The Mastercard Center for Inclusive Growth has set aside $1 million over the next three years to advance economic growth and financial inclusion in the country.
FORBES AFRICA’s Methil Renuka spoke to Raghu Malhotra, President, Middle East and Africa, for Mastercard, on the company’s plans for Rwanda, and the rest of Africa. Mastercard, which is in its 50th year, recently changed its iconic logo (to smaller case), and is No. 30 on FORBES’ World’s Most Innovative Companies list.
It has been 50 years of Mastercard, what is the future?
People consider the likes of Facebook and Apple as digital giants that have transformed things, and they really have, but if I really think of a company that 50 years ago digitized cash, I would like to believe we were the pioneers of what is called the digital economy. Obviously, you require technology and infrastructure to continue the transformation.
Somewhere in between, I guess we started to look at just payments, and then over the last seven years, again came back to our old journey and calling. Technology has changed, and infrastructure now allows us to do things differently. The good news is when you start to look at various companies, no one single company now can make all the massive changes, it’s a collection of things and there’s a whole value chain, everyone plays their part, and as that’s coming through, we are playing a part in transforming things. That’s our journey. I feel our next 50 years will be more telling.
What was the thinking behind the new logo?
The logo is very much part of that same change. It represents the young, the new and the digital, and is more modern. The logo in the past was designed for a brick and mortar world. The current logo is designed also for the digital world. It’s a very bold move. One of the biggest things you need to take away from this is we are a company not afraid to change with the times.
You are in South Africa, Nigeria, Kenya… now, why Rwanda?
First, let’s talk about Africa – it’s the next frontier of growth. What Asia was 20 years back, is what Africa will be today and the next 20 years. Today, if the world is looking for growth, Africa is it. But if Africa is going to be the next bastion of growth, how do you get Africa to do that – that becomes a story about financial inclusion. If you don’t include people, then you are not going to get that economic spurt you are looking for.
Our global strategy is 500 million new consumers; of that, Africa plays a very large part. Then, when you talk Africa, you look at the large economies, what have you done there, and what is the future.
The Rwandan government has a clearly articulated digital strategy. That helps, and when you actually talk to the government and they are super clear about what they want, what their policies are and what they want to achieve for their people, that’s a meeting of minds for a start. Then you look at all the reports in the world, and Rwanda is one of the easiest places in the world to do business. So you look at the track record and say, it’s not that the government just has a vision, it implements it in a particular way and all the stats are proving that. And then we started to have the dialogue with various ministries and the Rwandan Development Board and we quickly realized this synergy between what we want to do – doing well by doing good – and what they wanted; they have a very similar philosophy by saying they want 90% of their population to be included.
The first leg of our partnership is infrastructure enablement – collection of duties, taxes, enabling companies and businesses to do business with the government more efficiently in electronic form. The second level is financial inclusion. They want to digitize school fees; education is big for them, and so is healthcare. There is a meeting of minds, our strategies are common, they have a clear articulated vision like us, and we want to get to the same end results. They have sectors they have identified and we have solutions for them, put it all together, and we have a package that is complete.
How easy is it to work with other governments in Africa?
My personal view on this is it is a glass half full. Increasingly, in the Middle East and Africa, when we now talk to governments, there is a very different disposition, of how they look at their economies, how they need to enable people. They have a duty to their own population. So they have started to create vision.
Are you looking at all 54 countries in the future?
Some of this is opportunity-driven. Are we going roll out more offices, operate more locally in all of Africa? The answer is an absolute resounding yes. We have 13 offices in the Middle East and Africa. We are opening an office in Cote d’Ivoire. In Rwanda, we will have staff deployed there.
What are the challenges in converting a cash economy to electronic?
The first challenge is pure education. There is a common perception cash is better. But if you lose your wallet, and if you have cash in it, you will never see your cash again but you actually have a chance of getting your card back.
Secondly, it’s a very inefficient form. Somewhere the world has forgotten it started with the barter system: you moved to mineral trade, then diamonds and gold, you changed that to coins, silver and gold, you changed that to bullion and then moved to cash. Cash has been a phenomenon only for the last 600 years or so. The time has come to digitize it. Why can’t we just accept that and move forward?
Once you get over that hurdle, you start with infrastructure, and that’s where partnerships with governments and different stakeholders come into play.
You are big on innovation…
In my mind, innovation is not always the next new shining object or the next new breakthrough. Sometimes, a series of small things can be equally innovative, and they have a huge power of disruption. Having said that, it doesn’t mean we don’t do big things. We launched ‘push payments’ – basically cardholders can go to shops where there are no point-of-sale machines; you scan a QR code and the transaction is done.
The global first was in Pakistan, and Zimbabwe and Nigeria are in the implementation stage. That is quite innovative – you are eliminating billions of dollars of hardware costs that can be used for other purposes. So you are again leapfrogging technology in a different way in emerging markets.
In the past, innovation only happened in central labs and was pushed out to the rest of the world. I actually feel emerging markets will [now] push innovation to the rest of the world.
You said Africa plays a large part for Mastercard. Can you quantify it?
It’s more strategic. Africa is a new frontier, and certainly for all industries. If you are looking for the next growth spurt, Africa will play a large part of that. And it is poised for growth. The way the Asian tigers for example transformed themselves, I feel Africa is at the same cusp. The question is: will Africa continue to sustain it, will it continue that growth?