Reaching the Unbanked of Africa through digitized contracts

By Cathy Shepherd

FinTech companies need to look toward solutions to service the large number of unbanked people in Africa through light touch and high-tech solutions, says Professor Herman Singh, CEO of Future Advisory.

He was speaking with Shaun Barends, CEO of SimCash and Andrew Senior, a cloud architect for Nutanix at the recently held webinar where they discussed the growing use of expanding digital contracts in Africa. The event was attended by business people from around the world.

The webinar was hosted by Nutanix EMEA on BrightTALK and aimed to unpack smart contracts and the blockchain.

The proceedings clarified how a block chain smart contract is essentially a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code that are unchangeable and secure.

Smart Contracts are a computer programme that allow one to perform a credible transaction without third parties being involved. Using block chain smart contracts, quick and safe transferring of money from just about anywhere has now become a focus in Africa. 

The proceedings also discussed how government lockdowns due to Covid-19 are spurring on the need for virtual transactions with people, who are unable to travel from their homes and find themselves without cash.

Fintech companies are trying to find ways to access them and assist them. By looking at expanding hyper cloud distribution, the use of quick end results, electronic signatures, and unusual communication protocols our banking reach to rural and tech skinny communities is growing.

Singh highlighted the innovative move by SimCash to get a smart contract working on a feature phone for people who needed to transfer money helping many unbanked persons. Barends explained how this was done by using Quick Codes or USSD, which guides the user through the transaction process.

Another benefit is also that the costs are so low that the user does not even see the charges when they use the platform. Barends elaborated, “the large majority of the unbanked sector does not have your smartphone where you can use fancy apps or fancy web browsers.”     

He explained that the platform needs to offer quick results to get people to use this type of transaction, as this helps to build the users' trust in the system. Block Chain smart contracts allows the platform to distribute the workload and thereby get a quick result.

Senior advised Fintech companies to focus on understanding cloud platforms to facilitate the growing number of block chain smart contracts. He added that when operating in the multi-cloud world, companies must keep in mind that these clouds are going to be popping up all over the place.

The key will be to find a solution to bridge the gap and unite so a company can focus on the choice and ability to move workloads to where they are suited.

As far as legality of digital contracts goes, Professor Singh highlighted that digital signatures are legal in South Africa, Nigeria, Ghana, and Egypt. We also know they are not new and have been around in many forms such as steam subscriptions, debit orders and automatic top ups. 

Singh explained “smart contracts are rooted in basic contract law, and what makes it smart is that it is self-executed, and it is self-enforced.” The proceedings implied that there are of course, grey areas, but as digitised contracts spread throughout the world during these unprecedented times, Africa is fast catching up.


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