Regulators need to catch up with African tech, says Chipper Cash VP

At this year’s edition of the GITEX tech show in Dubai, African Business met with Pardon Mujakachi, vice-president of partnerships and strategy at Chipper Cash to talk about the current challenges for Africa’s tech sector.

The San Francisco-based, Africa-focused fintech company valued at $2bn is often described as one of Africa’s seven “unicorns” – firms valued at $1bn or more. Mujakachi leads a team of country directors in Africa, including Ghana, Uganda, Nigeria, Tanzania, Rwanda, South Africa, and Kenya.

Tech54: Chipper Cash recently obtained a licence to operate in Zimbabwe and will soon start activities there. What do you identify as the main challenges when you try to enter a new African market?

Pardon Mujakachi: Africa is 54 countries with different regulators and requirements and Chipper Cash offers a wide range of products, from crypto to P2P and wallet services. As a result, from a licence point of view, you might require three or four licences to operate in only one country.

The process of getting a licence is not something that happens overnight; it’s a time-consuming and costly process. If we look at the products that we offer, we have the next generation of financial services. But the regulation is still trying to catch up and understand how to govern these different products and services. There is a gap in the regulation that is affecting fintech across the continent.

Which African country do you identify as the most fintech-friendly?

I have seen several countries which have started to open up. A good example is Uganda where you have three or four different licences for fintech businesses, with even one licence to offer stocks.

Rwanda and Nigeria are moving towards some regulations to ease the business as well. There are also certain markets where it is taking a bit of time, but we are talking about a continent and I’m confident that all African countries are embracing the digital revolution that is taking place.

At GITEX in Dubai, lots of young African entrepreneurs came to present their projects to potential investors, as most of them are not funded yet. What advice do you have for newcomers? 

The most important thing that newcomers should be able to do is identify the gap in the market, meaning the size of that gap and the market within it.

Most fintechs plunge into the business without doing the necessary work in terms of research and intelligence. Chipper Cash is directed towards an identified problem – financial inclusion and making sure people have access to affordable financial services. You have to do your homework right – if you just plunge in and expect to win, I think you will be shocked.

Another important thing is to engage with your regulators or authorities and develop a relationship.

Financial products and services offered by fintech have never been commercialised before, hence it is difficult to find the right licence for your startup. But if you engage with your regulators and explain to them what you are trying to do, they will start looking at the number of regulatory sandboxes already implemented across many African markets which enable fintech to thrive.

I think engaging with regulators in Africa is crucial for the development of the tech sector.

The Dubai World Trade Centre just announced a GITEX edition in Morocco, intending to bring the African tech sector to light. Do you see Dubai as an inspiration for other African cities?

I think the right answer is that it all depends on the local context. But if you look at this platform, GITEX – which allows different ecosystem players to showcase what they can do – I think it is a plus for Dubai, the tech sector, and digital technologies in general. They have done well in terms of opening the space for tech.

The industry leaders of this region – aviation or tourism – have opened up to fintech. They are ahead of us all in the way they are embracing the tech industry and it is something we should look at more closely as Africans.

We are getting there, and it will take a bit of time. There are already a lot of bridges between the UAE and Africa, in terms of trade mostly, but now with GITEX, African tech is another sector of cooperation.

The question is what we can learn that the Emiratis have done, and can we take it home to start to transform our digital economies?