What is the role of Regulation in driving Digital Transformation?
As part of an ongoing series of conversations with Digital Transformation Leaders, I was honored to meet with Nick Kamanzi, who is the FinTech Lead at SafeBoda and Damalie Wasukira, who is the Communications Manager at SafeBoda. We talked about regulation, the future, entrepreneurship, and the youth.
About Nick Kamanzi
Nick Kamanzi is a Former Taxi conductor trying to have a go at innovating with technology. He is a Mandela Washington Fellow 2017. Nick is currently using technology to build financial products for millions of consumers in African cities SafeBoda. He enjoys solving offline challenges with technology and very interested in mobile payments. Nick, built Yoza to help single mothers get access to work and worked with Africa's Talking to enable software developers get access to millions of mobile subscribers in Uganda. Nick has worked with HiveColab, PCTech Magazine, Yoza, SulaPay and Africa's Talking.
Below is the script of the second part of the Q&A that took place at the SafeBoda offices in Kampala on 26th February 2019.
Where do you see Uganda in the next 10 years, is there momentum building up with the youth to go digital first as opposed to traditional bricks & mortar?
To understand the environment of any country, there are the macro themes like regulation then there are the micro themes like guys who go to university and come out and try their first handle at these things.
Nationwide, I know there are some initiatives that are coming up. We are seeing more innovation hubs coming up. We are seeing some startups getting funding from outside investors.
We don’t really have a big FinTech in Uganda. The closest is Mobile Money but now I see them moving more into the financial services.
If you think about FinTech as an industry, there is already a regulation that is coming in parliament, the National Payment Systems bill, which is going to regulate the FinTech sector.
Today, we don’t have a lot of FinTech firms but this regulation is already coming in place to stop some of the things that are supposed to happen. This regulation is being copied from markets that already have successful FinTechs, but we have not actually tried things first before regulating them.
We are not stepping back and asking what are we actually regulating? Who are we actually regulating?
I think the big banks and telcos are going and lobbying to copy and paste what is already that side to protect their businesses. A regulation like that can stifle innovation if it’s not done very well. I know a few things have been added to this bill and there is still room to change the course of how things are supposed to move, but if we are regulating an industry and we are not growing that industry, then we are stopping ourselves from innovating digitally.
I worry about some of those things.
I also know that the momentum and the rate at which some of the companies are moving at will push and show people the right way of doing things.
On top there is government, and we must operate within the laws of Uganda. Why are you stopping something that is not breaking the law? Why are you stopping something that is not illegal? Why are you stopping something that is helping government with the country’s 1.2-billion-dollar problem - which is road safety?
Are you optimistic about the future of FinTech given the proposed National Payment System Policy Framework by Bank of Uganda?
Yes, I am very optimistic about where this will go. Regulators need to worry more about creating an enabling environment with a consumer protection in mind than stifling innovation.
Every regulation that is passed in that sense should have that in mind. If you are going to regulate people who are executing at scale, you should also have in mind someone who is not already doing it at scale, but is also building something that might transact at that scale – how are you enabling this person to build that ecosystem? At least that is how I think about it.
I am optimistic overall. I believe regulation is going to be slower than innovation. Technology will always be a step further. We have seen the negative impact of regulation like the Mobile Money tax that is stopping people from using the innovation.
We need to pick a struggle – do we want to innovate and create millions of jobs or do we want to clamp down people who are creating millions of jobs?
SafeBoda has more than 8000 boda boda riders on the road today who are making 50% more than they used to make before joining SafeBoda. Where is all that money going? All that money is going into making sure their kids are well educated, making sure their families are well taken care of, that they have access to healthcare and pay for some of the hospital bills. We are really doing something.
The direct benefits that SafeBoda has actually created can be measured across all these families. Across everyone who directly works with SafeBoda. Everyone who travels with us every day and the safety that we add to them when we move them from point A to point B.
These are citizens that are going to create jobs and pay taxes to government. The direct and indirect impact of digital technologies, like SafeBoda, is really needed for our economies to move ahead. We have seen these with other economies that have all these digital platforms.
I am sure China is benefiting a lot from Alibaba when Chinese merchants are selling to other parts of the world – that is money they are earning. We need to start thinking like that. All the money that these businesses are making and the loans coming into these businesses is how we grow the economy.
What's your philosophy on growing the economy?
We grow the economy not by getting external debt but by investing in the small businesses to make more money. These are guys who come on the road at 4 am till like 10 pm. These are the guys government needs to support by putting in place infrastructure and good regulation that fosters innovation so that we can scale the way we do business.
I believe this 100% - that the only way we grow the economy is from inside outside. Focusing on the small business, who rely on sales. When we help this business to grow, guess what, they are going to open more branches; they are going to employ more Ugandans; they are going to make smarter decisions; they are going to get more customers; they are going to make more money; they are going to pay more taxes. Imagine that at scale –every small business in Kampala and Uganda doing the same thing.
How do you then start thinking of regulating the very tool that is enabling this small business to scale? Or earn more money? Or get access to these services?
What would you tell the young entrepreneurs starting business today?
There are two types of advice I’d give.
As someone who has tried starting a few of my own business, I would say it’s important to start things on your own. There is a challenge that we have as a society. When you get out of University you clearly don’t have any money. Your parents are saying you need to now go and get a job. Unless if you are really lucky and your parents did prepare a future for you – which is not the case for most Ugandan families.
I’ll tell anyone who is trying first handing on entrepreneurship - try as fast as possible to get to a point where you are making some money from this business. I know we see a lot of freemium tools online – Twitter and Facebook are free, they make money from advertisements. These guys can afford to be free because when they started they could access capital very fast. Now we are in a market where access to investors is not very easy – it is there but it is not very easy - you will have to be a second time founder to get money or you will have to raise money from your customers.
The easiest thing is if you have a customer that you are fulfilling a need for then charge them for the service as fast as you can. That way you start raising money from your customers.
The other advice is do come work with us. Come work with SafeBoda and start saving up for your next business. Sometimes your business is going to fail because you did not know how to do certain tasks. You did not know how to build the business in the first place. It’s not failing because people don’t like you.
My advice is find a place that you think is innovative, go work for them, learn how they are shipping products, then save up as much as you can so that when you are ready to start that business on your own, you have a starting point which you might not have when you have just graduated and your parents are telling you to find your place. We have seen entrepreneurs who have started after 35, that have worked with someone, they have a better chance. The thing with starting early is you learn these lessons yourself.
The other advice is to surround yourself with very good mentors who have built businesses, who can help you survive this early stage.
In Uganda we have two breeds of entrepreneurs – those that have tried their luck in getting a job and have failed – to those, the advice is to go and find your customers and make money from them, then grow that money. Then for the second group, those with an IT degree or those with BBA, just go work for a company that you admire and are very well established, try and save up then start your own thing afterwards.