We’ve seen countless fintech startups jump on the financial inclusion bandwagon, claiming to empower the unbanked. Yet, time and again, these promises ring hollow. Some so-called ‘inclusive’ fintechs operate from luxury offices, detached from the realities of those they claim to serve. Financial inclusion shouldn’t be a marketing slogan—it must be a tangible commitment to systemic change. The article below raises critical questions about microfinance and fintech’s role in perpetuating cycles of debt. The challenge is clear: real financial empowerment requires models that prioritize people over profit. What do you think? Are fintech and microfinance truly helping, or are they just repackaging old problems? #FinancialInclusion #FintechForGood #Microfinance #Blockchain #EconomicJustice
Financial inclusion in Africa often turns into financial extraction. That's according to Dr. Milford Bateman, a development studies and economics professor who researches & teaches internationally about the economics of development. "Many innovations, including financial innovations, start out as beneficial to the poor. But the problems start, in general, when such financial innovations are then commercialized and privatized," he notes. "Once private fintech corporations conquer a critical customer base and become oligopolists, or even monopolists — which is the ultimate goal of their scalable data-driven business models — the situation radically changes." According to Bateman, Africa offers a prime example. "M-PESA Africa was started with the help of the UK’s international development agency and everyone involved professed to having good intentions; they hoped that M-Pesa would be 'a great way of helping Kenya’s poor.'" So the mobile money platform launched as a significantly cheaper alternative to informal money transfers, genuinely helping lower-income Kenyans move money. But, in Bateman's view, market dominance changed everything: • M-Pesa started with more affordable transfers, resulting in a dominant market position • Began increasing fees soon after, reaching up to 20% for sending small amounts • Only reduced fees during COVID when forced by government intervention • Continued paying large dividends to foreign investors during the pandemic • Profits became prioritized over financial inclusion • Local entrepreneurs increasingly view M-Pesa as stifling fintech innovation, not enabling it "The poor are no longer the beneficiaries of financial innovation, but increasingly its hapless victims," Bateman argues. And he notes that, "To an extent, the Kenyan government since around 2020 has begun to try to rein in [M-Pesa parent company] Safaricom." This raises important questions about fintech's role in financial inclusion on the continent, and the tech ecosystem's role in development more broadly: Are sustainable solutions that genuinely benefit Africa's underserved being built? Or just new forms of value extraction? Without the right guardrails in place, what's meant as inclusion can easily become extraction. Good intentions aren't enough. Read more from Bateman on fintech, financial inclusion, and development here: https://lnkd.in/eUgMtgj3 Do you agree or disagree with him that M-Pesa has "morphed into one of the most exploitative corporate titans in Africa?" 👇🏽 Let us know in the comments. ________________ 🚨 Afridigest is building the most valuable platform for entrepreneurs in #Africa, starting with ideas, analysis, and insights. Subscribe today: afridigest.com/subscribe
