A 2016 study revealed that only 40% of Ugandans are financially included. The World Bank also points out that “up to 60% of adult Ugandans still keep their savings at home and in the form of assets such as animals.” This is what eSACCO wants to tackle.
“People are financially excluded because of cost,” Wensi Nuwagaba, Co-Founder of Clic.World and Chairman of eSACCO says. Thus, according to him, bringing down the cost will foster financial inclusion.
He gave an example of a boda-boda man who would like to save UGx. 1,000 (US $0.3) every day. But, that would cost them UGx. 500 (US $0.15). 50% of the amount being saved.
“So what you have is financial services like microinsurance. All those kind of things which can benefit a large part of the population is too expensive to collect the premium.”
The Ntinda-based eSACCO wants to ensure that the cost of financial inclusion goes down to almost zero.
“If you belong to eSACCO right now, you can send money between wallets at zero,” says Wensi. Though, joining is at a fee.
Andre van Zyl, responsible for Strategy and Business Development at Clic.World explains that social banking is at the core of the eSACCO’s strategy, which Andre believes is “the future of banking”.
“We look at the future [and] see [it] moving from large banks down to ecosystems of smaller banks. Which in Africa we have been doing for decades,” Andre says.
“There are 16,408 registered co-operatives and in 2015 alone a total of 1014 new co-operatives were registered majority of them were SACCOs and Agricultural marketing cooperative societies,” according to the Ugandan Ministry of Trade, Industry and Cooperatives.
Wensi and Andre, thus, decided to build the social banking concept on top of the SACCO concept, due to its wide adoption across Uganda and East Africa.
“So we see the SACCO model actually [in] the next ten years becoming a more accepted global way of (social) banking,” says Andre.
Trust, being at the center of most SACCOs, Andre believes this is the same foundation they’re banking on to build the social banking concept. Amongst the previously financially excluded.
Saying that “a couple of guys [that] know each other and trust each other are better suited to manage their money than some unknown shareholders in a large bank”.
Andre points out that “Clic.World chose to start with Uganda with the eSACCO because the country has a more flexible environment, with high digital adoption and appetite for new innovation.”
“If you are a small little fish in one big pool and then a big shark in a small one, then you go to the small pool where you’re a big shark.”
“Uganda was a more flexible environment, to try something new. In Kenya, you got a predominant player which is MPesa.”
Though, they still harbor plans of expanding across Africa. With Kenya, Tanzania, Zimbabwe, South Africa, Cameroon, Botswana, Zambia and others on their list.
“We are now at the point where we want to start expanding,” Andre says. Though he maintains that they are still “trying to be practical” because they “are a small startup”. Adding that “we need to go where we can generate business the quickest.”
eSACCO is built on top of clic.world, which develops white-label products. So, in some of the markets, they are doing it, it’s through partnerships. “Clic.world doesn’t go out on its own brand,” says Andre.
Beyond eSACCO, Andre is among those at the forefront of Cryptocurrency in Uganda. To be specific, he’s a Stellar evangelist.
He believes that crypto can deliver on financial inclusion. Though, adding that, if cryptocurrency is to help achieve financial inclusion, then they “have got to be able to process a magnitude more transactions per second than what say a Visa is doing at the moment.” Something Stellar with its proposed implementation of Lightning is in position to do, according to Andre.
It was on the basis of this that they came up with a “Stellar ATM”. According to Andre, this is basically how the ATM works;
“So i have got cash in my pocket, feed it in, get my XLM (Stellar Lumens) on my phone and i don’t want to touch cash. I go to my shop, i scan and i buy [whatever i want].”
Last November, Andre and his team exhibited the ATM in Singapore. Yet despite many describing it as “innovative”, Andre says that few were willing to further the conversation after finding out it was based in Uganda. A perception, he says, they are “working hard to change.”
Though, he maintains that they are currently pursuing conversations with the different funders.
“So the ATM is very interesting, we got a lot of demand for it and we [are] currently just busy discussing with funders because it is just a case we need to build. There’s a prototype [already]. The production unit is actually going to be a smaller unit and in fact, we have designed one that has got no screen.”