Tunde Ogungbade
If the COVID-19 outbreak felt like a terrible dream to you, you are not alone! The rude awakening to the fact that the disease might be with us for a while is a new reality we all have to grapple with.
What started as some distant news in faraway China has suddenly transformed into a constant threat for those in major African cities as a clear and present danger.
Beyond the hazard that the COVID-19 disease poses to our health and wellbeing, it has also wreaked complete havoc on our economies, stemming from the practice of social distancing and stay-at-home orders that have extinguished the fuel of commerce – social interactions.
Businesses, forced to close their brick and mortars, as well as governments across the world that declared lockdown to keep people safe at home, were unprepared for continuity. Conversely, online retailers and service providers experienced a massive rise in earnings as more people embraced digital commerce for essentials in preference to the risky infection-prone visit to the grocery stores or supermarkets.
Worldwide, lives have been upturned, business models have either collapsed or pivoted, with people unsure of their finances and future. With an estimated reduction in Africa’s GDP by up to -1.1% (Source: AUC,2020) and -3.4% in Nigeria’s GDP due to COVID-19, the once socially distant African economy has started to experience the ramifications of the pandemic due to globalization.
Leon C. Megginson, an American author, and Professor of Management, once said that “it is not the strongest or the most intelligent who will survive, but those who can best manage change.” This saying holds true more than ever in Africa today, with the emergence of CDCs (COVID-19 Digital Converts), a term coined and used by Tunde Ogungbade, the Managing Director of Global Accelerex. He used it to describe the new set of consumers coming online due to the impact of COVID-19 in Africa and perhaps beyond the continent. Speaking recently at NIBSS Fintech Webinar, Tunde explained how these late entrants to anything digital – the CDCs – are taking an expedition into a digital financial services lifestyle because of the pandemic. The CDCs have been forced to embrace change to survive due to the unprecedented challenge and scale of the global pandemic.
In the business world, no one ever imagined a situation where staff of organizations and SMEs would be compelled to work from home, on lockdown away for an extended period from business gatherings and events. With these corporate and other restrictions on physical gatherings in compliance with social distancing norms, never before have there been an appetite for virtual meetings and events like we see today.
Businesses with products and services enabled for this new virtual reality for social interactions have experienced a dramatic increase in patronage and revenue. Business Insider reports that the Founder of the video conferencing app, Zoom, Eric Yuan, joined the Forbes’ billionaire list in April 2020, following a 135% increase in the company’s shares. And the reason is not far-fetched. The company experienced 20X participant growth, making it the platform of choice for many people across the world who had to move their meetings, learning, or fraternizing online.
We have even encountered some exciting improvisations: players in the entertainment industry resorting to virtual concerts and games! Online education has been available for more than a decade and without mainstream adoption. COVID-19 changed educational content delivery globally. And in the corporate environment, while nothing is more desirable than physical training for corporate staff, there is a significant surge not only in the providers of online training but also in the number of participants due to risk of infection.
There has been a boom in agency banking, online retail businesses, online healthcare consultation and e-commerce. Unprecedented but sustainable business models have either emerged or are fast emerging and will shape the future of businesses in Africa.
The swell in online purchases during the pandemic is proof that more online payments are being made. Without a doubt, COVID-19 has done a better job of convincing previously skeptical Africans to embrace digital payments as the new normal. With more physical bank branches closed in a bid to reduce the potential spread of the disease, customers were compelled to explore digital payment alternatives. This indicates that COVID-19 has been a critical driver of the African CDCs’ venture into digital financial services. CDCs are likely the best tech evangelist in comparison to the billions of dollars spent by financial service providers to achieve the same result.
The best times are ahead for Fintechs in Africa. COVID-19 has compelled industry players to go back to the drawing board to rethink products and solutions that solve real problems for a post-COVID-19 Africa. We foresee a future of hybrid products and solutions to address, not only financial inclusion problems, but other challenges in health, agriculture, education, and essential but neglected sectors pre-COVID-19. Without any doubt, COVID-19 Digital Converts (CDCs) are here to stay.