Nabeoko in the Central African Republic: A small fish surfing the Fintech wave.

The Fintech wave hits the Central African Republic with the initiative to digitize the payment of civil servants. The Nabeko e-commerce platform appears like a small fish but it can contribute to the economic development of the country.

In September 2017, the WinstantPay (WIN) delegation, led by former Prime Minister Élie Doté, met the President of the Central African Republic, Mr. Faustin Archange Touadéra. The objective of the meeting was to present digital finance tools for small and medium sized enterprises (SME) to export their product and services, in line with the country’s sustainable development. WIN introduced a wallet in local currency for the financial inclusion of unbanked populations, a wallet in all currencies for international transactions, and an e-commerce platform for exporting SME products and services, etc.

In July 2020, WinstantPay-Leap2Shop and Nabeoko signed a Joint-Venture agreement to create an African e-commerce platform allowing local producers, VSEs and SMEs to sell products and services on cross-border, regional and international markets whilst avoiding the headache of financial transactions.

In the three years whilst the implementation of financial technologies has progressed in the Central African Republic, their potential is far from being fully exploited. The Nabeoko e-commerce platform is making its digital contribution to the country by trying to meet a major need of the Central African economy, encouraging the move from the production of non-tradable goods to that of exportable goods. Some elements of analysis are as follows:

Today, the Central African Republic is still far from being a FinTech paradise. As is the norm, digitalization started by affecting the finance sector. In 2016, Forbes Africa[1]identified mobile banking among the six growth sectors[2]in the Central African Republic. Mpesa and Kenya, pointed out as the models that were to be reproduced in the Central African Republic. Four telephone companies are currently competing for the market there: Azur, Moov, Telecel and Orange. Since its establishment in the country in 2007, Orange, the French multinational has never stopped investing to gain market share, thanks, according to the Orange group's communication, to a better communication network than its competitors.

In 2019, Orange is relying on this investment policy to enter into a partnership with the Central African authorities. During a meeting the Africa - Middle East Director of the Orange group, Alioune Diagne, assured the President of the Republic of the group's determination to make "significant investments with the option of extending the network to other localities. from the country»[3]. The ambition is clear: "Orange intends to position itself as the privileged partner of the government to reduce the digital divide in the Central African Republic” [4].

In January 2020, Orange's partnership with the Central African government materialized through the payment of salaries and the payment of compulsory online levies, which are the elements of the new digital strategy of the Central African authorities. The operation, called Patapaye, is being tested on a small scale with around 100 officials across the country, particularly in Bossangoa, Berberati and Bouar, with two major objectives.

The first is to allow officials in these deconcentrated prefectures to receive their salaries without the need to travel to the capital or for businesses to file their tax returns online. The second is to deal with fraud, corruption and embezzlement by armed groups in areas still under their control.

For this G2C initiative, the government is choosing Orange Money mobile payment in partnership with Ecobank. It is part of Orange's African strategy, in partnership with banks such as BNP Paribas, Ecobank, Bank of Africa and Microcred. This is to allow customers with a bank account to transfer their money easily and at any time between their bank account and their Orange Money account (and vice versa) from their mobile.

The solution works even without an internet connection, access to which still remains difficult in the Central African Republic. The innovation prompted the immediate support of some officials who could avoid racketeering on the way back from the bank to Place de la République in Bangui. However, the implementation is a challenge, as the system requires good coordination between Orange and Ecobank's bank accounts. But users are insufficiently informed, transaction fees are too high and identity checks by KYC are complex.

Beyond the difficulties of implementing the test, by creating cooperation between a government, an operator and a bank, the model seems virtuous. However, Patapaye is the tree that hides the forest. In Africa or elsewhere, the strategy of telephone operators is neither cooperative nor virtuous, it is simply market. In 2017, referring to the African evolution of Orange Money, its CEO Stéphane Richard declared: "in the years to come, Orange must accomplish a transformation to become a full-service bank”[5]. In the same year, Orange created seven electronic money establishments in Côte d'Ivoire, Guinea, Mali, Senegal, the Democratic Republic of Congo, Burkina Faso and Sierra Leone. They issue, distribute and manage electronic money instead of the partner bank. This strategy brings autonomy to Orange and the possibility of launching new services that compete with banks.

In the Central African Republic, the digitalization of private or public finance is only in its infancy. Patapaye is an illustration of the Fintech wave[6]defined by "billions of dollars invested, the wave of startups and unicorns in this space, the challenge they pose to the banks and incumbent financial operators, the way they conquer new spaces and places”[7]. This wave is causing a lot of turmoil. “RegTech for regulatory technologies. WealthTech for wealth management technologies. Insurtech for insurance technologies. Fintech and Lending, Analytics, Digital Identity, Digital, Cybersecurity, SME Finance, Financial Inclusion, Payments, Roboadvice, Blockchain Distributed Ledgers, Neobank and more. Then there are also generic technologies around such as Cloud, Internet of Things, artificial intelligence, machine learning, biometrics and others that also create FinTech themes and impacts. »[8]. Undoubtedly like any African country, the Central African Republic can constitute a privileged ground for the implementation of FinTech. On condition, however, that you do not let yourself be overwhelmed in a disorderly fashion by the wave and control its successive flows.

This is why Nabeoko and its partner WinstantPay - Leap2Shop have chosen financial inclusion for SMEs. The choice is not made at random. Before being a market strategy, it is the result of an analysis of the political and economic situation in the Central African Republic[9].

Politically, the country has been deeply affected by three years of civil war (2013-2016), decline in the human development index, fall in GDP per capita and a delicate security situation. The resumption of economic activity, conditioned by the restoration of security, became possible again with the election of President Touadéra and the signing of agreements with the armed groups. However, it remains the major issue of the presidential election scheduled for December 27, 2020[10].

Economically, the arrival of President Touadéra allowed the return of growth and the attainment of a pre-crisis level of activity. But from 2018 the rate of growth slowed down mainly due to the drop in official diamond production, which is still under partial embargo, and the disappointing results of the timber industry. A rebound in diamond production is hoped for with the expansion of the green zone, perhaps even the lifting of the embargo requested by the Russian presidency of the Kimberley Process. Agriculture is still the main source of economic activity, accounting for more than half of the GDP. The manufacturing industry remains the poor relation.

The problem with the Central African economy is that it remains very dependent on imports. In addition to strengthening the parallel economy, the drop in exports of diamonds and timber keeps the Central African Republic and particularly its capital Bangui stuck with the production of non-tradable goods with a difficulty of switching to the production of exportable goods.

In the Central African Republic, Bangui is the center of the country's economic activity. Industries here manufacture textiles, food products, beer, footwear and soap. From Mpoko airport, exports of diamonds, cotton, timber, coffee and sisal depart. Thus, the urban economy is centered on tradable goods and services and on natural resources, two sectors which, according to the World Bank, tend to keep the country in an underdevelopment trap[11]. The production of goods and services consumed locally would condemn Bangui and the country to weak growth. The finding is indisputable, production for local markets reduces returns to scale because the consumer base is smaller than that of a regional or global market.

On the other hand, the markets for exportable goods are the key to the dynamism of the industrial sector. In developing countries, growth depends on increased exports through industrial production and high technology. The goods and services produced face competition and increase efficiency savings. However, by comparing with other metropolises, the World Bank shows that African cities effectively limit themselves to producing non-tradable goods and services frequently intended for local markets.

The reasons given correspond precisely to the economic profile of the Central African Republic. The first is the development of natural resources, which can create a high demand for non-tradable goods and services, a phenomenon referred to as "Dutch syndrome". The natural resources sector takes precedence over others, especially the manufacturing sector. In a country heavily dependent on natural resource exports, the capital is a consumer and the urban economy tends to be dominated by non-tradable goods and services.

The second reason relates to the construction plan and the spatial configuration of the cities: lack of concentration of structures, dispersion of neighborhoods, lack of public transport and connection infrastructure. The tourists passing through Bangui identify these characteristics upon arrival.

There are many other constraints to growth that stem from the macroeconomic context, trade regulations, lack of access to finance and investment, the peculiarity of the demographic transition in Africa, the lack of economic gains and agricultural productivity. Either way, the promotion of the manufacturing sector is essential for growth, provided it can access regional and global markets and open up the national economy to the world. This is precisely the purpose of Nabeoko.

Patapaye and Nabeoko are just the first laps of the Fintech wave on the right bank of Ubangi. The sector has strong potential that can contribute to the integral and sustainable development of the country. Telephone operators, startups, Fintech and financial institutions will participate in the reconstruction and development of the country. For its part, the Winstant Network consortium which brings together Trade Solutions Group, WinstantPay, World KYC and Leap2Shop has proposed several projects to its Central African partners including financial inclusion of people and SMEs; increased security of financial transactions with strengthening of KYC; sale of liquid and physical gold on international markets; fundraising for decentralized financing of agriculture, the rubber industry, gold and diamond production; Central African electronic markets stock exchange; instant access to international commodities, stocks and silver markets around the world; digital currency for international trade with instant settlement; creation of gold-based tokens allowing international trade with countries that have adopted this principle; stimulation of new business in commodity exchanges by facilitating the export of products through instant payment; etc.

Among these projects, Nabeoko is only a first initiative. The challenge is big. A recent blog mentioned the eight conditions for successful e-commerce in Africa. In the Central African Republic as elsewhere, in the face of telephone operators and FinTechs, competition may be fierce. Nabeoko will play their card by building on the partnership with the banks and the Central African authorities. The platform does not dream of becoming an African Amazon or AliBaba. We must never forget that Nabeoko is just a little fish on the FinTech wave.

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[1]Forbes Afrique, 2016, Centrafrique : six secteurs porteurs en 2016, https://forbesafrique.com/centrafrique-six-secteurs-porteurs-en-2016/
[2]According to Forbes, the growth economic sectors in the Central African Republic are beef, cement, solar panels, mobile banking, oil and soap.
[3]Financial Afrik, 2019, Centrafrique : Orange poursuivra ses investissements, https://www.financialafrik.com/2019/02/03/centrafrique-orange-poursuivra-ses-investissements/
[4]Ibid.
[5]Jeune Afrique, 2017, Stéphane Richard, « Dans les deux ans, nous aurons une banque en Afrique », https://www.jeuneafrique.com/mag/494177/economie/stephane-richard-dans-les-deux-ans-nous-aurons-une-banque-en-afrique/
[6]Skinner, C., 2017, The Fintech Wave, Part One, https://thefinanser.com/2017/02/fintech-wave-part-one.html/
[7]Ibid.
[8]Ibid.
[9]Direction générale du Trésor, 2020, Indicateurs et conjoncture, https://www.tresor.economie.gouv.fr/Pays/CF/indicateurs-et-conjoncture
[10]In September 2020, the opposition and civil society assured that the National Elections Authority could not organize the presidential and legislative elections scheduled for December 27 and recommended a postponement.
[11]World Bank Group, 2017, Ouvrir les banques africaines au monde, https://openknowledge.worldbank.org/bitstream/handle/10986/25896/211044ovFR.pdf?sequence=13
[12]Forbes Afrique, 2016, Centrafrique : six secteurs porteurs en 2016, https://forbesafrique.com/centrafrique-six-secteurs-porteurs-en-2016/
[13]Selon Forbes les secteurs économiques porteurs en République centrafricaine sont la viande bovine, la cimenterie, les panneaux solaires, le mobile banking, l’huilerie et la savonnerie
[14]Financial Afrik, 2019, Centrafrique : Orange poursuivra ses investissements, https://www.financialafrik.com/2019/02/03/centrafrique-orange-poursuivra-ses-investissements/
[15]Ibid.
[16]Jeune Afrique, 2017, Stéphane Richard, « Dans les deux ans, nous aurons une banque en Afrique », https://www.jeuneafrique.com/mag/494177/economie/stephane-richard-dans-les-deux-ans-nous-aurons-une-banque-en-afrique/
[17]Skinner, C., 2017, The Fintech Wave, Part One, https://thefinanser.com/2017/02/fintech-wave-part-one.html/
[18]Ibid.
[19]Ibid.
[20]Direction générale du Trésor, 2020, Indicateurs et conjoncture, https://www.tresor.economie.gouv.fr/Pays/CF/indicateurs-et-conjoncture
[21]En septembre 2020, l’opposition et la société civile ont assuré que l’Autorité nationale des élections ne pourra pas organiser la présidentielle et les législatives prévues le 27 décembre prochain et recommandé un report.
[22]World Bank Group, 2017, Ouvrir les banques africaines au monde, https://openknowledge.worldbank.org/bitstream/handle/10986/25896/211044ovFR.pdf?sequence=13

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