Stories - David South Consulting

Entries in African innovation (2)

Tuesday

Jun302015

African Innovation Helps Make Banking Transactions Safer

Tuesday, June 30, 2015 at 11:17AM

As economies grow in Africa, more and more people are conducting their financial transactions electronically. This can be either through mobile phones and digital devices, or through the hole-in-the-wall of the automatic teller machine, or ATM.

These short cuts mean many people no longer have to endure long line-ups at banks to conduct day-to-day financial transactions. This convenience is revolutionizing banking for many millions of people, but there is a risk: fraud and theft. Both are rising, and are costing customers and banks, both in cash and in damage to the reputation of electronic banking.

Criminal gangs and lone individuals alike are behind this crime. Most notorious are the “carding” and “skimming” gangs, who plant devices on ATMs to read plastic bank cards and steal victims’ money. Mobile devices can also be “hacked” by sophisticated criminal gangs and the data stolen and used to plunder bank accounts. Lone thieves also take people hostage and force them to use their card to withdraw money. A crime victim is usually forced to give over his or her Personal Identification Number (PIN), which the thief then uses to withdraw cash from the ATM.

But just as thieves have become cleverer about the new opportunities created by digital financial transactions, enterprising start-ups are developing innovations to improve financial security.

One Kenyan start-up is hoping to be a pioneer in innovative financial safety software for mobile devices and ATMs. Usalama Innovative Systems, LTD. (http://usalama.biz/), co-owned by graduate student and lead programmer Denis Karema (deniskarema.com), has already been singled out for a CIO magazine’s CIO100 Award in Enterprise Innovation in 2011 (http://www.cio.com/cio-awards/cio100).

Karema has been working in information technology since 2008 and has a background in computer science. He has built his experience while working on various information technology projects in East Africa.

The ambitious company says it wants to be “the leading provider of innovative solutions to financial entities in Africa by 2015.” Usalama has developed various systems pending patents and copyrights and has built up experience in deploying enterprise information technology.

Usalama is seeking additional funding from investors for multiple innovations to protect customer financial transactions. One of them is an ATM solution, which the company claims can reduce theft by over 90 per cent. Speaking with the Business Daily Africa website, Karema explained the anti-fraud application, dubbed Safety Pin.

“When someone approaches you or when you are involved in a carjacking, or one of those unfortunate incidences, you give them your card or PIN as they ask for it, but when they get to the machine it does not treat them the same way as it does you,” Karema said.

The thief is presented with what looks like the victim’s bank account but actually only has 10 per cent of their cash on display. The thief will then withdraw this cash and think they have cleaned out the victim’s bank account.

It is a clever solution which doesn’t entirely block the thief from receiving money from the ATM, but just gives them a small portion of the amount in the account. The idea is to fulfil the psychological need of the thief to get some cash in the robbery attempt, so they will then release the hostage and go away.

“We are working on reducing the amounts that can be lost by up to 90 per cent, so it means if I have 100,000 shillings in my account, only 10,000 shillings can be lost through fraud,” Karema said.

The amount that is stolen can be covered by bank insurance policies so that the customer does not suffer a serious financial loss.

“(The) good thing about this application, first of all, is this hasn’t been done before,” Karema said. “People have come close to creating ATM anti-fraud measures, like asking you to put your PIN in reverse. But they don’t seem to work. For each of them, you are ending up having your money stolen and then following up with the fraudster. So our application prevents the money from being stolen in the first place. So our preventative measure is better than a curative one when money is involved. And also the application is applicable globally.

“We intend to have this implemented in each and every commercial bank, not only in Africa, but the rest of the world.

“A bank can recoup investment in our application within the first year [by avoiding the loss of clients and funds from fraud]. Aside from that, the bank is also able to receive complete and detailed reports each and every time a fraud occurs and so it makes it easier for the bank to monitor trends and also to know which of their outlets are having more and more fraud-related cases.”

Other innovations Usalama has been developing include Usalama Pin, which helps commercial banks monitor fraud in real time; Usalama Spy, which gives more detailed fraud reports and analyzes the information; Home Bank, a way to offer 24/7 banking to customers so they can deposit the money directly into savings accounts without delay; and Usalama Mobile, a mobile banking and money service solution.

Usalama believes the suite of solutions will help banks to retain current customers and make their financial transactions safer, attracting so-called “high net worth” clients. Usalama believes this will help banks in Africa grow their number of customers and cash reserves.

“We are always thinking about innovation because we feel that innovation is the key thing to developing sustainable enterprises,” Karema believes.

By David South, Development Challenges, South-South Solutions

Published: March 2013

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.

Follow @SouthSouth1

Google Books: https://books.google.co.uk/books?id=Z_ZcAwAAQBAJ&dq=development+challenges+march+2013&source=gbs_navlinks_s

Slideshare: http://www.slideshare.net/DavidSouth1/development-challenges-march-2013-issue

Southern Innovator Issue 1: https://books.google.co.uk/books?id=Q1O54YSE2BgC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 2: https://books.google.co.uk/books?id=Ty0N969dcssC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 3: https://books.google.co.uk/books?id=AQNt4YmhZagC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 4: https://books.google.co.uk/books?id=9T_n2tA7l4EC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 5: https://books.google.co.uk/books?id=6ILdAgAAQBAJ&dq=southern+innovator&source=gbs_navlinks_s

Creative Commons License
This work is licensed under a
Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

David South |

African Innovation Eco-system Taking Shape

Thursday, June 25, 2015 at 9:01AM

How to increase the rate of innovation in Africa? And specifically, innovation that actually improves people’s lives and reduces poverty. It is a hard question to answer, but some are putting in place the building blocks of a 21st century innovation culture by riding the information technology revolution as it rolls across Africa.

The transformative story of mobile phones in Africa has captured the attention of the world. Technologies like mobile phone payment systems developed in Africa are now being rolled out around the globe.

But there is more to come as undersea cables increase the communications links between African nations and the rest of the world. New undersea cables including TEAMs, Seacom and Eastern Africa Submarine Cable System (EASSy) (eassy.org) are vastly increasing the continent’s Internet capacity and bandwidth (http://en.wikipedia.org/wiki/Bandwidth_%28computing%29).

These communications links will revolutionize the type and scale of innovation that can happen in Africa.

As websites like AfriGadget (afrigadget.com) amply prove, there is already an entrenched do-it-yourself innovation culture hard-wired into daily life on the continent. While impressively resourceful and able to make the most of often very little, this innovation culture is often confined to a narrow geographical area. And this is the difference the new information technologies will make: They will allow this energetic and resourceful innovators’ culture to develop businesses and business models that can reach beyond narrow geographical parameters.

New technologies will also accelerate the spread of new ideas and solutions.

Across the continent, ways and means are being stitched together that enable people to transcend borders and old divisions and obstacles to connect with like-minded collaborators, seek out funding and take ideas from dreams to schemes and eventually to continent- and world-straddling levels.

According to the Deloitte 2011 East Africa Private Equity Confidence Survey: Promising 2012, “Many investors see East Africa’s strong growth potential as a driver of better investment performance than in South Africa: This is a huge shift in private equity attitudes toward Africa, which have been historically focused on South Africa. East African investment potential is seen as roughly on par with West Africa, where similar growth dynamics are at play.”

Identifying the elements that are making this innovation culture flourish came under analysis in a recent post on the Afrinnovator website (afrinnovator.com). Afrinnovator is dedicated to “telling the stories of African startups, African innovation, African made technology, African tech entrepreneurship and entrepreneurs.”

While it is well known that new infrastructure, better governance, new policies, and new services like mobile phones and mobile money have made a big difference in shifting perceptions of Africa from despair to optimism, Afrinnovator found there were other key ingredients to this innovation renaissance.

Afrinnovator argues there are four elements that have come together to change circumstances for innovators on the continent: education, mentoring and incubators, funding, and showcase events.

Afrinnovator found education was critical to the quality of emerging technological innovations. Information and communication technology (ICT) education has moved from just computer science courses to a vast array of options, from bachelors degrees to masters programmes.

For mentoring and incubators, Afrinnovator found hubs and incubators are providing places for young educated people to go to and get down to work.

Examples include iHub (http://ihub.co.ke/pages/home.php), mLab East Africa (http://mlab.co.ke/pages/home.php), ccHub (Co-Creation Hub Nigeria) (http://cchubnigeria.com/about-cchub/), Lusaka, Zambia’s Bongohive (bongohive.com), iLab Africa (http://ilabafrica.ac.ke/) NaiLab (http://nailab.co.ke/) iBid Labs (http://ibidlabs.com/) and Uganda’s HiveColab (http://hivecolab.org/), among others. These places offer like-minded fellowship and access to mentors to take them on the journey from “idea to viable profitable business.”

According to Business Daily Africa, “There are more than 3,000 software developers who have come up with both mobile and personal computer-based software applications that are changing lives across the continent.”

A transformation in funding access has seen a renaissance in new thinking that is transforming tech start-ups into viable businesses. Kenya has the Kenya ICT Board (http://www.ict.go.ke/) and it awards US $50,000 through its Tandaa grant programme (https://sites.google.com/a/ict.go.ke/tandaa/).

Because of this enthusiastic local support, the World Bank is now committing a US $55 million grant targeting Kenya’s technology innovators to be distributed through the Kenya ICT Board.

East Africa also saw 16 new investor funds launch in 2011 alone. They include early-stage investor funds like eVentures Fund Africa (eVA) (http://www.eva-fund.com/), which calls itself “the first venture capital firm investing in African SME’s active in digital media.” Another is Kenya-based 88mph (http://www.humanipo.com/88mph), with its “focus on startups targeting the East African mobile and web market.”

In Kenya, the World Bank money will be used to help technology developers bring to market simple solutions in health and education.

According to the World Bank (http://tinyurl.com/cm3g2rf), “Kenya has put in place the second-fastest broadband on the continent (after Ghana), which has reduced the wholesale internet capacity prices by over 90% and increased internet penetration from 3% to 37% of the population in the past decade. Today, about 90% of Kenyan adults have or have the use of a mobile phone.”

And the final game-changer, according to Afrinnovator, is “showcase events.”

These events give investors and potential partners the opportunity to meet start-ups and explore their new ideas.

Examples include DEMO (http://www.demo.com/ehome/index.php?eventid=29414&) – which connects the idea people with the money people – and Pivot East in East Africa (http://pivoteast.com/). Pivot East provides 25 technology entrepreneurs with the opportunity to make a pitch in front of investors. DEMO is working with USAID, Microsoft, Nokia and others to launch DEMO Africa in Nairobi, Kenya from 21 to 22 October 2012.

Afrinnovator concludes: “This is the last virgin tech landscape left on the planet. The best time to become a player in the African technology innovation ecosystem is now.”