The problem of Africa’s unbanked millions is not purely a banking or financial services issue. It is also a social development and tech infrastructure issue. Using the smart deployment of fast and cost-effective connectivity solutions, companies such as 3air are addressing the issues of internet access and the unbanked head-on.
The Long-Term Cost of Financial Exclusion
There are currently about two billion people around the world who are unbanked. These people, for a variety of reasons, either cannot or choose not to use traditional banking services. In many countries, the high costs of opening an account, high transfer fees, a lack of acceptable identification, the limited reach of physical banking networks, and the inconvenience of using time-consuming services offered by banks force many people to remain unbanked. As a result, these individuals either do not actively participate in or use any form of organized financial services, or they resort to under-the-table or black-market sources for funding.
This has serious and long-term implications for a country’s ability to grow economically. Fortunately, current trends are promising. Despite approximately 1.3 billion people in Africa still lacking broadband internet access, the internet is expected to drive a substantial amount of economic development in Africa over the next few decades. According to recent reports, digital solutions and offerings in fields such as finance, education, healthcare, governance, entertainment, and retail are expected to reach a valuation of $700 billion by 2050.
The Promise of Internet-Powered Digital Payment Solutions
Of these verticals and opportunities, internet-powered digital payments have been particularly successful in terms of user onboarding and value generation. While two-thirds of adults in Sub-Saharan Africa are unbanked, approximately 50% of all mobile money users in the world live in Africa. The digital payments space grew 1,000% over the last decade and is now seen as a safe, reliable, and cost-effective way to send and receive money.
Looking at the problem from another angle, it is clear that the issue of unbanked consumers in Africa is a financial services outreach and adoption issue. Leaders and decision-makers from business and government should look to cost-effective alternatives – particularly fintech solutions – that can seamlessly bring the unbanked and underbanked into the formal financial system.
The Internet and Finance
Building new physical banking infrastructure to reach hundreds of millions of new users all across the continent and providing them with financial services and products would not only take too long but would be prohibitively expensive. Using the internet and custom-built financial applications, however, we can convert users’ mobile phones – both smartphones and non-smartphones – into seamless extensions of the financial system. Many advancements and innovations such as crypto-based payments, connectivity NFTs, and digital identity can be used to provide people with the financial services and resources they need to avail investment opportunities, start businesses, make and receive payments, and lower the cost of doing business via traditional methods – just by using their phones. All that is needed is a mobile device and internet connectivity.
When looked at this way, the race to reach Africa’s unbanked is an opportunity worth hundreds of billions of dollars in untapped economic potential that can (and should) be solved not by building new banks but by getting people online.
At present, the primary obstacles to internet connectivity in Africa are a lack of infrastructure, long lead times for approved projects, and an over-dependence on costly and ineffective connectivity solutions that include mobile towers, underground fiber optic cables, and slow GSM/CDMA/3G connectivity. Newer technologies such as 4G, 4G LTE, and 5G could potentially close the connectivity gap in Africa, but the costs of consumer plans that use these technologies are typically too expensive for the residents of developing countries.
A New Internet Era
One company is using low-cost connectivity hardware, customer-friendly plans, and wide-area network coverage to bring millions of new people online over the next few years. 3air, in partnership with K3 Telecom, has developed a proprietary wireless point-to-multipoint technology that delivers safe, fast, reliable, and low-cost internet access using radio signals. All that is needed is the installation of a base station connected to the global internet backbone (with only two or three base stations needed per city) and transceivers installed at end-user locations (such as buildings) to deliver internet access to users via low-cost and widely-available Wi-Fi routers.
Base stations offer exceptional coverage (up to 15,000 users – almost 500 times as many users as a mobile tower) and speed (up to 1 Gbps – almost 100 times faster than the average 4G connection) at a fraction of the cost of a new mobile tower or fiber optic network. Furthermore, using crypto-based rewards and incentives in the form of the $3AIR cryptographic token, 3air allows users to pay for services and share their bandwidth via connectivity NFTs with others without having to resort to slow and costly middlemen to manage this exchange.
3air Over the Long Run
By providing users with internet access and empowering them to create their personal crypto wallets for sending and receiving $3AIR tokens, 3air is perfectly positioned to bring millions of new users online. The project is also perfectly positioned to ride the wave of digital payments growth and crypto adoption in Africa and can help usher in a new era of connectivity and banking for all.
Blockchain-powered payment solutions have already experienced exponential growth on the continent, growing approximately 10-fold since June 2020. By building new financial products, services, and offerings that run on blockchain’s Distributed Ledger Technology (DLT) and reaching new users via 3air’s performant and cost-effective mesh network of connectivity devices, local players have the power to radically transform Africa’s financial services industry. Crypto-based payments solutions have already started to compete with digital and brick-and-mortar services providers such as Western Union and the local offerings of regional financial institutions, but the long-term goal of projects such as 3air is to meet the connectivity demands of the next billion users and provide them with unfettered access to the financial solutions that they need the most.
