Cowrywise Is Pioneering An Inclusive Pan-African Investment Project

Wednesday, July 17, 2019 / 10:00AM / Cowrywise

As of July 7, 2019, the official website of the Nigerian Interbank Settlement System showed that over 38 million Nigerians have beencaptured under the bank verification number (BVN) project. This figure, whencompared with how financially included Nigerians are, tells an even moredepressing story. To explain this, we can refer to an article writtenby Mrs. Oghogho Osula, in February 2019.

Thearticle stated that over 70% of BVN holders are still underserved; particularlyin the areas of investing. For example, less than 400,000 Nigerians invest inthe Nigerian mutual funds market. With mutual funds being one of the simplestinvestment vehicles, one can conclude that the story won’t be anywhere close topretty for other investment options.

Understanding The InclusionChallenge

Currently,the benchmark for financial inclusion focuses majorly on access to bankaccounts. This shallow measure clouds the measure of progress on this journey.It leads us to ignore the following:

1. Use of financial services.

2. Quality of impact. How do these services impactusers?

Commentingon this, Razaq Ahmed, CFA, the CEO/Co-founder of Cowrywise said,“It is important not to delegate access to financial service to the background.It is the most important measure, as people cannot use what they cannot access.With the hurdle of access crossed, it is equally important that financialservice providers commit heavily to creative education on benefits, workings ofproducts, and of course consumer protection. A number of people today have accessto bank accounts but still won’t use them beyond receiving money and makingpayments”.

RazaqAhmed’s firm helps thousands of Nigerians access automated investment optionswith as low as NGN100. The firm started with pooling automated savings fromusers. These savings are then simultaneously invested in treasury bills andgovernment bonds to earn users competitive returns.

“Ourchoice to start with those who already have bank accounts was built on therealization of exclusive access to investment options”, he said. He went on tostate that in itself represented what can be termed as secondary exclusion; inwhich people have left the primary stage of exclusion but cannot still access/use options that will actually lead to quality impact. This is based on thefact that funds kept in regular savings accounts are subject to the woes ofinflation.

Building An Integrated Solution

EdwardPopoola, who is also a Co-founder of Cowrywise, stated that the biggestchallenges people face with actually using products that help with investingare complexity, trust, and the absence of affordable advisory services. “To tacklecommon challenges, we committed quality time to build a platform thatcommunicates with the everyday user in plain language. One that does notdistract the user but helps them focus on the necessary action points. Wehaven’t slowed down on this as it is a continuous process for us.”

Ontackling the issue of trust, Edward shares how the firm partnered with MeristemTrustees right from the start. “We wanted to create a platform that willprovide users with a strong sense of security as pension funds, and we madethat happen”, he said. Recently, in line with Edward’s take on ease, the firmalso on-boarded mutual funds from top investment managers. This innovationallows the everyday person to invest in mutual funds from top fund managerswith as low as NGN100.

Marketing The Solution

Speakingon how it has been able to effectively market its solutions, Razaq points tocontinuous investments in educational campaigns. “When we got into the market,there was a lot of misinformation on how investments work. Where theinformation was right, it was complex for the everyday person to understand theconcepts. So, we built a system that combines the use of events, automatedadvisory, and simple money guides that even 10-year olds can understand”, heexplained.

Overall,this has paid off significantly in the area of engagement. “We have not justbeen growing, we have been able to maintain a high and stable level engagementwith our user community. This is a clear pointer that we have gone beyond justdemocratizing access to actually driving usage and quality of impact”, saidAjetomobi Feranmi who serves a brand engagement strategist at Cowrywise.

What Does The Future Hold

Withinthe first two weeks of launching mutual funds, Cowrywise claimsit was able to introduce 3,000 first-time investors to the formal investmentspace. In the next 7 years, they are committing to introduce 10 millionfirst-time investors. A noble goal that will significantly impact the Nigerianinvestment space.

In thepast, Cowrywise has introduced products such as the Life Goals that help with anumber of important long-term goals such as parents planning and investing foruniversity fees of children. Also, it has extended its inclusivity drive toallow for ethical investment options making it possible for everyone includingMuslims to invest with ease.

Roundingthis up, we would lend the words of Razaq Ahmed, “In the nearest future, we donot just want to create an inclusive space for first-time investors, we want todo something bigger. We are looking to pioneer a pan-African investmentproject, making it possible for Africans to access investment options acrossvarious regions of the continent with as low as 25 cents.”