The government of Rwanda is planning to engage private sector in a bid to improve healthcare across the country.
“BailoutBuddy” will rescue you when in trouble with the traffic police and have no cash to settle charges right away
By Boniface Otieno Kanyamwaya
Travelling by road has become exceedingly expensive in Kenya, and it is not because of skyrocketing fuel prices. Drivers are losing too much money to the local traffic police who have no pity for those who cannot pay cash for traffic offenses. Alex Mutitu was once a victim!
In August 2015, the hawk-eyed traffic police stopped him on his way to Nakuru, accusing him of over-speeding and demanded Ksh 25,000 (US$ 250) as bail out charges, money that he did not have in hand at the moment.
He says because he couldn’t immediately raise the fine, he was thrown behind bars for more than eight hours and was only released after borrowing the money from close family friends and relatives – and it was no longer Ksh 25,000 (US$ 250) only.
By the time he gained his freedom back, he had parted with some Ksh 150,000 (US$1500). Considering that he also had to cancel his trip and suspend all other plans, it was a nasty and costly experience.
But he was not alone. Many of his friends and other road users fell victim of such circumstances on daily basis.
He was sick and tired of it, and so he decided to team up with friends, Felix Ngari and Mike Kihia, to come up with a solution. The three came up with Napex Solutions Limited, the creator of BailOutBuddy, a mobile application that bails out people arrested for traffic offences by paying their fine.
“In my case for instance, I had to spend a night in Nakuru that day, which I hadn’t planned for. This app will help others from such unexpected incidences,” says the 32- years-old actuarial science graduate from Digital Advisory Learning Centre (DALC).
How it works
Mutitu says BailoutBuddy mobile app works like an insurance cover, allowing members to redeem amounts payable under a selected premium plan, thereby bridging the gap between when an arrest is made for a traffic offence and the moment one is released from police custody.
There are three categories through which members can subscribe on the platform and they can be downloaded in the Google play store.
“You simply need to go to playstore app in your phone menu, search ‘BailoutBuddy’ and download it. You then have to install it in your phone then go to the phone menu, open the ‘BailoutBuddy’ app and fill in the personal details required and you will be good to go,” says Mutitu.
Members applying for the annual premiums of Ksh 6,000 (US$ 60) are covered for a cash bail of up to Ksh. 30,000 (US$ 300), while those in the Ksh. 13,000 (US$130) plan are covered for up to Ksh 50,000 (US$ 500) cash bail. Those under the Ksh. 25,000 (US$ 250) plan can get cash bail of up to Ksh. 100,000 ( US$ 1,000).
Premiums are payable once a year through M.pesa, with benefits of the cover only redeemable 24 hours from the time of subscription.
During the transaction, M.pesa alert offers details regarding the type of cover and time payment was made, which has direct impact on legality for covers.
Upon an alert that a member needs bail out, the administrator sends motorbike riders who are on standby to the police station where the member is held.
Today, the app has registered 50 members with over 2,000 downloads. They intend to have about 100 registered members and about 4,500 download by January 2017.
They have also employed eight young graduates to help them run a few errands in the office and are looking forward to add five more by April 2017.
Mutitu indicates that they generate over a million Kenya shillings in annual sales.
Their services are currently available in Nairobi, Nakuru and Kiambu. However, they are planning to extend them to all the 47 counties by June 2017.
Creating awareness
To be able to sensitise citizen on their rights when arrested for various traffic offences, on its home page, the BailoutBuddy app has a section which features the National Transport and Safety Authority (NTSA) Act bearing all the traffic offence type and penalties.
According to Mutitu, having the Act on the App helps shield members of the public from rogue police officers who might want to take advantage of their ignorance.
In a recent report released by Transparency International, the Kenya Police scored 81 per cent corruption rate, gaining the infamous title of the most corrupt institution in Kenya, as well as reaching in the top ten bribery-prone institutions in east Africa.
Apart from the educative section, the app also lists cabs, doctors, lawyers, breakdowns, mechanics, police, fire fighters and their contact addresses just in case need arises.
Challenges
“It wasn’t easy at the start. The actual cost of developing the app was about Ksh. 250,000 (US$ 2,500), money that we did didn’t have then” says Mutitu.
Secondly, getting the right people to help them develop the app was not easy. And to make matters worse, they were charging over Ksh. 350,000 ( US$ 3,500) to do the job.
However, all those hurdles did not stop them from achieve their dream.
New products allows Kenyans abroad to ensure their family back at home are covered
By Tullah Stephen
Every year, Kenyans in the diaspora send billions of shillings back home to cater for various needs for their families.
According to the Central Bank of Kenya (CBK), Kenyans abroad sent home a record KSh15.6 billion in the month of June 2016, representing a 6.3 per cent increase.
However, there have been concerns that some of the monies sent by relatives from abroad never reach their families back home.
For long, people in the diaspora have mostly relied on favours from relatives and friends to help them get the money to their families. But this sometimes proved costly. There are cases where people have been swindled millions of shillings as they send money back home through the seemingly trusted family and friends.
To avoid such scenarios, those abroad are now turning to private companies to help them connect to services in Kenya, especially those that require information and research such as securing an insurance cover for their family.
“People in the diaspora are constantly sending money home when their relatives are in need of medical treatment or a family member passes on. Unfortunately, they do not have sufficient information and networks to be able to research companies and signup family members for medical insurance or life insurance,” says Lucy Nguru, founder of WINPamoja, a US-based company that offers a platform for the diaspora to connect to service providers in Kenya.
Nguru says her company, in 2015, conducted a survey that revealed that life insurance is one of the areas that diaspora shied from because they felt there was insufficient information or professional point contacts to help address some of their questions.
“We saw this gap and thought of meeting the markets demand,” she Nguru.
Life insurance, she explains, is not something new to diaspora. However, most services available to the diaspora do not offer customer service experience that promote accountability and loyalty. Though there are several Kenyan Insurance companies angling for the diaspora life insurance business, most have remained unsuccessful in doing business with the diaspora.
Their main undoing, according to Nguru, are inefficient application, renewals and customer processes. This results in non-satisfactory customer experience leaving most Kenyans in the diaspora without Insurance products.
Initially, Kenyans who wished to secure a life insurance product would be required to sign up and then send the application forms back home for relatives and friends to follow up on the process. During claims, they would also ask for favours from relatives and friends to assist them in following up the claims.
But for Nguru, this was an opportunity. Her company, WINPamoja, approached APA Insurance Company in a bid to deliver Life Insurance in a unique way. She came up with WINSure, a life insurance product that allows diaspora direct control over their insurance policy.
The product allows its members to rest at ease while someone else runs their errands such as paper work and claims follow ups. Kenyans in the diaspora sign up through WINPamoja’s website by creating an account that allows them to include family members that they would like insured.
Members who sign up pay US$50 for each member of the family that they would want to insure per year. In return, the member gets US$5000 coverage. Through this product, one can insure family member of the age one month to 75 years.
Apart from insuring ones children and spouse, the product also allows members to insure their brothers, sisters, and grandchildren to whom they will be expected to contribute in the event of their death.
The Insurance application process, Nguru says, takes into consideration that getting families to send copies of their documents to the USA was proving to be a challenge. But with their service now, the diaspora do not engage in the stress of delivering documents to Kenya. WIN Pamoja, through its office in Kenya, handles the process on their behalf. There is no waiting period as the Policy is effective immediately.
Diaspora can continue to keep the insurance policy if they relocate back to Kenya. Similarly, insured family continue to keep coverage if they travel outside Kenya.
In addition, WIN Pamoja has negotiated on behalf of the diaspora to exclude additional elements such as Insuring the Policy Holder and allowing for Cash withdrawal. This makes it affordable to diaspora including students.
“With the improved end-to-end operations, diaspora are now recipients of their insurance claims, which can be used towards funeral expenses, travel to Kenya. and education of bereaved children,” says Nguru who has lived and worked in the US for the last 16 years.
“Our end goal is to provide a platform through which diaspora can access Insurance claims within 7 to 14 days so that they can contribute towards funeral expenses and buy air tickets to travel to Kenya.”
WINPamoja is currently available to all Kenyans that reside outside US.
“We began pushing the product in USA in May 2016. Today, we are very proud to report that through word-of-mouth, we now have account holders in Germany, UK and Italy. We have customers that have been very kind to do referrals because they are happy with the product and our services,” says Nguru, adding that almost 50 per cent of sales are from referrals from existing parents.
A lot of referrals, she adds, are to immediate family and community members.
One of her main challenges, she says, is competition. Life Insurance providers in Kenya are some of her largest business competitors since the diaspora have an open opportunity to insure their families through them.
An analysis by Cytonn investment reveals that the country’s ratio of insurance companies to total population is at 51 insurers serving 47 million people. This is compared to South Africa where 175 companies for 55 million.
Bankers’ umbrella body in a drive to promote access to financial services in Uganda
By Tullah Stephen
Uganda’s financial structure was once characterised by stringent government controls and instability. This led to financial repression and stagnation in the development of Uganda’s banking sector. However, a shift in government policy, in the 1990s, saw the industry gain momentum. The government embarked on a mission to liberalise the sector, which saw the number of banks increase tremendously.
Today, an open playing field for private investors, foreign and local, in Uganda’s banking sector has welcomed 25 commercial banks and one development bank, all keen to participate in the sector’s growth. These reforms specifically provided for liberalization of the sector, strengthening of banks, better regulation and oversight across all tiers of financial institutions, provisions for more products & services, and controls to address risks of money laundering and terrorist financing.
However, despite this impressive progress, Uganda continues to lag behind its east African peers in terms of the banked population. Figures from Bank of Uganda (BoU), the country’s banking sector regulator, indicate that only 20 per cent of the population is banked with about 6.5 million accounts. Evidently, financial inclusion is still extremely low in Uganda, which is why the Uganda Bankers Association (UBA) is turning to financial inclusion to encourage the population to access financial products and services.
UBA’s mandate is to promote a strong and vibrant banking sector, encourage good governance and best practices in banking as well as represent the professional and business interests of its members. According to Fabian Kasi, the chairman of the umbrella body, the goal is to endow the population with wealth creation initiatives to assist them avert poverty. “Our idea is to have the benefits of financial services spread throughout the population to support the country’s economic growth and reduce poverty,” says the chairman of UBA.
UBA, he adds, has for the last two years been championing for financial literacy in Uganda. The ratio of financial saving to GDP, which is an indicator of financial literacy, is one of the lowest at about 13 per cent. UBA’s goal, according to Kasi, is to increase access to financial services and products, their usage and quality of financial services and products.
UBA’s financial literacy programme covers areas such as managing savings, capital mobilisation, funding SMEs and consumer rights among others. “Over UShs 200 million was invested in consumer literacy program that was launched in 2013 and the progress has been very good with the introduction of new products targeting specific population groups spread across the country.”
Kasi who also served as executive director of FINCA Uganda Limited until 2010 argues it is also in the interest of the country’s economy that the population open and manage bank accounts so that banks can get more financial resources needed to finance economically viable projects, which will in turn steer Uganda towards greater economic heights.
“As an association we have been encouraging our members to develop products that will easily attract the larger and excluded consumer market, which comprises of women and youth. This is in addition to being innovative in how we market products,” says Kasi, adding that as they engage with the public through financial literacy campaign, they will be further simplifying banking while sensitising population on how to make money and manage it better.
Promulgation of Financial Institutions Act 2016
The Government of Uganda has since promulgated the Financial Institutions Act 2016, which provides for Islamic Banking, Banc assurance and Agency Banking among others including the creation of key governance structures such as Sharia advisory board.
Kasi, who is an accountant by profession and also the managing director of Centenary Bank Uganda, says the industry is fortunate to have the Financial Institutions Act in place.
The Act, he adds, also permits the banks to provide insurance products and services.
Agency banking will see banks transact business with people outside the banking system, especially in areas where banks have no presence. About 80 per cent of the population in Uganda live in the rural areas.
Building Confidence
The association is also trying to ensure that Ugandans maintain confidence in their banks. According to Kasi, most people avoid going to the bank as they often think that banks are for the elite.
“We are undertaking initiatives that will help the banks ran efficiently. We are setting up an Asset Reconstruction Company (ARC) also known as Asset Management Company that will manage assets that are not doing well for the banks,” he says.
ARCs have been used across the world and mostly in Asia where they have been used to manage or re-construct stressed assets (viable businesses struggling with debt) The ARC will assist banks manage toxic debt impacting on the loan book, which in-turn affects liquidity and ends up eating up the capital of banks hence reducing their balance sheets. “In a year’s time we should have the ARC in place.” says Kasi.
Mobile money services is also growing in Uganda with mobile operators and banks working together to promote financial inclusions. UBA is encouraging its members to look for ways to reduce high operational expenses that translate into higher cost of doing business making service delivery expensive to clients. Kasi says the association is currently advocating for sharing of costs & other resources among banks, especially in agency banking.
Capping Interest Rates not the way to go
While capping interest rates continue to dominate debates in the country, the umbrella body has continuously advocated against it, arguing that capping interest rates remains counterproductive for the country’s economy.
Interest rates started rising in April 2015 as BoU attempted to wave off any inflationary pressures resulting from the depreciation of the Uganda shilling. As at June this year, commercial banks’ lending rates averaged 23.54 per cent.
“Capping rates stifles free market forces, discourages investment in the financial sector as well credit growth , instead facilitating black credit markets,” which is bad for investment says Kasi.
“Capping rates discourages investors in the financial sector who then turn to other markets. This creates shortage of much needed credit and capital, which not only makes it scarce and expensive but starves the businesses who need to trade and invest. It sends a very wrong signal for investment,” says Kasi.
Uganda’s overall savings are still low and the government’s collection of taxes has also not been effective enough, thus leaving limited sources of capital for financing projects. When commercial banks have to finance longer term projects, the have to secure longer term funding from other sources at a higher rates.
The challenge around cost of credit has not been made any better by the burgeoning non-performing loans (NPLs), which he argues is due to a challenging business environment both in country as well as in key regional markets.
NPLs as the percentage of total loans in the first half of 2016 had gone up to over seven per cent, the highest rate for any quarter since December 2003. The agricultural sector led with the highest level of non-performing loans in Uganda banks with 15.3 per cent.
“What is however important is that the sector has demonstrated resilience in these challenging times and withstood shocks. We remain committed to addressing our challenges and contributing to economic growth.”
Sanlam Kenya has stepped up its market development efforts to raise the local insurance penetration rates through corporate partnerships.
The local financial services firm is pursuing corporate agreements with leading local firms to facilitate life and general insurance premium payments via check off systems.
Riding on the Sanlam PayPoint platform linked directly to corporate and institutional organisations, the firm will manage to securely receive insurance premiums voluntarily deducted on a check off system from its customers.
Speaking in Kisii during a corporate partner’s forum, Sanlam Kenya Group Managing Director, Mugo Kibati, said the firm has adopted cutting edge information technology systems to facilitate the running of the innovative check off option for premium payments.
Currently, Sanlam Kenya has established Check-off linkages with more than 700 local firms including savings and co-operative societies, large and small corporates. The firm plans to double the number as it seeks to enhance its corporate efficiency and product distribution capacity.
“At Sanlam Kenya we are borrowing heavily from our group and global best practices. In many developing countries, insurance premium payments for life and related products are conventionally deducted via check off systems,” Kibati said.
The firm, he added, has also enhanced its partnerships with leading local banking institutions, which are providing bancassurance services powered by Sanlam Kenya.
During the function, the Kisii County Government, announced plans to integrate risk management solutions as part of its social-economic development plans.
According to Kisii Governor James Ongwae, the integration of risk management solutions such as commercial insurance products for Small and Medium Enterprise (SME) operators in the County, are currently under consideration.
The Kisii Governor, in a speech read on his behalf by the Kisii County Government Chief of Staff, Henry Nyanchoka, noted that the poor adoption of insurance products by SMEs has continued to impoverish local traders.
The role of non-bank financial services, he said, cannot be wished away in a growing economy.
Such products provide a recovery path for our hardworking SME’s and even individuals engaging in business.
Citing the case of the recent 11-storey building collapse in Kisii town, Ongwae expressed regret that local traders continue to suffer heavy losses with minimal recourse to commercially available risk management options.
As a key player in the Kenyan insurance sector, Sanlam Kenya, Kibati assured is now attuned to play its part in the overall effort to raise the national insurance penetration rates starting from County level solutions.
Prof. Noah O. Midamba, the Vice Chancellor and CEO of KCA University, demystifies the decay of quality education in local universities and how they can reclaim relevance
FEP Holdings has announced its plan to offload its five percent stake in Credit Bank after CBK declined to approve the direct acquisition of a 25 percent stake of the bank by the investment company.
FEP Holdings Chief Executive Officer Mr Maurice Korir said that CBK had expressed reservations about the company’s share register and financial capability to adequately capitalize Credit Bank. “We will therefore take another two years to work on other business priority areas before considering this option or any other in the banking sector,” said Mr Korir.
He expressed confidence in the fortunes of the bank saying that FEP Holdings members were allowed to invest in the bank directly and have to date subscribed for shares worth over KSh1 billion in the capital raising drive which closes on 15th November 2016.
“Credit Bank is a profitable bank with sound management and sound ratios. The bank made a return to profitability in 2016 with a pretax profit of Kshs 123.7m for the nine months ending September 2016, this is an impressive turnaround by any yardstick,” he added.
He said the investment company would instead channel its resources towards beefing up Fountain Credit Services, a microcredit outfit owned by the Group. “Our current focus is to develop the existent businesses instead of venturing into new initiatives. This should not be interpreted to mean that we will be static, rather, we are avoiding spreading ourselves too thin,” said Mr Korir.
The investment company however still has interests in the financial services sector with entities such as FEP Insurance Agency, Fountain Credit Services and mobile money transfer operator Mobikash.
FEP Holdings has now embarked on beefing up the operations of FEP Credit Services and installed a core banking system that will help the organization disburse digital loans.
By Darrel Orsmond
According to the United Nations, Africa’s population is expected to surge to 2.4 billion by 2050. Due to Africa’s largely youthful population and the aging population in most developed countries, forecasters expect that much of the world’s labour will be supplied by the African continent. This increase in economic activity is expected to drastically increase the uptake in banking services among African workers.
However, despite encouraging economic growth, most of Africa remains unbanked due to insufficient banking infrastructure, the perceived high cost of banking fees, and a disconnect between banking services and the needs of the customers they are meant to meet.
In Sub-Saharan Africa, bank branches are generally concentrated in high-population urban areas. Despite this, the European Investment Bank notes that these banks are typically high-cost operations that result in high service fees and a wide spread of interest rates. A 2014 World Bank paper showed that the average per-capita income in Sub-Saharan Africa is a mere US$762. Therefore banking products and services need to be carefully tailored to suit a diverse set of customer needs or risk losing traction in a market currently being disrupted by innovative start-ups.
Managing disruption
These upstart fintech companies are introducing new customer-centric innovation at a pace unmatched by the formal, traditional banking sector. While this clearly represents a threat to the incumbent banks, they should be wary of focusing on maintaining their traditional advantages and rather focus on utilising technology to create new opportunities across the entire value chain.
The ability to embrace disruptive fintech products and services will allow banks to ride the wave of uncertainty and emerge strong and future fit to change in any meaningful way. What is likely to change, however, is the role of the banking sector in providing such services, both for consumers as well as corporate clients.
Smart, forward-thinking banks will embrace Digital Transformation by adopting cloud technologies to reduce costs, analysing data to create more personalized services, and using customer-focused channels such as mobile and social to deploy services.
Despite the threat posed by fintech start-ups, traditional banks have an enormous advantage, and that is the vast amounts of customer data created by multiple customer touch-points. Banks should use this data to customize products and services at an individual level to deliver a truly personalized experience. By mining this customer data, banks can start moving beyond pure banking into more of a ‘lifestyle partner’ role, something the insurance industry has achieved with tremendous success.
New opportunities
For African banks, the advantages of Digital Transformation are immense. Considering that many banks on the continent are only at early stages of evolving their core IT enterprise, there is an opportunity for them to leapfrog their peers from more developed markets.
According to IDC, an enterprise approach to Digital Transformation presents a better option for banks as it prepares them to fundamentally change the way it uses technology and allows them to build a technology platform that can meet present-day and as-yet unknown future business challenges.
But for that to be truly effective, leadership structures driving Digital Transformation need to focus on three key aspects. First, have a strong commitment at an executive level, encouraging collaboration. Second, build a solid digital core to the business that includes in-depth analytics and enable agile technologies; and third is openness to partner and collaborate with other players in the financial and banking ecosystem, including fintech start-ups and other disruptors.
African banks have a golden opportunity to adopt Digital Transformation and revolutionise the way they offer banking services by using technology to build customer-centric solutions.
More importantly, by partnering with a skilled Digital Transformation leader, banks can build market-leading tech platforms that enable rapid deployment of new services and products tailored to the unique needs of the African market.
The Writer is Head of Financial Services at SAP Africa
Direct Pay Online is transforming the way you pay for goods and services
Agency has a current project pipeline estimated at over one billion USD in the two countries, which is expected to double