For underserved financial markets across the world, leapfrogging traditional banking systems and turning to fintech could bring an economic boon.
That’s the message from Elizabeth Rossiello, founder of Nairobi-based fintech company AZA Group, speaking on Thursday at the Fortune Global Tech Forum in Guangzhou, China.
AZA, which focuses on currency trading solutions, was the first company to use digital currency to lower the costs of fund transfers and payments in Sub-Saharan Africa. Rossiello founded AZA six years ago in Nairobi after working at a rating agency there and noticing a currency liquidity problem, stemming from ‘dollarization’ among many small banks in East Africa.
That meant the banks were borrowing from international banks in U.S. dollars or euros, and then lending themselves in local currencies, meaning that even when they did “everything they were told to do” in terms of regulations, “If the Ugandan shilling slid against the Euro that year, they were out of luck.”
Rossiello began trading currencies, first out of her U.S. account and then through Bitcoin, “literally in my living room with my kids crawling on the carpet.” Through Bitcoin she connected with brokers all over the world. AZA expanded to Nigeria in 2015, then moved into the U.K. and Spain, and now sees $100 million a month in transactions and is present in 15 countries in Africa.
Cryptocurrency became a solution, for example, for AZA’s Nigerian customers with businesses that import from China—they wanted a naira-renminbi currency pair, which a lot of banks would first route them through the U.S. dollar to do.
“We used cryptocurrencies in the beginning because the barrier to entry was so low,” and AZA lacked traditional infrastructure, Rossiello says. Now, AZA is a “hybrid company” that sometimes uses cryptocurrency for transactions but has also built infrastructure like its European licences.
Rossiello wants to see individual crypto and digitally native market makers across Africa, rather than “just rely[ing] on the top two banks [in the country] to make a market in the currency,” she said. She points to markets like Hong Kong, London, Zurich, and New York, which offer “a whole rainbow of financial providers.”
But she also sees “exponential potential” in the financial markets of the countries she’s worked in, like Kenya and Nigeria, to go beyond established financial systems.
“I love the idea of leapfrogging legacy systems and I believe in the transparency, the traceability of a lot of these blockchains,” said Rossiello. “We don’t need to go on the same railroad with only two stops. We can actually create as many networks and routes as needed […] and that can only increase business, it can only make it easier to trace supply chains, financial transactions, and help grow relationships.”
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