Series Eleven, Episode Six: Democratising finance through female education and empowerment

Julia: Hello. My name is Julia Streets and welcome to DiverCity Podcast talking about equality, inclusion, and diversity in financial services. On the podcast, we seek to shine a light on positive progress, call out areas requiring further focus and offer lots of ideas to help drive change. Before we get started today, I just want to take a moment to thank our friends at CityAM for their continued support of DiverCity Podcast, publishing and promoting both our episodes and also supporting blog series so their readers can stay on the very top of the latest diversity and inclusion debate. You may want to check out CityAM’s own podcast called The City View for all the latest news and opinion from the city, because we at DiverCity Podcast are huge fans. Today, I’m delighted to be joined by Noha Shaker From Egypt and Monica Singer from South Africa. Let me tell you a bit about each of our guests.

Noha Shaker is the founder and secretary general of the Egyptian FinTech Association and the elected vice president of the Africa FinTech Network, both of which are nonprofit organisations, serving financial inclusion and equitable economic growth across Africa using FinTech and entrepreneurship as a means to democratise finance. Over 20 years, Noha has held previous leadership positions in banking between operations, business development, product innovation and business technology and she’s also a partner in a FinTech holding, a company based out of the UK that builds and invests in FinTech startups across Africa. Noha, it’s wonderful to have you on the show. Thanks so much for joining us today.

Noha: Well, it definitely is my pleasure to be here with you, Julia. Thank you very much for providing that wonderful platform for us to be heard for us to inspire and get inspired with other wonderful initiatives and wonderful ladies that are working towards achieving goals that makes this world a better place.

Julia: Fabulous. Well listen, you’re in excellent company today because I’m also delighted. Our second guest today is Professor Monica Singer. She was the first CEO of South Africa’s Central Securities Depository called Strate, which she set up in 1998. Then in October 2017, she was appointed South Africa’s lead for Consensys, the global blockchain company. She’s worked at the Johannesburg Stock Exchange and also the World Bank in Washington DC and today she participates as a board member of the South African Institute of Chartered Accountants and she’s a professor of practise in the School of Accounting in the University of Johannesburg, specialising in blockchain for the accounting and auditing profession. Monica, it’s wonderful you could join this. Thanks for being us.

Monica: The pleasure is mine. Thank you for the invitation. Absolutely passionate about this topic and for me to share with the listeners the potential that this technology that I’m working on at the moment, blockchain, can actually empower everybody that has been left out and that’s going to be the theme of my conversation today. So thank you.

Julia: The social inclusion piece of course is incredibly important. Let’s get into the discussion first of all. I mean, I’m dying to know what you’re both up to. Noha, can I come to you first of all, what are you focused on right now?

Noha: I have one goal that I live for and that is democratising finance, making financial services more relevant. We’re accessible and affordable to the underserved or totally unserved segments so MSMEs, bottom of the pyramid of individuals using FinTech in it’s a broader definition. That includes InsureTechs, RegTech, Global advisory and of course enabled by all those wonderful technologies like distributed ledger technology that I’m sure that Monica is going to tell us a lot about how it can help democratise finance and of course you cannot do any of that, make financial services accessible without working on building that innovation driven support, that FinTech ecosystem, that grows entrepreneurs and FinTech startups. I also work on separating the incumbents, whether they’re banks, insurance companies, micro finance institutions to work on their registered infrastructure readiness as well as culture to enable partnerships and collaborations with promising Fintechs.

And all of that of course is also focused on ladies. Women led businesses of all sizes, FinTech startups that are either serving women or that are founded and managed by women. That’s the core of what I do. Aside from that, I also support and work with governments to build that one African digital economy, which is like a dream of ours, not just myself, as myself and the organisations I support, whether it’s the Egyptian FinTech Association, or the Africa FinTech networks. We work on regulatory reforms or forms of strategies, policy, advocacy, and education as well that we’re going to cover later on.

Julia: Absolutely, there’s an enormous amount of that we’re going to unpick and bring into the conversation for sure. Monica, let me turn to you as well. I mean, I haven’t seen you for a long time. I’m dying to know what you’re focused on right now.

Monica: I discovered blockchain technology in 2016. I fell in love with white paper by Satoshi Nakamoto creating Bitcoin and if anybody reads it and  I encourage every single human being to read this paper, because it explains how everything should be peer to peer. There shouldn’t be intermediaries. You should be able to use the internet. You should be free to look after your own data, your own banking abilities, everything. So it requires a lot of education but as we know in Africa, we have the majority of younger people. We have more mobile phones in Africa than human beings there because people have more than one mobile phone. So just imagine the combination of a younger generation with mobile phone access and internet access, just all of those combined will tell you that this is the time of Africa because we don’t need to duplicate what was done in the west.

We can now empower everybody, but we must go and start with the young people because to tell you the truth Julia, I joined Consensys, the biggest blockchain company in the world in 2017 and I’ve been meeting with CEOs of companies all over the world, explaining this new technology and if anybody sells more than 45, they will look at me and say what? No way, this is never going to happen. Why? Because the paradigm shift is so huge that they refuse to learn. So I’m using much more of my energy to start from the beginning and go to the roots, which is educate younger generations to use this technology. You know, I would say my grandson is going to say, Grandma, what was that thing called a bank branch? And I said, boy, that is a museum. You will never see a bank branch in your life because then this new generation is going to have an app and he’s going to press those buttons under their control, exchanging different types of money all over the world.

No intermediaries, no bank, no permission, no working hours. No mainframes with certain messages and it’s going to be cheap and he’s going to be accessible to everybody in the world, not anymore having this horrific story, which is that there’s 1.7 billion people in the world that never had access to any financial products or banking or anything. So we have the underbanked, the unbanked, and we have never cared for all these people and now once and for all, we have a technology that can enable access without proof of address, even proof of identity and it can actually be done without the internet. Can be done very simply with their QR code and many other technologies that we are creating in Africa to enable people that don’t even know how to read or write to be able to use this technology.

The technology could become so ubiquitous that you won’t even know that you’re using blockchain, but blockchain is the technology that is going to empower and in a nutshell, is the internet of value. So the internet was used for exchanging information. Now we’re going to use the internet for this type of financial transactions and that’s why for me, it’s like amazing. And the final point is said, think about it, you can become a programmer and work for any company in the world, no matter where you learn. You could be living in the middle of the Sahara. As long as you have access to a computer, you can work for Consensys. So that is the other thing that is very encouraging. You can empower kids that are living in the townships, anywhere to actually participate in the global economy and that is amazing.

Julia: Amazing. Let’s get into the conversation about diversity and inclusion straight from that point, if we may. So when you talk there about, both the experience in FinTech, in marketing infrastructure, and also then the application of blockchain, as you just beautifully defined it as well. What opportunities do you see for diversity inclusion, particularly as you look ahead and also within Africa, you were talking about being able to work from anywhere. I mean, that’s, that’s an inclusion point of view, straight away.

Monica: The possibilities are endless because truly you can take any girl and convince them that this is the time that they should empower themselves by following this career, which is engineering. I truly believe in the past, it was more like an accountant, a lawyer, a doctor. I truly believe that we need to tell the girls that they can become engineers and work in software and the way to do it is because they’re using the cell phone all the time. So if you can show them that the same way they use the cell phone, they can now start programming languages that are basic and you start slowly when they’re very young. I sit on the board of a company that is teaching from seven-year-olds onwards to programme to create robotics and know how to play games and all of this immediately is going to encourage any person, no matter the background, no matter where they live to be able to get into this industry and they will embrace this technology because for them, it’s going to become the norm.

That’s why I really want to concentrate on the younger generations. I think the baby boomers, I’m not saying I’m writing them off, but they’re too obsessed with synchronisation and what they understand, control and this technology, it’s not about control. It’s about open source. It’s about empowering, it’s about diversity. I’ll give you one last example. We have a technology called the Centralised Finance. You know that you go to a website, it hasn’t got staff members. It hasn’t got shareholders, support members, or a bank manager, and you can apply for a loan without having to say that you’re a woman. So all the biases that apply when you apply to a loan when you have to meet with the bank manager, all of that is going and that’s why I believe that this world that we are building without wall gardens using the internet is going to totally interconnected and empowering people that want to be empowered. Just remember Julia, we know very well, not all women want to be empowered, but the ones that want, they’re going to have access to that education and power to be financially independent.

Julia: It’s incredibly empowering, isn’t it? Noha, in your opening remarks, you were talking about FinTech and also your focus on social business innovation and social inclusion, as well. As sort of building on Monica’s remarks there, I’m just very keen to hear where you see the greatest potential for diversity and inclusion and particularly when we’re thinking about Sub-Saharan Africa and also in the Middle East as well.

Noha: Opportunities lie within the FinTech industry growth and what it represents. If you look at banks, insurance companies, micro finance institutions, all banking and non-banking financial service providers, they are going to cease to exist within the foreseeable future within that traditional format. As Monica has mentioned, you are not going to have branches. That puts a lot of stress on the profitability of those organisations and somehow limits the reach contributing to the financial exclusion state that we have reached right now. The financial technology and FinTech businesses are going to make the future of the financial industry feasible and possible. A more inclusive financial industry that may include everybody, whether there are MSMEs, where there is a huge opportunity in Africa and in the Middle East, whether you are looking at women in business segment or individuals, that is also a great opportunity and of course, Monica touched base on the youth segment, which is also of great importance.

If you look at the number of MSMEs within Sub-Saharan Africa, it’s like around 40 million of those. If you look at within the Middle East, you have around five and a half million of those, 2 million out of which are in Egypt, mainly. Women led MSMEs however does not exceed 30% of that number and women led MSMEs in the area is around 28-30% and the gap to funding that they have, the access to finance gap that they represent is around 32% because there is that misconception that lending to women is associated always with higher risk. Although the actual studies and trials were made in Lebanon in partnership with one of the commercial banks there is, and they found out that the persons that have non-performing loans, loans that women could not pay back is around 3% less than the average of the non-performing loans percentage for the entire bank portfolio.

So we represent less risk of the full because women generally are more responsible with money. Women are inclusive by nature. They do not keep anybody out and they focus on growth and sustainability. Banks within the emerging markets that serve SMEs have a higher performance in terms of return on equity than the average bank that does not have a formal segment that serves SMEs. So it’s like banks with SMEs have around 23% ROE. Banks without SMEs have 15-18% ROE. So there is an opportunity in there and I always talk business. If it does not contribute to the bottom line, if it’s not sustainable or scalable, I’m never going to recommend it or support it. This is a business opportunity. The introduction of financial technology and collaborations with Fintechs can make those numbers even better because again, we bring down the cost to income ratio. We make operations a lot less expensive, allowing banks to serve the bottom of the pyramid and MSMEs that were prior to that introduction of those technologies, really expensive to serve.

Julia: It’s very interesting to hear you talk about the attitude of banks towards lending and supporting female led businesses when we, perception and reality are two very different things. Also, you mentioned in your opening remarks about your support for women led businesses and love to hear more about that in terms of the economic empowerment of women.

Noha: Well, if we look at the fact that women contribute around 30% of the entire wealth of the world, and if we keep in mind the fact that the economic growth that is driven by women and women led businesses around the world is a bit more than 25%, then not supporting women and women led businesses would be like cutting a leg of a four legged animal, if your four legged animal is the economic growth within Africa and the world in general. But of course Africa is it’s a more pressing case because we grow on average like 4% year over year, the GDP of Africa as compared to 1.7% or sometimes less in the mature market, some more advanced markets. So focusing on women and supporting them is not a choice. It’s more of an imperative. It has to be there and social inclusion and financial inclusion are very much related.

So thank you for the question, it’s always on the top of the development policy agenda around all emerging markets, but no one has ever referred to that clear, significant correlation between social inclusion and financial inclusion. I think that focusing and supporting social inclusion can lead the financial inclusion. What is social inclusion? Social inclusion is simply having access to services. Access as in availability, as in affordability, as in reach. While financial inclusion in simple terms is having that access, availability and reach for financial services. So with looking into that digital economy and how things are changing, but also services are going to be offered via the digital platforms and the change that the COVID has brought into the world, that accelerating, that digitalisation of all services. If you managed to build a platform that serves a significant database of customers, whatever that service is.

It can be educational. It can be Edutech. Whether it’s an e-commerce platform, whether it’s healthcare, a health tech service provider, at least one financial service is going to be provided by those platforms without even thinking about it and that’s payment. So every person that you have managed to serve via that platform is going to be automatically financially included. Once you have that scalable database of customers and you build that transaction history amongst those people, you can later add another service of offering lending of one kind or another. You can offer insurance, microinsurance in digital form. So where can also our social inclusion is the story in there. Focusing on social inclusion is the right way, to work on financial inclusion. This is the opposite of what’s been happening. Governments have been building initiatives to push for financial inclusion without focusing on social inclusion while it should have been the other way around.

Julia: It’s really fascinating listening to you talk because I love the fact that you’ve really brought it back into sharp relief when you talked about payments and lending and the involvement in financial inclusion, but also that two very much sort of go hand in hand and drawing the line between the two. Monica, I’d love to bring you in here because I would love for the listeners to kind of bring things back to concepts that they can really grab hold of and I wondered what initiatives you’ve been paying attention to? What’s particularly impressed you when you think about the empowerment or the most alienated and the most overlooked?

Monica: You have to understand, we have a very long-term view. As I said to you, I’ve written off the baby boomers. I’m concentrating on the younger generation so we are building for them. Why? Because I worked for the World Bank and the World Bank gives handouts, loans and it doesn’t work. I can write a book just on that. So the whole idea is to, and I’m partly a libertarian so I believe in empowering people by educating them, giving them the tools and getting them to be where they want to be and that’s what we’re building. The internet of value would allow anybody to have access to any service, any product. You just have to give them the education and you’ll see with this finance world that we’re building that has no people behind it.

It’s just a computer programme that you’ll be able to do any transaction from stock market, transaction buying, micro-insurance, taking out loans. It doesn’t matter and you’re going to do it with your own instrument, with your own little buttons that you press, and that’s what we are building and therefore we’re saying, if you don’t want to be empowered, that’s fine but if you do, you’re going to control your own destiny. You’re not going to have to depend on a government to give you permission. You’re not going to have to depend on the bank to give you a loan or anybody. So one of the incredible things that are happening in the world. I don’t know if you heard about central bank digital currencies, but this CBDC is going to come and you will see that it will be proven by the central banks and that will ensure that the central banks will educate the citizens of a country, how to use digital money.

When even your grandmother knows how to use digital money, she’s going to start playing not only with CBDCs, she’s going to try to play with Ether and Bitcoin and maybe stable coins, which is private money.

I don’t know if you know that Facebook that has 2.3 billion people in the world that you use Instagram, Facebook, and WhatsApp, they are about to issue their own private coin. This coin is going to be used in their ecosystem. Once you start using that coin, you’re going to be able to swap that coin from other coins, just at the touch of a button and like you never would have imagined that my grandmother would have been such an expert at Facebook, just trust me that as time goes by, everybody is going to have access to this technology. Do you understand how profound the change is because you’re empowering people to do and to look after themselves, not to have to be dependent on a handout. So we’re going to teach people how to fish. We’re not going to give them any more fishes and what is the fish that they’re going to be fishing? It’s the internet of value, which is accessible to anybody that has access to this, a device and the internet

More and more companies are providing internet for free, data for free. So it won’t even be dependent on the data and the cost of data is going to come down. Can you picture a world where everything happens in the internet? There’s no more Excel spreadsheets. There’s no more ledgers in silos, there’s no auditors that come a year later. Everything is real time and it’s really the fourth industrial revolution that will combine artificial intelligence, internet of things, big data, and of course, blockchain and that is the world we are building, but it has to be built for the mind of the younger generation because they are digitally native. The paradigm shift for the older people is huge. Like I remember, I was a young girl when I saw my first email. The older generation said I’m never going to use email. Now who can live without email, even my grandmother does email.

So that is the point that this technology will evolve to the point that everybody will use it and they won’t even know that they used a blockchain but this idea that we need to have a conversation about financial inclusion is going to disappear because it’s going to be the norm, except that they are going to be, I’m sorry to say, countries that are in their culture, obsessed about controlling their citizens and they won’t give them all this power. So this technology can also be used against citizens. So in the same way that as you know, your data that you share with Facebook has been abused, there is a risk that this could be used for controlling people, not for empowering. So in the same way that you take a knife and you use it for catching meat, or you’re murdering someone, the internet can be used for good or for bad. So I am praying that, well I won’t be here anymore when I see this evolution, that the common good should prevail in the world and give access to the people and give them their power that they should have.

Julia: It will be very interesting to watch how the dominance access of the world pivots between those that were, you know once you reach out in social inclusion in less socially included parts of the world and empower them for the common good, will it overturn and overrun those who are trying to control for the citizen bad, if you like. Fascinating, really fascinating listening to both your thoughts. I think now is a great moment to bring in Cynthia for some research to support today’s discussion.

Cynthia: The 2019 barriers to women’s inclusion report by the Toronto Centre focuses on financial inclusion for women notably in Sub-Saharan Africa and Southern Asia. The report notes that although the majority of barriers are based on social norms and common beliefs, there have been misplaced policies and practises, particularly around marketing. Financial services providers may not consider women to be bankable prospects. Marketing financial products to women may therefore not be seen as cost-effective, which could be a misplaced marketing strategy. Regulators and supervisors should work with providers to ensure that marketing campaigns with specifically designed products targeting women’s financial independence and accountability are carried out in a transparent manner. This will deepen women’s engagement with providers and help to shift perceptions. The report goes on to mention that a key objective of the World Bank’s Gender Strategy 10 is the removal of social barriers to women’s ownership and control of productive physical and financial assets, including land, housing, technology, and deposits and savings.

Julia: Thank you, Cynthia, as always and of course, everybody. You can find the research on our website at DiverCityPodcast.com. Don’t forget that DiverCity with a C, not with an S. DiverCityPodcast.com, where you can find all our episodes and sign up for early notifications of future recordings.

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Now let’s go back to the conversation with Monica and Noha. It’s been wonderful. It’s been really thought provoking actually and as we went into the break, we were talking about empowerment. We were talking about how the internet and course blockchain, and many, many digital ambitions of change for the future and Monica, I’d love to come back to you about a question of a really key part of empowering social inclusion and the digital economy. At the heart of that lies the question of how to become educated and I know you’ve got some thoughts on that. I’d love to hear them.

Monica: I want to explain to people that everything I know and, as you know, I’m a professor at university, everything I’ve learned on my own, in the internet. So if I could do it and I’m a baby boomer and a grandmother, anybody can do it. I want to give hope to everybody that if anybody wants to not only make a difference to the world, but to themselves and start generating a store of value that doesn’t depend on a pension fund or a bank giving you a loan, or maybe if you study and you start getting involved. I’ll give you an example, one simple example. Download what is called MetaMask. MetaMask is an eWallet. This wallet already gives you access to cryptocurrencies, to stable coins, to DeFi, to a world that it’s unbelievable.

At the beginning, it’s a little bit overwhelming, but once you start getting used to it and playing with it, you just have to play with it. Buy $10 of crypto. Play with it, learn how to use this technology by using it. And anybody, wherever in the world you are, you all can empower yourself to do this without having to ask anyone for permission.

Julia: And of course, we know the barriers to entry are dropping and dropping. You’re talking there about $10 to get into the financial system and also to become educated in the financial system as well, which is amazing and I keep thinking about what if that is the reality, then of course the ability to empower female entrepreneurs is just, well my mind is slightly boggling. Noha let me come to you really, because I knew this is something you’re really thinking about, the empowerment of female entrepreneurship.

Noha: If we look at the amount of money that was invested by venture capital funds into African startups, I was around 800 million over the past year. What’s the percentage that went into investing in female led startups? 2%, only 2% of the 800 million investments that was directed towards African startups was actually given to separate women led businesses. When this is happening, while ladies control one third of the world’s wealth, when we, as women, are adding five trillion U.S. dollars every year to the global wealth. Actually and now by the way, we are outpacing the growth of the wealth market overall and yet only 2% of businesses led by women end up getting funding. So what’s the message in here? Let us use our money to help ourselves. I encourage ladies to invest in venture capital funds that support women entrepreneurs. I encourage ladies to be a first time venture capital fund manager. Let us build the vehicles that can support our growth.

Julia: Inspiring and if you think, the world of VC investment, seed investment seems so far away from us all, but actually the points of entry are remarkably low. So that’s a very inspiring words. I’ve really, really enjoyed this conversation. It has been not only thought provoking on a transformational level, but actually also deeply down into a very approachable, pragmatic level as well. So thank you both for sharing your thoughts. There is one thought that kind of prevails as I interview people around the world on this very topic about diversity and inclusion, which is I am quite deeply concerned that as we go through tough and ever changing economic times, that diversity and inclusion could easily fall down the corporate agenda and I would love to hear from you as we round out this fabulous conversation about why you believe that diversity and inclusion must remain high. Noha, I’m going to come to you first of all.

Noha: What happens to business results, the performance of companies when women are excluded from key leadership positions and decision-making? You are literally not attending to the needs of half your customer base. With almost 60% of the purchasing power lying in the house of ladies, whether they’re representing households or individuals, you are losing because you are not keeping in mind the needs of your customers and you are not going to attend to those needs and that is failure in every sense. It’s going to hit your bottom line hard. We are not asking for women to be included just for the social impact of it. It really affects your business badly.

Julia: Well, if that isn’t a good reason why diversity inclusion must remain high on our priorities, particularly when we’re talking about the field of technology, I don’t know what is. Monica, I would love to ask you the same question as we round out the show today, tell us why diversity and inclusion must remain high on the corporate agenda.

Monica: Because we’re 51% of the world, people really, number one. Number two, we’re not going to ask any more permission for a corporate to include us. We’re going to do our own thing. Do you understand that the world is going to change to the extent that we are going to empower ourselves to do whatever we have to do? So let’s stop putting the begging power out there and telling corporate, well, you need to diversify. We’re going to create like nurses, companies that are made up of women only. If you don’t want to include me, I’m not going to ask you permission. I’m going to just do it and that’s it. So that’s why our message is to tell young girls, you can do whatever you want. The information is available and encourage them, give them mentors, give them role models, give them the tools that we need to now start breaking the bias against women, starting with the little girl.

Julia: It’s been a fantastic conversation. So I can’t tell you how much I’ve enjoyed it. Noha Shaker, thank you so much for joining us. It’s been a great conversation. Thanks for being with us.

Noha: Thank you Julia, for having me and it’s a pleasure to have Monica as well on board as part of the discussion. Very insightful and a lot of fun. Thank you.

Julia: Absolutely and Monica, it’s been a joy to have you on the show. Thank you so much for being with us today.

Monica: Thank you Julia. It’s been amazing and I love the topic and know you’re doing amazing work. It’s inspiring to have met you, and I hope we can be talking in future and just doing things together. Thank you Julia.

Julia: And to all our listeners all around the world, I’ve been Julia Streets. Thank you for tuning into DiverCity Podcast and we look forward to coming back with you with a fantastic episode very soon. Thanks for listening.

Kieron: This episode of DiverCity Podcast was produced by me, Kieron Yates, on behalf of Julia Street’s Productions. Thanks to Cynthia Akinsanya for her insights. You can find out more about the guests on this week’s show on our website, DiverCityPodcast.com and that’s diversity with a C, not an S. Whilst you’re there, you can also sign up to our newsletter for all our latest updates. All our episodes are available in Apple Podcasts, Spotify, or your favourite podcast app. If you enjoy DiverCity Podcast, remember to share on social media and give us a rating or review. It really helps promote the show to a wider audience. Finally, our Twitter handle is @DiverCityPod. Thanks for listening.