them (licenced operators) with the technological platform for their business.

licencing telcos as mobile money operators would bring untold hardships to consumers as the mobile operators could hold the economy to ransom. “It is like this, they (telcos) have the technology to drive the mobile money business. What will happen if they are licenced is that they would make it extremely difficult for the other operators using their platforms optimally because they would seen as competing operators.”

"the Kenyan experience was not a good model for Nigeria. “I am sure if the Kenyan central bank had to do it again, they would do it differently because what Mpesa has done is to create one big monopoly for the country. A single operator controls 90 per cent of that country’s mobile money payment, is not really good enough for any economy.”

MPesa may have its flaws but it has been successful and has been widely praised (and hyped) globally for the way it has transformed the East African economy. One thing that has to be made very clear is that MPesa is NOT a monopoly and monopolies are impossible to achieve in mobile payments or any utility without active collaboration by the regulators or governments. The most celebrated telco monopoly was AT&T in the United States and that was before mobile phone technology became prevalent.  With current technology enabling  IP telephony, MVNO models and Mobile Number Portability, a monopoly is almost impossible to achieve in telecommunications.

What is a Monopoly?

I do not make any pretensions to being an economist as my exposure to economics is limited to 2 semesters in my MBA, arguments in my MSc class and reading several journals like this one here on "The Myth of Natural Monopolies" by Thomas J DiLorenzo

From my pedestrian knowledge of economics, a monopoly is defined as:

“The exclusive possession or control of the supply or trade in a commodity or service.

Such exclusivity can come either from business combinations by the existing players to form a single entity or mandated by the government in the case of  franchise utilities or concessions. The case for government mandated monopoly is based on the weak argument for "Natural Monopolies" which Thomas Dilorenzo insists do not really exist. One of those government created monopolies was recently enacted by the CBN - the National Central Switch. I gather that a memo was recently approved by Mr. Lemo himself instructing (not encouraging) all players to interconnect via the NCS.

I made the case for telcos in a previous post as the best organizations to help scale mobile money simply because the current experiment had not worked after one year. I also said that the infrastructure to enable mobile payments succeed in Nigeria is already in place as the telecommunications companies have put in a lot of investment to build it over the years. These same telecommunications companies are already doing a lot of micro-transactions in form of airtime transactions of immense magnitudes and that industry is currently the most competitive with winners being those who provide ubiquitous access and deliver the best service.

In Thomas DiLorenzo’s argument against so called Natural Monopolies":, he reiterated the consensus amongst economists  that:

“Large-scale, capital intensive production did not lead to monopoly, but was an absolutely desirable aspect of the competitive process. “

He also stated that:

“The word "process is important here. If competition is viewed as a dynamic, rivalrous process of entrepreneurship, then the fact that a single producer happens to have the lowest costs at any one point in time is of little or no consequence. The enduring forces of competition-including potential competition-will render free-market monopoly an impossibility”

He argues that regulators and governments knowingly or unwittingly create monopolies and not free markets. An example of such a monopoly being created in Nigeria is the National Central Switch. I now believe that it is a very bad idea.

Mpesa was never a monopoly but a very successful model that all others have tried to emulate in the emerging markets with varying degrees of success. The CBN as a regulator is also within its rights to make policies and provide the best framework that would improve the payments process in Nigeria but such policies should not be made out of imaginary assumptions but rather empirical evidence. The only people complaining about the success of MPesa in Kenya are the banks and not the customers. The banks have deliberately excluded a large proportion of the population from their services over the years because they could not justify the cost of infrastructure to enable micro transactions for such customers at scale. The telcos could do it and they did very well while at the same time competing with each other. A lot of economists actually argue that large-scale production and economies of scale should ideally be seen as a competitive virtue, not a monopolistic vice

What is an Oligopoly?

An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists).A general lack of competition can lead to higher costs for consumers

Banking in Nigeria after multiple consolidations is becoming an Oligopoly. The same bankers control the successful switching companies as they support their own and kill others. In my opening statement I mentioned that the unbanked have remained that way for a reason and that reason is simple, they provide lower margins to the bankers as the cost of reaching them does not justify the investment in infrastructure requirements.

The infrastructure problem

Telcos and Banks can never fairly compete for access to the unbanked because while both industries have their own infrastructure, the telcos have indeed deployed the infrastructure to reach these people at the bottom of the pyramid while the bankers have concentrated on the higher layers. Telecommunications enjoys the benefits of economies of scale while banking thrives on protectionist policies and exploitation.

Telecommunications itself is a capital intensive industry and the single most effective barrier to entry by competitors had been infrastructure costs. That model is also rapidly evolving as the regulator encourages shared services and puts in place measures like number portability to ensure that customers are not boxed in. Telecommunications is dynamic and evolving, the real question should be why is banking not evolving the same way? Why is the regulator not actively encouraging shared services and infrastructure? It seems the regulator’s policies protect a few players at the detriment of the general public. Free market policies will actually help change the face of banking and ensure that bankers themselves realize the need for investment in infrastructure.

The telecommunications industry itself was a victim of the flawed banking model in Nigeria. I remember when the licenses for GSM operators were being issued, the local banks were lukewarm players as they did not take an active role in the investment process. The decision was justified at that time because telco funding requirements dwarfed the capitalization of most Nigerian banks around then. They also felt it was a risky and unproven terrain and made tepid attempts at syndicating capital.

I remember how difficult it was to raise a loan of 7 Million Naira for the operating offices of Econet Wireless Nigeria when I was involved in the startup stage of that project. I had to get members of the board to provide guarantees of exclusivity for collections from dealers to get simple loans from a local bank. It then made sense for the companies to seek investment from outside Nigeria. When the telecommunications companies became successful, there was a rush by the banks to handle their cash. The real fight between telcos and banks in payments is about cash and float, it is not about service or market share.

The way forward

It can be argued that the CBN’s directive to banks to divest from other non-core activities would raise professionalism in the industry, it has however put more pressure on the banks to control what they seem is their turf from others. It should however be made clear that payments is not banking, it is a service that can be offered by the banks in conjunction with others. All successful payments initiatives have the backing of the banks but are actually not led by them. Visa or MasterCard are not owned by any bank but are service companies.

I do not believe that the ex-post attempt at the rationalization of CBN’s decisions based on the fear of monopoly can be justified in any way because the telecommunications industry in Nigeria has a strong regulator who prevents such practices. Nigeria is not America where the regulator granted AT&T monopoly status. One telco appears dominant because the investors have put in a bit more resources. Granted that Telcos are not interested in payments for totally altruistic reasons, the competitive dynamics already at play in mobile payments will actually be in favor of the smaller telcos than the larger ones as they continue the process of scrambling for market share. The smaller telcos would actually have more at stake as they bring new innovations to the market and try to tip the balance. This is a dynamic process.

It would be in the interest of both regulators to work together to draw up an all-inclusive framework that is not based of the fear of the unknown but deterministic expected outcomes. The framework for mobile payments in Nigeria should concentrate on service and not players. Licensing and regulation should not become a vindictive exercise for the banks to try to get back at the telecommunications companies or protect turf; it should be an exercise that takes into consideration the actual needs of the common man in the street. I respectfully disagree with the monopoly argument by Mr Lemo and the CBN and I think the framework needs a review. 

*Thomas J. DiLorenzo is professor of economics at the Sellinger School of Business and Management, Loyola College.

His text quoted liberally in this post was published in

The Review of Austrian Economics Vol. 9,No. 2 (1996): 43-58

ISSN 0889-3047

Thoughts On Barcamp Accra December 2012

For a while now, it had seemed to me that all the exciting tech community activity in Ghana was happening outside Accra. There seemed to be a lot going on in Kumasi (home of KNUST) and Cape Coast and I have seriously considered setting up something in Kumasi to tap into this pool of talent. When BarCamp Accra was announced, it was a big relief as it gave an opportunity to meet firsthand with those in my neck of the woods.

First problem I found was that a lot of people who should have been aware were not. My brother-in-law is a big time techie in government and ideally should have been a sponsor of such an event but he was busy planning his own private party at home. I had to drag him kicking and screaming to the venue. He also had friends in the industry doing exciting things locally but they also were not aware of the event when I told them about it later at the party. It seems not many techies in Ghana have caught the Twitter bug.

I had never been to Methodist University before and it was a good thing I was dragging my wife and her brother along but it still took a while to find the venue. I got there late but it was a pleasant surprise to see people like Herman Chinery-Hesse talking at one of the breakout sessions. Herman used to be my wife’s boss and a local pioneer of indigenous tech activity. The venue however could have been better as it was far from what I had expected. It made me realize the gap between tertiary education in Sub-Saharan Africa and other parts of the world. My old secondary school had better chairs and classrooms.

I quickly joined Herman’s breakout group (which was naturally the largest) and was impressed by the frank and open questions being asked by the guys around. It may also have had a lot to do with Herman’s own distinct style of not pulling punches but this was a different set of people from the shy cohort I have had to work with at some times in Ghana. Some of the local techies in the past had me almost pulling my hair out in frustration as they made (mostly wrong) assumptions on a lot of issues and never asked questions. These guys here were eager to learn and Herman was eager to share his own experience and knowledge.

One of the biggest problems we have with learning and knowledge sharing in Africa is our pedagogical models reinforced by a culture that encourages it. We see the older people as wiser ones who should never be questioned even when we have our doubts. Asking questions or arguing with elders was always frowned upon, as it was a sign of disrespect or poor upbringing. It also has led us into deep holes of ignorance as it never allowed us to learn properly. The boundaries of knowledge are increased when we question assumptions and in Africa, most assumptions are never questioned so they subsequently become a fabric of the culture.

The older generation learned from those before them and they pass on these practices along without question and the rate of change is slow. I found the Ghanaian society to be less turbulent because of this conservatism but in the age of the Internet, conservatism has no place. If you don’t question assumptions, you will not innovate. It was therefore  huge relief when I found people asking questions instead of just sitting down and taking in Herman’s sermon. Some of the questions were silly but were valid questions by people who were not ashamed to show that they did not know and wanted to learn and it was a good thing. In Nigeria, I found that in similar scenarios, a lot of people asking those questions would do it in a manner where they try to show off more of what they think they know than to readily admit what they do not know. Ego is a huge problem in African tech.

The two extremes, conservatism and egotism have to give way for true learning and innovation to happen. I remember my first day at a Harvard Executive Education Program, Professor Tom De-Long told us that to get the most from the course, we had to leave all our previous assumptions about management at the door before we walked in and open our minds to learn. We came out of that course knowing more about what we do not know than any reinforcement of what we thought we knew. Innovation in tech should also follow the same path; both mentors and entrepreneurs should never assume to know it all or assume any other person has all the answers. The thoroughfare to innovation is an inquisitive mind.

BarCamp Accra gave me hope again for the next generation of African techies. Leaning comes from asking a lot of questions and they were asking plenty. I am also happy that people like Herman are involved in the community; his frank and opinionated views are required to get people thinking and not following. A guy asked him there openly if he could come to his office to just sit and learn and he responded asking what the guy had to offer in return? We are building business communities here, as technology is a business and not a charity. That message also needs to be drummed into the Ghanaian tech community where a lot of so-called “social entrepreneurs” are springing up fed by NGO Kool Aid.

Thanks to Ato Ulzen-Appiah(@abocco) and his crew for the effort but a better venue (with Internet) will be preferred next time and we will provide our own contribution when asked to make that happen. There is a revolution happening in Ghana and the world will soon feel it, not just hear about it.

88MPH Demo Day Nairobi - A Great Day For Beer Drinking, Networking, Learning And "PDA"

I attended the last Demo Day organized by the 88mph startup accelerator in Nairobi yesterday and had a swell time. The location of the accelerator is probably the best place in Africa!  By location, I don’t mean Nairobi the city but rather being located the same building where the best beer I have ever tasted on the continent is brewed. We all know that Starbucks Coffee and beer largely power tech entrepreneurship in places like Silicon Valley, Brew Bistro and Lounge (my favourite and adopted Nairobi hangout) provides both food and drinks in the same building as 88mph.

Brew Bistro is run by and they provided a lot beer at the event. A pub run by a brewery with fresh beer flowing is always a winner. They actually brew it right on the premises.

Sometimes it seemed people were more interested in beer and networking than the startups. People spoke freely as alcohol flowed even more copiously; it probably allowed most of us to ignore the fact that the list of startups doing demos was a tad underwhelming. Frankly with all the fanfare, I expected really innovative ideas but a lot of them were more like recycled Western and local models. A few were outstanding and I am sure things will get better with time.

In my opinion, the only truly awesome startup at the event was a revolutionary African music distribution venture.

Gamsole from Nigeria was also pleasant surprise. and I had a chat with them after the pitch where they mentioned stuff to me I did not hear previously. I liked their tenacity and willingness to learn more but they need to review their model. My belief is that the future of gaming is social and multiplayer not single player downloads. There were others that were so bad that they could not answer simple questions about the valuation they placed on their company. Presenting a pitch to raise $50m means being at your best form and if you can’t give straight answers when asked, it means you either don’t understand the reason for the pitch and have a long way to go.  I will talk more about my experiences with startups at the event (awesome, great and not so great) in subsequent posts.


The most important lesson I learned yesterday was that building an Accelerator or even the larger project of growing the tech ecosystem is not a part-time affair. The guys at 88Mph are are devoted to the accelerator (and Brew Bistro) 1000%. That has been the greatest mistake we have made at Afrinnova and Open Garage. It will DEFINITELY change in January 2013, opening a bar or lounge nearby may also help. Seriously, the guys at (in Los Angeles) always tell me, “an Accelerator is also a startup” and it deserves to be incubated or nurtured carefully. You cannot outsource it. It is not about hiring and firing but putting all your passion in it the same way you would do for any startup or growing enterprise.

I used to think that because we had an "unconventional approach", things would happen just like that as there was pent up demand. I was wrong. For startup ventures in Africa there is quantity and not quality. The noise to signal ratio is very very high. It also explained why the 88Mph Demo Day line-up was underwhelming. What I have learned in the past year is that getting people who do not know each other to work together in Africa is the biggest hurdle. Building African tech communities depend on deeper ties and a great foundation. We discovered that probably the only way you get great teams who work well is if they all started from school. If you take a sample of the best teams around Africa, they all started out as friends in school and had a common purpose from the beginning. Getting hustlers together to form a community is a disaster.

African seed stage accelerators should ideally be in schools. Gbenga Sesan’s effort with TENT deserves special commendation as it encourages entrepreneurship at that level. The schools already need a lot of help as Olabinjo Adeniran highlighted in his latest post. Having accelerators inside them will do everyone a lot of good.

Tomorrow I will try to visit HiveCoLab in Kampala, Tuesday it will be ccHUB in Lagos and I am not only learning but also building relationships with entrepreneurs and investors all over Africa. In the past year, that has only been something I do as a secondary outcome of my business visits to clients and partners. This will now change.


Another thing that struck me after my visit to Nairobi and interacting once again with the tech community is that there are still a lot of people hung up telling the world how their venture or organization is also founded on principles of social impact. It even crept into some of the presentations by the startups and it made me cringe each time anyone mentioned it. This public display of altruism (PDA) makes me more worried about the future and gives little comfort.

I love Africa and I am one of the biggest advocates of progress in the continent and YES, I am also a “cynical punk” and "hardcore capitalist" who does not sugarcoat the obvious. There are some things that must be said for the benefit of everyone while others struggle to avoid the apparent truth. If you want to do good stuff for your community, just shut up and do it not brag about it.

I sometimes wonder why can’t we be very Machiavellian about tech in Africa and say the real truth that we all really want to make money for all parties involved. All parties including entrepreneurs and investors are there not just to save Africa but to get groceries on their table and the rent or mortgage paid. A few get lucky and become philanthropists but the underlying fact is that you don’t grow great companies by thinking of social impact first or flaunting your credentials as a possible Saint.  Bill Gates became a phialtropist only after Microsoft was a success and Pierre Omidyar could not have been one if eBay was not successful.

Social impact is an important by product of growing a tech ecosystem and should not be the primary motive. Excellence and merit is what builds great ecosystems not donor funding. If we keep getting hung up on social issues, we will miss the point of it all. Growth and excellence comes when we create efficiencies and new markets and not from compounding mediocrity. Collaboration and building communities work best when all parties are truthful that they will also gain from it.

I will say it openly here and you can quote me; trying to run a startup by claiming that it is solely because of purported altruistic motives is a scam. You will not get canonized by the Catholic Church for pretending to do it from the good of your heart so enough of this PDA. I actually get edgy when someone starts from this angle and they remind me of used car salesmen.

I believe hubs/accelerators/incubators etc have two purposes 

  1. To make lots of money for everyone while building communities and ecosystem or
  2. Just become a location where a collection of tech enthusiasts gather for the sake of the tech itself and have fun at it while also growing the ecosystem. 

Personally, I am interested (as part of Afrinnova) in growing the local ecosystem because I hope to make a lot of money while helping awesome local startups to scale across Africa. I am motivated primarily by longer-term survival and sustainability for the ecosystem because of ventures I have in it and not any high hopes of becoming the next Nelson Mandela or Fred Swaniker. Those great men did not talk to everyone about doing it, they just did it.

Two people have said things in the past that I did not realize made a lot of sense until yesterday. Kwame Luke is Sierra Leonean co-founder at Afrinnova; he really gets pissed at self-appointed (or is it anointed?) “Saints” in technology who pretend that they are do-gooders but surreptitiously using funds from donors to support their lifestyle. He says these same people quickly become hardcore capitalists when it suits them revealing their true intentions. He used to work with a lot of them and he knows what he is saying. Jason Njoku (Founder of Iroko) puts it less eloquently and calls them “bloody fake hippies”.

 I don’t know if it was the “Brew Bistro” beer that sharpened all my senses but I could smell the bullshit all around. At a point I had to ask a guy if he realized he was talking to a Nigerian? He quickly got the message and avoided me for the rest of the evening. “Hippies” may have built Silicon Valley but capitalists now run it. I think for Africa, we have wasted enough time and should skip the hippie stage altogether.

Yes we must build communities, yes we must collaborate but we can only do that if it suits our primal objectives. There will always be Darwinists and hardcore capitalists and I am not their best friend either but at least they are honest about their intentions. PDA scammers are the scum of the earth.

Dee Hock the founder of Visa says and I quote yet again:

"Community is composed of that we don’t attempt to measure, for which we keep no record and ask no recompense. Most are things we cannot measure no matter how hard we try – such things as respect, tolerance, love, trust, beauty – the supply of which is unlimited.  The nonmonetary exchange of value does not arise solely from altruistic motives. It arises from deep, intuitive, often subconscious understanding that self-interest is inseparably connected with community interest; that individual good is inseparable from the good of the whole; that in some way, often beyond our understanding, all things are, at one and the same time, independent, interdependent, and intradependent…

Without an abundance of nonmaterial values, and an equal abundance of nonmonetary exchange of material value, no true community ever existed and never will.  Community is not about profit. It is about benefit."


Nairobi is an awesome place and everyone who is doing something positive there also enjoys a great time.They should make no apologies for that or try to hide behind the veil of PDA. Others outside Nairobi are beginning to also follow the same path as well. In Ghana, some techies I know are in it more for donor money than anything else and the first thing you hear when they pitch is “social impact”. A guy in our office started building yet another education app for the last Google Apps developer challenge and I asked him how it would scale? He started talking about social impact and funding, I killed the project and replaced it with a commercial one. I also heard this interview of one of the founders of Wennovation Hub in Nigeria today, it started out very great when he talked about their focus on getting local investors involved (I believe in that 100%), when he started making the social impact pitch, he lost me as part of the audience as I switched off.

To be candid, I will not reject any money from an investor who genuinely cares about local growth especially if they decide they are doing it from the good of their heart and not expecting abnormal returns. They most likely have met their objective by just giving it to the entity they believe will spend it wisely. Most of the time there is due diligence and monitoring but some NGOs or social impact investors still directly or indirectly perpetuate the problem. It seems there is a glut of this type of money around and it is not bringing out all the best but more of the noisier mediocre bunch.

As Eghosa Omoigui of EchoVC reiterated and I completely agree, "investor funds of ANY kind are not meant to fund lifestyle but to generate returns" Those returns can be in any form but have to be measured empirically to make sense. I am also an investor and entrepreneur and I know what money can do when spent wisely. Returns on social impact investments are harder to measure and it makes it easier for the unscrupulous to hide their true motives. What I really abhor is entrepreneurs pitching social impact as a way to score cheap points in a demo day. If they are that desperate then they don’t deserve ANY money from ANYONE.

Thanks again to 88Mph for an awesome event yesterday, the networking was worth much more than the pitching and they should probably do more events with Brew Bistro beer flowing. That is my last shameless Bistro plug in this blog and I hope they compensate me with a barrel next time I am in Nairobi.

Payments At 38,000 Feet

A couple of days ago I was on an Emirates flight between two continents for at least 11 hours and to catch up on work I used their onboard Internet service  “OnAir “. This was not the first time I had used this service on Emirates or any airline for that matter. I have tried "Gogo" on American Airlines domestic flights between New York and San Francisco, also on Virgin America. What made this experience memorable was that I was able to pay for it in less than 3 seconds and my payment was validated even as I was moving in a vessel at close to the speed of sound at 38,000 feet above the ground. For some reason this time, the payment bit stuck in my mind.

We have been working as consultants on transactions platforms for 10 years and I know how hard it is to make things work for people who are just walking around with cell phones. The recent experience made me realize the importance of card associations and the role they play in facilitating global transactions and connections. The transaction did not require any exotic interface, all it required was my name, card number and validation code (all available on a piece of plastic), I was online in seconds.

In one of my sessions, the service got interrupted because of turbulence and I got refunded also in an instant. I even got an email notification to confirm it. All the complexity in getting the transaction fulfilled happened in the background on a platform built to handle it. 

VisaNet or the MasterCard Network never fail to amaze me, yet when people talk about all the innovations in payments like Square, Stripe even Paypal with all the new bells and whistles they fail to realize the importance of this global infrastructure to making everything already happen in the background. I guess we are all like kids in payments looking for shiny new toys but ignoring the old reliable playground.

MPesa is a success in Africa because it enabled a huge mass of people to carry out transactions between themselves with a ubiquitous channel but let us not kid ourselves, all those people are all still within a closed loop. All the innovations around MPesa will remain hard to scale as long as they remain within this closed loop. Even current attempts at interoperability between payment schemes in some countries have had limited success as the players are more interested in providing this functionality as just another feature rather than an integral part of opening up their platforms to a wider ecosystem.

Visa and MasterCard are global successes because they help to provide a common standard that is universally acceptable and globally verifiable. The banks still own the customers but the merchant does not need to know which bank the customer has his account with or vice versa, all they do is depend on the card association to perform the settlement. All parties trust the card association to perform this function quickly and also to mediate in any dispute. Visa or Mastercard put their brand at stake on every transaction and assume all responsibility. That trust relationship is what companies like Square and others are trying to replicate but with newer technology and less friction.

Building a similar trust relationship using mobile payments in Africa has been hard because there has been no common denominator or arbiter between parties irrespective of the payment scheme or operator. Companion cards to mobile wallets provided by some players end up as just an alternative means to perform "cash outs" rather than really extend the functionality of the mobile wallets in the ecosystem. Even attempts at integrating mobile wallets diectly to existing merchant platforms hang on the thread because of this issue of trust.

I had an epiphany on that flight; the only way to get mobile payments to truly scale all around is to provide the same trust relationships between all parties in a scalable and ubiquitous manner. It really should not matter who provides the customer with the wallet, as long as it conforms to a particular standard, payment can be accepted. Current aggregation models fall short when it comes to building that ubiquitous level of trust between all parties and will only remain niche solutions because they focus on the interface and not the relationships. They are only increasing the size of the closed loop and don’t integrate well with the larger ecosystem.

The mobile wallet is just another location to store electronic value and should easily be linked to other repositories of value to allow easy flow in an ecosystem. If that functionality is not natively available then we are just trying to reinvent the wheel by adding new layers of complexity.

Mobile has a huge advantage over card payments, as there are many ways to verify that authorized parties have performed a transaction. Location data cannot be repudiated and one time passwords or validation codes can be generated and sent on the fly. It is very obvious that the future of the card associations is in mobile and all what has been happening so far is just a preamble. A partner from Egypt who sold his payment company to one of the card associations told me a year ago that there was very little room for small players in payments and I argued with him then but now I believe him. It seems that in payments there is a food chain, the fast will eat the slow but the big will eat up everyone else. Visa acquired Fundamo last year and made some other strategic alliances to confirm this.

There is a lot of racket around about NFC and contactless payments using mobile devices but there was nothing an NFC equipped mobile device could have done for me at 38,000 feet. Granted that there are different use cases and not everybody flies on airplanes or even use the Internet as they do, the bottom line is that the underlying trust relationship the card associations provide at scale will be very hard to replicate without also working with them. All NFC players are extending the card associations functionality and not disrupting or replacing them.

To replicate the trust relationships these existing global payment organizations have in place will mean collaboration on an unprecedented level between current players who already only see themselves as adversaries. Regulators cannot enforce interoperability especially where operators see their closed loops as turf providing competitive advantage.  Settlement or switching institutions can only act as facilitators only after standards have been established.

My bet is that the next wave of successful mobile payment initiatives will have interoperability woven deeply into their DNA and the card associations will provide the infrastructure to make this happen from the day of launch. The standards for mobile payments will once again be set by those who have successfully done it for global card payments. That is unless Google comes along to ruin the party.

The guys from MasterCard said it at the last Carte Africa event in Morocco, their biggest fear is Google and Google is coming. I still think Google have no choice but to work with the card associations, as they will be around for a very long time. I did not use Google Wallet at 38,000 feet, I used Visa.

A Tale Of Two Queues - The Knowledge Gap

I was at the immigration queue at JFK yesterday which was especially long as it was an Emirates flight. Each person had to be given "special treatment" by the TSA. The time we spent on the queue allowed me to learn a lot more about the people around me from the conversations they were having. 

Four young South Africans in front of me were having a rather animated discussion about a lot of things ranging from encryption to sub-atomic particles. I saw a couple of Google Nexus 7 tablets with them as they were talking about Google's encryption protocols and also Bosons, Leptons, Fermions and Quarks. I probably got more education just from eavesdropping in that conversation than I have had from years following and seeing chatter from my mostly Sub-Saharan African friends in social media.

It happened that they were from the University of Cape Town and were on a exchange/internship program named "Cultural Vistas". I took out my iPad there on the queue and Googled it then became part of their conversation too. This is a program I think a lot of young people in Sub-Saharan Africa should be part of and I think even working in other parts of Africa will be a great idea as well.

This brings me to the second queue in Dubai where we were waiting for a taxi at Dubai Mall after the movie theatre had closed. There were some young Nigerians in front of me and their conversation was mostly about fashion, Nollywood and music.... 

It may have been wrong timing and it may also be unfair generalization but overhearing the conversations from two different sets of young people on both queues got me thinking if our real problems in Sub-Saharan Africa are not the same that is plaguing Black America? Chris Rock said Shaquille O'Neal is "rich" but the guy who pays his salary weekly is "wealthy". At the rate we are going, the South Africans will keep paying us our salaries, they already pay mine. The young South Africans were on the Cultural Vistas program to seek more knowledge and experience while the Nigerians were in Dubai to shop for clothes for the new academic session.

While we were undergrads and shortly before our graduation in 1988, my late friend Obi Osakwe whom we fondly knew as “Obi Live” made a prophetic statement. He said that if we keep drinking beer and chasing after young women, we would be helping to increase the gap between the developed and developing world. He further explained that an 18 year old American or European probably had visited several countries and knew how to fly a plane but all we knew then was how to drink a lot of beer and get under the skirts of the ladies very quickly. He was a very handsome and outgoing fellow so he knew very much what he was talking about. He challenged us to do something different and it made me think of a career in technology rather than banking or accounting, which were the fad professions at that time.

The knowledge gap is increasing and sadly "Obi Live" did not live long enough to see his prophecy come true. He died in a road accident shortly after graduiation. We lost a visionary and a potentially great leader. When I speak at the Paradigm Initiative Nigeria's TENT gathering at Ife next month, I will be reminding everyone of Obi’s warning. I see hope in the new generation but they just have to be exposed to other things beyond fads.

My friend Andrew Turpin a South African living in Pretoria and one of the founders of (together with his father Andrew Turpin Snr) built an airplane from scratch and flies it. Details here. I am still battling with flight simulators and I’m here in the USA on Black Friday to look for bargains on equipment.

Obi Live was right, we should have left the beer and girls alone.