Kenyan-built fintech turbocharges Eswatini’s mobile money market

By Steve UMIDHA

The speed and breadth of mobile money adoption is transforming Eswatini’s financial landscape.

Steve Umidha, Data & Financial Journalist, YouTube’s The Pivot Point Show host https://www.youtube.com/@financial_fortune_media, and the Managing Editor of Financial Fortune media www.financialfortunemedia.com, explores the future of finance and trends shaping the country’s financial landscape. 

From exponential growth to regulatory advancements, this article considers the foreseen impact of mobile money operator, Instacash, in financial inclusion and the economic development of Eswatini.

The landscape of mobile money in Africa continues to witness a remarkable transformation, nearly two decades following the burst of M-PESA novelty into the scene. And now several trends forecast an unprecedented steady upward trajectory in growth across many countries on the continent.

What’s more, the momentum is showing no signs of waning, underscoring the pivotal role mobile money plays in the financial inclusion of millions across the continent.

Just two years after its launch, mobile money platform Instacash, developed by Kenya’s Directcore Technologies has made significant inroads into the southern African Kingdom of eSwatini.

Watch Instacash story here: https://www.youtube.com/watch?v=BSW-dKXgKKI&t=742s

In an extensive sit-down with its Managing Director, Mandla ‘Cheeks’ Nxumalo – an investment banker by training, Nxumalo tells me that in the next few years, the platform will be the go-to mobile money provider not only in eSwatini but across the Southern African market.

“I will put agility at the top as what gives us that competitive edge. And we are a people – centered platform and looking into the future, our plan will be to spread into the region,” narrates Nxumalo, adding that, “we are making inroads in the region.”

The idea was first mooted in 2018 with the help of Directcore Technologies, a Kenyan Fintech, as the platform’s service provider, but it took the brand until 2022 to actualise the dream.

The non-telco operator has already captured over 200,000 users, representing more than 16.67% of the country’s population and has begun to upend the market where five banks — including three South African institutions — have long controlled access to financial services.

Its fast-growing adoption rate hints at a potential M-PESA-like effect in Eswatini as young users embrace mobile financial solutions.

“Our platform is as safe as it is. It has been easy to regulate because all the Telcos now with banking platforms are separated from the core Telco business, so it is easier to regulate. So, the Central Bank of Eswatini is looking after your mobile money platforms and Telcos are regulated elsewhere.”

The brand will be keen to follow into the successes of the Kenyan homegrown MPESA brand, but will periodically entrench other exciting products and services within the platform like an overdraft credit facility, an equivalent of MPESA’s Fuliza service.

Similarly, Mandla says the firm will continue to work on other modernizations to simply agent networks and account opening processes. And at the most basic level, Instacash is bullish it will continue to heavily invest in low-cost communications platforms to boost its current US$700K monthly transactions – the volume of transactions handled by the platform.

“We are looking at a market share of between 30 and 40 percent in the next three years, which is the medium term,” affirms.

The platform allows users to transfer funds to others, to pay bills, and to purchase mobile airtime credit. Retail stores are paid a fee each time they exchange cash for INSTACASH credit on behalf of customers. All INSTACASH transactions are authorized and recorded in real time using secure short messaging service (SMS) and are capped at a fee.

In 2023, the Eswatini Economic Policy Analysis and Research Centre (ESEPARC) conducted the first ever national cryptocurrency survey to understand the level of awareness among consumers, their involvement with cryptocurrencies, and the opportunities in this market.

As a result, the Central Bank of Eswatini is now considering whether the introduction of its retail central bank digital currency (CBDC) would be beneficial for its economy and the continued integrity of its currency in light of increasing use of digital money.

This decision could have a significant impact on how eSwatini’s financial markets operate and the ways in which consumers and businesses make payments on a day-to-day basis.

The Bank is keen to introduce an eSwatini retail CBDC, and has proposed that this undertaking would be done in collaboration with the private sector. INSTACASH is now ready to pounce on the opportunity.

Already trials and pilot programs between the two parties are happening in what would be another first for the company.

Instacash has now completed the necessary integration to operate a potential CBDC on a USSD-based system, according to a recent statement by the country’s Central Bank of Eswatini.

It has developed an entirely new product with a new backend system with the help of Directcore Technologies.

Instacash has invested significant effort into the integration and also developed a sandbox solution to demonstrate the process of a USSD-based Digital Lilangeni.

“This use case was successfully tested in the sandbox environment. The CBE considers this a unique use case for the region for any potential CBDC engagements. With regard to a potential Digital Lilangeni roll out, this use case could still prove crucial,” read in part a statement from the bank.

Adding that, “Digital Lilangeni can support interoperability amongst existing payment methods especially, in the absence of a domestic payments switch. This also includes interoperability between physical banknotes, coins, and Digital Lilangeni.”