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<p>At the SME and Banking Africa forum, CNBC Africa spoke to Manoj Prashar, from IFC to help us understand how IFC is tackling Africa&#8217;s access to finance woes.</p>


IFC spearheading SME funding

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<p>According to research done by the World Bank in 2014 an estimated 2 billion working-age adults globally have no access to the types of formal financial services delivered by regulated financial institutions that wealthier people rely on. Senior Financial Analyst for CGAP, Gerhard Coetzee, says customer-centricity is key to banking the unbanked.</p>


Why customer centricity matters

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<p>So what exactly is the future of retail banking in the continent? And how do you connect the African masses to financial services? The retail banking council is seeking answers for this through the coming together of senior retail bankers in Nairobi.</p>


What the future holds for retail banking in Africa

<p><span class="articleLocation">JOHANNESBURG</span> (Reuters) &#8211; South African financial services firm Alexander Forbes Group said its chairman Sello Moloko will retire in August and appointed Moses Kgosana, a non-executive director of the company and a former CEO of KPMG South Africa, as his successor.<span id="midArticle_byline"></span></p>
<p>Moloko will step down at the end of August after holding the position for nearly 10 years, during which he saw the company through the 2008/09 global financial crisis and its re-listing on the Johannesburg Stock Exchange in 2014.</p>
<p>Chief Executive Andrew Darfoor said he welcomed the appointment of Kgosana, who is currently executive chairman of his own property investment company.</p>
<p>&#8220;I am privileged to be handed the reins of a company such as Alexander Forbes with a strong heritage and market leading history in the financial services sector,&#8221; Kgosana said in the statement put out by Alexander Forbes.</p>
<p>He will become chairman on Aug. 31.</p>
<p>(Reporting by Nqobile Dludla; Editing by Susan Fenton)</p>


South Africa’s Alexander Forbes appoints ex-KPMG chief as chairman

<p><strong>An open letter to the regulator ﻿by Dawid de Villiers and Seshree Govender of Webber Wentzel﻿</strong></p>
<p><strong><img loading="lazy" decoding="async" src="/media/19303554/dawid_de_villiers_partner_at_webber_wentzel__lr_.jpg" width="350" height="527" alt="Dawid De Villiers Partner At Webber Wentzel (LR)"/>﻿<br /></strong></p>
<p>Dear Prospective Blockchain Regulator</p>
<p>A belated warm welcome to the age of Blockchain. In the last five years or so we have witnessed this technology&#8217;s ability to redefine the very nature of processes and role players, we hold dear in the financial services industry. Given a few years, the right regulatory landscape and a shift in the mindset of the industry&#8217;s collective consciousness, Blockchain technology has the potential to change fundamental ideas and concepts currently entrenched within the financial services industry.</p>
<p>How? Well, Blockchain technology, as with most products of the Fintech movement, is underpinned by a &#8220;millennial&#8221;philosophy that seeks to better harness the benefits of free flow information, the shift toward more consumer orientated product development processes and integrate systems with greater adaptability. Accordingly, should Blockchain successfully integrate into the financial services industry, crystalised concepts and institutions such as the need for financial intermediation, single point information storage and centralised clearing and settlement may no longer exist.</p>
<p><strong>The Mission of the Regulator</strong></p>
<p>The benefits of Blockchain technology have been well documented in various platforms for the last couple of years.  So too has the fear of security breaches and the platform being utilised as a means to defeat the current consumer protections instilled in the financial services regulatory framework.</p>
<p>As such, we get it &#8211; there is definitely a need to regulate this innovation in technology. The devastation alone that a breach or failure in the Blockchain system may cause, certainly calls for regulation. However, as is the case with all innovation, amidst the calls for regulation there is also a need for deference and patience, given the infancy of Blockchain technology.</p>
<p><strong>The Keys to the Blockchain</strong></p>
<p>Blockchain is essentially a record keeping system, albeit a sophisticated and virtually bulletproof record keeping system, against which information is verified, cleared and settled. In other words, a key aspect of the Blockchain system is its inherent ability to adapt and continuously develop its core purpose which is to provide a secure manner of transacting between people without a third party verifying the information provided by the transacting parties.</p>
<p>This inherent commitment to security and transparency is premised on three basic characteristics of the Blockchain system:<a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftn1" title="">[1]</a></p>
<ol>
<li>A decentralised clearing  or responsible authority</li>
<li>the multi-member consensus approach to enhance transparency<a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftn2" title="">[2]</a>; and</li>
<li>the irrevocable chain and its reluctance against judicial or regulatory intervention </li>
</ol>
<p><strong>The decentralised authority</strong></p>
<p>Blockchain is premised on the idea that no one institution or person ought to bear the overall responsibility of verifying the authenticity of the information (block) to be added to the chain or regulating the Blockchain itself. Blockchain operates on the foundation of a decentralised verification system that serves the functions of clearing and settlement based on information held by each member of the Blockchain network.<a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftn3" title="">[3]</a></p>
<p>The efficacy of this decentralised verification system rests on the fact that the record held by each member of the network is a replica of the chain and as further blocks are added to the chain, the records of each member updates to reflect the record of the Blockchain.<a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftn4" title="">[4]</a></p>
<p>Therefore, if the replica record held by one member is fraudulently altered so as to manipulate the verification process a block undergoes, the relevant block would still not accord with the other members&#8217; versions and as such creating an inherent checks and balances system in respect of information verification before a block is added to the chain.</p>
<p>This decentralised verification system negates the need for a single entity to be responsible or liable for the information that is entered into the Blockchain system.<a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftn5" title="">[5]</a> This is because all participants on the Blockchain network serves the function of and is responsible for the accurate verification of information.</p>
<p>It is arguable that regulation that undermines the function and purpose of a decentralised system by requiring a central entity to maintain authority in respect of the Blockchain is counterintuitive to the very purpose of Blockchain. The concept of a decentralised system is to ensure that no one entity, which is susceptible to various faults and weaknesses, as is any other entity, is tasked with ensuring the validity of transactions that operates through the Blockchain.</p>
<p>In an ideal Blockchain system, every member connected to the Blockchain network bears equal responsibility and liability for ensuring that transactions and information are in accordance with the information record instilled in the Blockchain.</p>
<p>Accordingly, we submit that the Blockchain system requires the financial services industry to start thinking of the concept of liability, responsibility and consumer protection as a function performed by every member of the Blockchain network as opposed to a single central entity.</p>
<p><strong>Multi-Member Consensus Approach</strong></p>
<p>Blockchain, in line with the calls for increased transparency in the financial services industry, seeks to secure and generate an irrevocable and transparent record of transactions. This transparency is achieved through an irrevocable record that (i) is continuously verified by each member of the Blockchain network and (ii) such verification is not reliant upon the internal processes of one particular entity. <a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftn6" title="">[6]</a></p>
<p>In order to illustrate this, let us consider the hypothetical scenario of a securities exchange where the central securities depository, the issuer, the stockbroker and the central securities depository participant are all members of a Blockchain network. Should the broker (in processing a sell order) claim that their client is the owner of securities forming the subject of the sell order, this information (block) will be distributed to the various members within the Blockchain network and if it is determined that such information does not accord with the Blockchain record (held by each member) the information will be rejected and will not form part of the Blockchain, resulting in a failed trade.  </p>
<p>This system of multi-member consensus clearing ensures that each member, on an automated basis, applies the same diagnostic approach to the verification of information against the same record, irrespective of the internal processes of each member.  Accordingly, each member of the chain is always cognisant of the acquiesced process adopted in determining whether a block should be added to a chain. <a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftn7" title="">[7]</a></p>
<p>This system affords transparency to transactions processed through a Blockchain, bearing in mind that due to the flexibility of Blockchain, the system can be restricted depending on the particular needs and purpose of the Blockchain network.<a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftn8" title="">[8]</a></p>
<p>The built-in transparency feature of the Blockchain network arguably negates the need for the regulator to administer and enforce further transparency requirements. The regulator should rather focus on the members of the Blockchain network and not the technology itself. Regulation within this context should aim to create criteria for persons who are permitted to form part of particular Blockchains. In this way, the regulator could ensure the integrity of the Blockchain and its members without inadvertently hampering innovation or undermining the core function of Blockchain.</p>
<p><strong>The Irrevocable Chain</strong></p>
<p>Conservative critics of Blockchain have argued that a critical flaw of Blockchain is its resistance against judicial and regulatory intervention.<a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftn9" title="">[9]</a></p>
<p>Let us take for example an instance where an investor is of the belief that a block in the Blockchain incorrectly reflects the factual position and contests the accuracy of the Blockchain in a court or an equivalent regulatory forum. The question that arises in this context is whether the judiciary or the regulator should have the overarching power to alter the Blockchain record in light of such a claim.</p>
<p>It is crucial to note that the strength and validity of Blockchain are solely dependent upon the irrevocability of the chain. In other words, the moment an institution, judiciary or regulator is empowered to alter the Blockchain; it compromises the chain in its entirety.</p>
<p>Accordingly, we submit that the regulator should exercise restraint in permitting regulatory or judicial intervention in the Blockchain, bearing in mind that one cannot simply oust the jurisdiction of a court.</p>
<p>Rather, a regulatory presumption should be adopted. The central premise of the presumption should be that the Blockchain is presumed to be correct unless evidence is adduced to illustrate otherwise. The judiciary, as well as regulators, should bear in mind the essential characteristics of Blockchain which is to enable various intuitions within the network to verify the information contained within the network. Therefore, unless there is clear evidence of manipulation or contamination of the information, the members of the network, or the verification process itself, the judiciary or a regulator should refrain from intervening in a Blockchain. </p>
<p>Taking all of the above into account, the position of a prospective Blockchain regulator is an unenviable one. Such a regulator may in the immediate future be tasked with attempting to balance the benefits and industry need for Blockchain against the potential exploitative weaknesses that may be inherent in the system. How does a regulator balance the need for investor protection against the restraint from overburdening a budding and innovative field within the industry?</p>
<p>It is submitted that the solution is two-fold:</p>
<ol>
<li>Understanding the purposes and core functions of Blockchain and the manner in which it differs from current industry practices and at the same time realising that while Blockchain is termed an innovation, its purpose and process are not novel. Blockchain is merely a more effective and secure means of performing the already existing function of record keeping, clearing and settlement. Regulation should thus not aim to prescribe the process of Blockchain by seeking to codify or label the Blockchain system. </li>
<li>An understanding that the inherent features of Blockchain are based on principles of transparency, investor protection and security. As such, regulation should seek to enhance the framework in which Blockchain operates rather than further regulating its core principles.</li>
</ol>
<p>Caution must be exercised by the prospective regulator to ensure that a &#8220;throw the baby out with the bathwater&#8221; approach is not inadvertently implemented in the regulation of Blockchain.</p>
<p>The challenge will be to strike this balance by ensuring investor protection while at the same time encouraging the innovation and development of technology within this budding industry.</p>
<p>Kind Regards</p>
<p>The millennial financial services industry﻿</p>
<p> </p>
<p class="Body">For more information visit <a href="http://www.webberwentzel.com/">www.webberwentzel.com</a> </p>
<div>
<p class="Body">Follow Webber Wentzel on Twitter: @WebberWentzel</p>
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<p class="Body"><strong> FOOTNOTES:</strong></p>
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<hr />
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<p><a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftnref1" title="">[1]</a>IMF Staff Discussion Note: Virtual Currencies and Beyond: Initial Considerations (January 2016)</p>
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<p><a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftnref2" title="">[2]</a> Brave New Coin: Digital Currency Insights &#8220;A Gentle Introduction to Blockchain Technology&#8221; (2016)</p>
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<p><a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftnref3" title="">[3]</a> &#8220;Distributed Ledger Technology: Beyond block chain&#8221; A report by the UK Government Chief Scientific Adviser (2016)</p>
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<p><a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftnref4" title="">[4]</a> Brave New Coin: Digital Currency Insights &#8220;A Gentle Introduction to Blockchain Technology&#8221; (2016)</p>
</div>
<div>
<p><a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftnref5" title="">[5]</a> &#8220;Distributed Ledger Technology: Beyond block chain&#8221; A report by the UK Government Chief Scientific Adviser (2016)</p>
</div>
<div>
<p><a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftnref6" title="">[6]</a> Brave New Coin: Digital Currency Insights &#8220;A Gentle Introduction to Blockchain Technology&#8221; (2016)</p>
</div>
<div>
<p><a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftnref7" title="">[7]</a> Brave New Coin: Digital Currency Insights &#8220;A Gentle Introduction to Blockchain Technology&#8221; (2016)</p>
</div>
<div>
<p><a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftnref8" title="">[8]</a> Barclays &#8220;Blockchain: Understanding the potential&#8221; (2015)</p>
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<div>
<p><a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftnref9" title="">[9]</a> Oliver Wynman and Euroclear &#8220;Blockchain in Capital Markets: The Prize and the Journey&#8221; (2016)﻿</p>
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Op-Ed: Blockchain – Innocent Until Proven Guilty

<p>African financial technology company Zoona has successfully raised $15 million in a Series B round of financing, showing an improvement from the first round of investment which was for $4 million. International Finance Corporation (IFC), a member of the World Bank Group, is the lead investor.</p>
<p>“This investment round marks a key milestone in our journey to build a billion-dollar business that helps communities thrive,” says Mike Quinn, CEO of Zoona.</p>
<p>With the IFC only investing up to 50% of any given round of investment, it is joined in this investment round by first round investors Accion, Omidyar Network and Lundin Foundation.</p>
<p>Omidyar Network, which was founded by Pierre Omidyar, doubles its investment in the Series B round. The round also includes investment from 4Di Capital, a venture capital firm based in South Africa’s “Silicon Cape”, headed up by entrepreneur, investor and Zoona non-executive director Justin Stanford. Another investor, Lundin Foundation, provides capital to high potential businesses to create wealth and alleviate poverty, increased its investment in Zoona during this round. Only MEDA is not investing in the second round because its mandate is for early stage SEED investment and not for organisations seeking to upscale.</p>
<p>“Our existing Series A investors increased their investment to make up the remainder of the investment round. They did this because they share our values, back the leadership team and are as passionate as Zoona is about helping communities thrive,” says Quinn.</p>
<p>Zoona’s mobile money platform has already enabled more than 1,000 entrepreneurs to become Zoona Agents, creating over 2,500 jobs at 1,500 agent outlets in the process. It aims to reach 10 markets and 30 million active consumers across Africa by 2020.</p>
<p> “Zoona has made this possible in Zambia and Malawi and is planning to do the same in many other markets in Africa. Whether in the form of a money transfer or a cash collection network, these retail footprints play an important role in acceptance and adoption of the new form of money and will be critical for the financial service industry as it transforms itself,” says Andi Dervishi, Global Head of IFC’s Fintech Investment Group.</p>
<p>Zoona uses technology to provide financial services to underserved and financially excluded communities across Africa. It has over 1.5 million active users with its system and has processed over $1 billion in mobile money transactions since its founding 2009.﻿</p>


financial services

IFC spearheading SME funding

Why customer centricity matters

What the future holds for retail banking in Africa

South Africa’s Alexander Forbes appoints ex-KPMG chief as chairman

Op-Ed: Blockchain – Innocent Until Proven Guilty

Zambia’s Zoona raises $15 mln to reach 10 markets by 2020

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financial services

IFC spearheading SME funding

Why customer centricity matters

What the future holds for retail banking in Africa

South Africa’s Alexander Forbes appoints ex-KPMG chief as chairman

Op-Ed: Blockchain – Innocent Until Proven Guilty

Zambia’s Zoona raises $15 mln to reach 10 markets by 2020

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