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Reimagining informality leads to opportunities for lending and insurance

Photo by Benny Jackson on Unsplash

In 2018 FiDA conducted interviews with several key platforms in Africa looking at how platform business models are evolving in terms of financial services.

One of the most significant potential benefits digital platforms offer for financial inclusion is in redefining what it means to be an informal merchant or worker. Most Africans participate in the informal economy, sometimes beyond the purview of the state and tax authorities and often without secure contracts, benefits, or social protections.

Digital platforms are changing how informal merchants and workers trade. In turn, they are changing how visible and additionally interpretable informal merchants’ and workers’ activities are not just to the platforms themselves, but also, potentially, to formal financial institutions. Indeed, in tackling the burden of standardization, platforms are unlocking new opportunities for financial services. As more commercial activity and income streams become standardized and accessible through worker and merchant participation on digital platforms, the business case for serving small businesses or self-employed individuals should become more straightforward.

Instances of platforms using standardized data streams, alone or via a partner, to offer financial services are becoming more prevalent, but many Global South use cases are still early stage.

So far, India has provided leading use cases linked to e-commerce platform models. Flipkart aims to explore insurance and lending for sellers and consumers. And Paytm, in partnership with Lendingkart, offers collateral free loans to SMEs and merchants. In Africa, Jumia uses sales history and projections to confirm seller ability to pay for merchant lending underwritten by Branch and others. For African micro-merchants that transact or begin to transact digitally, standardization may bring about tremendous new potential, especially since, as BFA has noted, micro-merchants have been unlikely to do bookkeeping even with incentives. For micro-merchants on Sokowatch’s platform, for example, the data the platform has obtained from store ordering has made it possible for the platform to offer financial services to its micro-merchants.

We are aggregating data on informal merchants via a digital tool for the first time in Africa. Today we are doing predictive ordering and a suggested ordering window based on historical orders, instead of kiosk data entry. No one else [in Africa] has been able to crack this. —Sokowatch

Local services platforms may offer even greater opportunities for financial inclusion than e-commerce models. For some platforms, transactions can be highly standardized with few customizations and, more importantly, the imperative for financial services from a business perspective exists. Ride-hailing platforms, like Bolt (formerly Taxify) and Uber, require that drivers have insurance. For domestic and craft workers, the law is unclear regarding who is responsible if a platform worker breaks something while on a job, increasing the likelihood that platforms need to make sure their workers are covered by insurance.

Additionally, we are already seeing instances of ride-hailing platforms in Africa offering financial services through partnerships. Uber, in some markets, has partnered to offer insurance or facilitate car leasing arrangements. And JUMO has announced a recent partnership, JUMO Drive, that enables digital vehicle finance for existing Uber driver-partners. Bolt  has sourced, negotiated and facilitated an insurance scheme for its drivers (Drivers Shield).

Platforms in the domestic and home improvement sub-sector are still exploring possibilities. Lynk, building on the standardized data they have on artisans’ incomes, is trialing loans for power tools for their Pros.

We have KYC information on Pros (i.e., workers or artisans on Lynk’s platform) already; we know their transaction histories, how much profit they make, and we can deduct repayments from their pay.—Lynk

Lynk also has other data that can be used for credit scoring including ratings and timeliness of communications and deliveries. They are testing this right now with BFA who has given them $100k to disperse as loans of up to $200 each to tradesmen who meet certain criteria. They are also exploring per-job insurance so that, if a Pro breaks something while on the job, both Lynk and the Pro understand who is responsible and how the insurance plan will pay out. With all the work they are doing to standardize data streams, digital platforms could be good business partners for African financial services providers, particularly banks, as they grow. To capitalize on this opportunity, banks and other financial services providers will need to think creatively about how to develop new products or modify existing ones for the digital platform era.

How financial exclusion and lack of trust hamper e-commerce platform models

In 2018 FiDA Partnership conducted interviews with several key platforms in Africa looking at how platform business models are evolving in terms of financial services.

Faced with a customer base that lacks bank accounts or who do not trust online payments, many e-commerce platforms have developed tools and processes that allow customers to pay in cash for most transactions. In this note, I argue that while this strategy is fueling growth in transaction volumes and active customers, issues with fraud, failed deliveries and late/uncollected receivables stemming from the use of cash are opening platforms up to substantial losses. Additionally, e-commerce platforms have not been as proactive as they could be in launching strategies to onboard and pay financially excluded merchants and workers. This misstep is probably limiting the number of merchants that would be selling on e-commerce platforms if mobile money or easier conversions to cash were implemented.

In their F-1 registration statement, Jumia (Jumia Technologies AG) describes how they have overcome the challenges posed by their African markets by developing their own logistics and payment infrastructures. Jumia Logistics now includes leased warehouses and drop-off centers; more than 100 integrated, local third-party logistics providers; and Jumia’s own last-mile delivery fleet in certain cities. In 2018, Jumia logistics handled 92% of Jumia’s deliveries.

Photo source: Financial Times

Even so, the company has been subject to theft, fraud, and other risks associated with cash transactions. Late collections (when funds are not remitted from third parties back to Jumia on time) and unrecoverable receivables (when delivery agents commit fraud or become insolvent) have been particularly problematic for Jumia in countries where a large percentage of deliveries are outsourced to third-party delivery agents. In Kenya, where approximately 95% of Jumia’s consumers paid in cash-on-delivery in 2016, the company discovered in early 2018 that approximately $800,000 in cash payments was never collected. The company notes that, to mitigate this risk, they now have an automated system that allows Jumia to monitor cash transactions on a daily basis.

Nevertheless, compared to more developed markets, Jumia has experienced a higher number of failed deliveries, because customers paying in cash have to be home to provide payment at the time of delivery or the delivery will fail. After three failed attempts, Jumia returns the product to the seller. In 2018, 14.4% of Jumia’s gross merchandise volume consisted of  failed deliveries and items returned by customers.

Image: Jumia website

In addition to a financially excluded consumer base, many SME producers that might want to access e-commerce platforms like Jumia do not have bank accounts. Most platforms require producers to be paid via bank accounts. Some, including Jumia, allow workers to use mobile money accounts or interface with PayPal or Western Union. However, many platforms restrict the frequency and withdrawal destinations that participants can use to transfer money from the platform’s pocket to their own. This can create time delays between when the sale happens and when a merchant is paid. While some delays are to be expected, restrictions that severely limit the frequency by which participants receive payouts can be problematic for financially excluded workers and merchants. Moreover, because only 20% of sub-Saharan Africans have bank accounts, platforms that only support bank accounts are limiting the number of merchants that can onboard to their platforms. Paypal and Western Union withdrawals are not reasonable workarounds; they charge additional fees and create further friction because, with these services, money has to make additional hops before it reaches participants’ pockets.

In the near term, e-commerce platforms need to offer cash-on-delivery in order to scale. There’s also no guarantee that the market will shift rapidly from the current situation, where most transactions are cash, to primarily digital payments. It will take time to build trust and for banks and financial institutions to address the 80% of the market that remains financially excluded. In the meantime, early entrants like Jumia need to find ways to minimize losses that result from cash transactions to ensure their own profitability and sustainability. Moreover, e-commerce platforms need to grow sellers as much as they need to grow consumers. To do so, platforms may need to diversify how they pay workers or facilitate bank account openings.

Digital platforms offer new opportunities for innovative African banks to grow

E-commerce and online labor platforms could be good business partners for African financial services providers. This is especially true for banks whose scale makes them prime partners for digital platforms. Similarly, banks and other financial institutions stand to benefit from the large numbers of consumers and producers on platforms’ growing networks.

Our interviews with platforms and the evolution of their business models in terms of financial services, suggested that many platforms are enthusiastic about the potential to partner with banks and other financial services providers. For instance, Lynk, a local African services provider eager to partner and confident about what it brings to the table, has said, “as a platform we can bring 10k people and so we should be interesting for financial services providers and should be in a good position to get a good deal for our Pros (i.e., workers or artisans on Lynk’s platform).” The e-commerce procurement platform Sokowatch shares Lynk’s enthusiasm: “we would offer tremendous value to financial services providers through our network. No one else has this direct connection to such a large number of stores in East Africa.”

We met with Lynk earlier this year to learn more about their platform’s impact on micro-entrepreneurs in Kenya.

But in addition to serving as a channel, platforms can facilitate “know-your-customer” (KYC) information gathering. As they grow, platforms standardize and validate the very same KYC details that banks and financial services providers need to onboard new clients—verifying who workers/merchants say they are, accessing records about commercial activities, and checking the quality and character of workmanship (on-time, etc.). Flipkart, an e-commerce platform in India owned by Walmart, is already trialing this and recently announced that they are piloting video KYC in order to instantly grant credit, via their partners, to customers.  

In Africa, however, digital platforms currently lack suitable partners or products in the market. Their primary challenge has been poor product-market fit between financial institutions’ existing product suites and what platforms (and their audiences) need. Lynk, for example, would like to find a partner with the funding and the logic for the loan product they are piloting. They have also looked into partnering with private insurers for health insurance, however, most insurers offer microinsurance-type products that would not fit the profile of their workers. Partners, like FinTechs, that are willing to work quickly and collaboratively on product design have been useful, but there are a limited number of qualified players.

To capitalize on the opportunity, banks and other financial services providers will need to think creatively about developing new products or modifying existing ones for the digital platform era. They will also have to resolve some of the technical limitations that hamper APIs and integration points. For example, Jumia would like to provide consumer loans, but is struggling to find a partner with whom they can share data in real time and quickly get a lending decision. Banks and financial services providers that can innovate quickly and deepen partnerships with platforms will have an advantage as platforms like Jumia, Upwork, Uber, and Bolt scale across the African continent.

Three pain points of African platforms adding financial services to their business models

The future works online. How can platforms overcome three areas where they’re struggling?

In 2018 FiDA Partnership conducted interviews with several key platforms in Africa looking at how platform business models are evolving in terms of financial services.

There are several important challenges that digital platform businesses are facing when trying to integrate financial services into their business models, but we saw three themes emerge from our recent research highlighting areas where Africa platforms are struggling.

  • Partnering with financial institutions has been difficult,
  • Platform users need to be educated about the financial services products on offer, and
  • Regulations are hampering, without equally incentivizing, platforms from exploring worker benefits.

These issues were uncovered during interviews we conducted with six platform organizations and two ecosystem players active in sub-Saharan Africa.The discussion below highlights these pain points and makes some recommendations for further areas to explore .

Partnering with financial institutions has been difficult

Platforms have not had an easy road partnering with financial institutions. Primarily, the challenge has been a poor fit between financial institutions’ existing product suites and what platforms (and their users) need. In interviews, Lynk and Jumia both noted a lack of suitable products and partners. Lynk, in particular, noted a gap in the marketplace for lending products with logic of sufficient flexibility for the loan product they would like to offer, as well as health insurance products that sit somewhere between microinsurance for completely uninsured individuals and higher levels of insurance.

Partners willing to work quickly and collaboratively on product design, like FinTechs, have been useful, but there are a limited number of FinTechs to choose from. Moreover, platforms need multiple FinTech partners to cover several countries because continent-wide deals are not presently possible. Ultimately, banks are still desirable partners because of their scale.

You can either build a small house quickly (FinTechs) or build a mansion over time (banks). We have a very broad spectrum of merchants—from tiny one man entrepreneurs to quite big SMEs—so they have a broad range of financial needs. One FI [financial institution] cannot cater to all [of] them. There is no one partner who is going to solve for all of this and understand all of this. —Jumia

Additionally, platforms have experienced technical limitations integrating with financial services providers. Jumia would like to provide consumer loans but is struggling to find a partner with whom they can share data in real time and quickly get a lending decision.

Conversions are key to e-commerce business models: a consumer who has chosen a product needs a loan decision at the moment of checkout, not days later. —Jumia.

Even as FinTechs and other financial services players make progress, payments infrastructure remains a challenge. Lynk has used M-Pesa for disbursements to Pros (i.e., workers or artisans on Lynk’s platform) as a workaround because most Pros do not have bank accounts and because they have had technical issues with bank APIs. This, in turn, has created further challenges when payouts are too large for a single M-Pesa transaction (the daily cap is KES 70,000 = $700) and have to be split over several days. Jumia also mentioned issues knowing whether funds have cleared into bank accounts. On the consumer side, Jumia was dissatisfied with payments infrastructure options that could operate Africa-wide and decided to build their own payments gateway, which also gives them more control.

The issues that platforms in Africa face around partnering are probably more to do with timing challenges (i.e., being early innovators while legacy financial institutions catch up) that all startups face, as opposed to something unique to Africa. That said, banks are notorious in their ability to move slowly when it comes to product or technology changes. Exploring how other Global South regions, such as South Asia and Southeast Asia, address partnering issues might give African platforms new ideas that can be applied to their context.

Platform users need to be educated about the financial services products being offered

Platforms that offer financial services have a duty of care to make sure people understand the terms and conditions to which they’re agreeing. In this sense, platforms are upskilling workers’ and merchants’ financial literacy in a way that enables them to better manage their finances on and off the platform. Indeed, in an example of this, Sokowatch noted that financial education was critical to the growth of the revolving credit product they currently offer.

FiDA Partnership is researching impacts of transformational upskilling—for platforms and  producers on platforms as well as for cities, regions, and countries—with particular emphasis on the business case for platforms. For more details about transformational upskilling, see this post on how teaching skills to digital platform users can increase value for all.

Regulatory frameworks have not kept pace with platformization

Currently most jobs in Africa are informal and without the protections and benefits, such as healthcare, sick leave, and pensions, that formal employment offers. Platformization may exacerbate these challenges in various ways, particularly in developed countries where the number of independent contract workers is increasing. It is also bringing to light the inadequacy of many countries’ current regulatory environments around independent contractor employment and whether companies like platforms employing large volumes of independent contractors should or shouldn’t be required to comply with statutes.

Meanwhile, some platforms that want to offer benefits to their workers are running into regulatory challenges. Lynk, for example is learning that government pensions and health schemes were not built with platform businesses in mind. At present, Kenya’s National Health Insurance Scheme only allows individuals or employers to make contributions on behalf of someone else, however, platforms do not want to be seen as employers because this would put them in an uncomfortable position. Lynk would like to see the regulations around the scheme in Kenya updated so that anyone could provide health insurance contributions to a national program, which would save the company from having to source or own a separate product to offer benefits.

This is an important and timely topic, but one that is incredibly complex. Addressing what a single platform like Jumia, which operates in 14 African countries, should do involves navigating labor laws and regulatory gray zones in at least as many countries. While governments and policymakers evolve their thinking, it may be useful for development actors interested in this topic to explore what labor policies might be appropriate in the platform era and how policy could incentivize an actor, such as Jumia, to provide certain benefits. It may also be useful for both businesses and policymakers to have a better understanding of how worker benefits are regulated under labor laws across Africa and where gray areas exist.

Concluding thoughts

These pain points are probably not unique to African platforms but challenges that platforms elsewhere are facing as they adapt and evolve with the changing landscape brought about by platformization. It is important for the development community and policymakers to understand how African platforms perceive problems scaling and how financial services and financial inclusion play in. These three pain points reflect potential areas for collaboration in ways that will benefit platform users and accelerate digitization of the economy.

Three important ways platforms are changing the landscape for financial inclusion

In 2018 FiDA Partnership conducted interviews with several key platforms in Africa looking at how platform business models are evolving in terms of financial services. This blog discusses three important ways that platforms are changing the landscape for financial inclusion:

  • Some platforms are advancing their core business by building physical networks and, as a result, now operate at the frontier of financial inclusion;
  • Platforms are standardizing transaction data and helping the financial services ecosystem figure out how to use it; and
  • Platforms are standardizing payments; worker pay, performance and incentives; and identity validation. As such, they could become important sources of non-financial information for financial service providers.

As we explore several African platform business models, we will highlight which business tactics and partnership strategies promote financial inclusion.

Building physical networks is helping some platforms reach the frontier of financial inclusion.

There are numerous examples of e-commerce platforms building their own physical networks to operate as last-mile platforms. Sokowatch started as an open procurement platform connecting distributors and shop owners. However, they had to adapt quickly as a pure platform strategy didn’t work. According to Sokowatch founder Daniel Yu, distributors were not interested in delivering $5 worth of chewing gum to the informal settlement and so they did not respond to the opportunity. Sokowatch decided to take control of distribution and inventory themselves so that the company could move forward with its platform model. As they built out their physical network operations, they layered on tools to manage the business, monitor inventory, track orders, and more. The intelligence that comes from their technology implementation combined with the delivery capability that a physical network allows makes platforms like Sokowatch an interesting potential partner for financial services providers. As Daniel Yu says,

“The value that we have is in the network—no one else has this direct connection to such a large number of stores in East Africa.”

Daniel Yu (far right), CEO of Sokowatch, introduces us to Jeff (far left), one of Sokowatch’s delivery agents, and one of Sokowatch’s customers (second from left), highlighting the direct connection to many rural stores in East Africa.

The e-commerce players Takealot and Jumia also operate their own physical networks. In 2014, Takealot—the leading consumer goods platform in South Africa—acquired a logistics network by purchasing Mr Delivery, an established courier and on-demand food delivery service that had been operating in South Africa for over 20 years. Jumia—another growing consumer goods and services platform operating in several African countries—built its own logistics and distribution network and now operates warehouses and a fleet of delivery men and women with better efficiency than DHL.

In some cases, platforms use their physical networks to advance their own financial services ambitions. Little Cab, a Kenyan ride-hailing platform operated as a joint venture between Safaricom and Craft Silicon, has recruited and trained drivers to be registered Safaricom agents. Drivers can sell Safaricom minutes, data, or help customers pay utility bills through M-Pesa. Customers can pay using cash, credit card, or M-Pesa. They can also redeem Safaricom’s Bonga points for cab rides.

Others are bridging the gap between operating a digital business and customers with a preference for cash. Some platforms embrace face-to-face practices to decrease payments friction that would, ironically, hamper a purely digital model. For example, most e-commerce platforms seek to reduce payments friction by offering cash-on-delivery. This addresses a trust issue that consumers have with buying a product at a distance as well as any conflict in tender type between what the platform accepts and what the customer has available (e.g., card, mobile money account, cash). For example, Jumia leverages its network of sales consultants and delivery agents to convert cash-on-delivery customers to the Jumia wallet, through which the company plans for customers to be able to access an array of financial services, including consumer credit for on-platform purchases. Similarly Konga, a Nigerian online shopping website, leverages a distributed network of merchants to promote its offline/online payments technology Konga Pay to merchants and their customers. The payments platform supports the core business but also generates additional revenue streams since it can be used off-platform as well.

Jumia advertises its cash-on-delivery to reduce payments friction, but uses delivery agents to convert customers to the Jumia wallet, offering avenues for financial services.

Platforms are standardizing transactions data and helping the financial services ecosystem figure out how to use it.

The most significant benefits for financial inclusion probably arise from digital platforms making transactional data digital and standardized. Digital platforms are changing how informal merchants and workers trade. In turn, they are changing both the visibility and interpretability of informal merchants’ and workers’ activities—not just to platforms themselves, but also to formal financial institutions and FinTechs. In doing so, platforms are reinventing informality; whether workers and merchants operated in the informal sector out of necessity or choice, governments or other formal institutions can now access transactional and non-traditional financial data about their activities even if what they do (work from home or on the street) is the same.

Platforms are tackling the burden of standardizing and making visible large volumes of commercial activity because they believe in the value of this data. As previously informal income streams become standardized and accessible through worker and merchant participation on digital platforms, the business case for serving small businesses or self-employed individuals should become more straightforward. Already, historical sales data is being analyzed to offer loans to merchants in many e-commerce platform examples. Jumia uses sales volumes history, seller performance, and seller ratings to prequalify merchants for lending offers underwritten by Branch, Baobab, and Invoice Pay. Jumia has also already captured most of the KYC (know-your-customer) information, which it also shares with its FinTech Partners. And India’s Paytm, in partnership with Lendingkart, offers collateral free loans to SMEs and merchants. Paytm wants to grow the number of SMEs and sellers on its platform and sees the loans as a way to bring ease of financial assistance to SMEs and merchants in semi-urban and tier-II cities across the country.

Additionally, transactional data related to ordering is just as informative for lending decisions as sales. The procurement platform Sokowatch tracks store ordering data across all of its informal merchants. This has enabled the platform to offer revolving credit to shopkeepers whereby shops can order and receive merchandise on net-7-day payment terms. Sokowatch collects a small fee for this service, but it doesn’t need to make money from it because it also has credit with its suppliers (e.g., Unilever). In another example, Twiga Foods applies machine learning algorithms to its purchase order records, enabling the procurement platform to predict creditworthiness. Lenders have noted that this gives them the confidence they need to provide microloans to small businesses.

Instances of platforms using standardized data streams, alone or via a partner, to offer financial services are becoming more prevalent, but many Global South use cases are still early stage. The devil may be in the details around how easily an activity or transaction can be standardized and how ready financial institutions are to plug into these kinds of partnerships. Opportunities for lending may depend on how much variety there is in the type of work performed on the platform —simpler data streams may be easier to interpret. Platforms with low variety (e.g., Uber, Bolt, Sweep South, Hello Tractor) may be able to maximize standardization and predictability of income streams for lending, while platforms with more variety (e.g., Kuhustle, Upwork) may not be able to capitalize as much on this. Frequency of transactions may also matter since this has implications for how engaged a worker or merchant is on a platform and whether they are loyal to a given platform.

Services business models may offer the greatest opportunity to offer insurance in order to protect workers against on-the-job risks since the imperative exists from a business perspective. Ride-hailing platforms, like Bolt and Uber, demand that drivers have insurance. To this end, Bolt has sourced, negotiated, and facilitated an insurance scheme for its drivers (Taxify Cover). Uber has formed partnerships with insurance providers to offer affordable options—Jubilee Insurance in Kenya and VUM, OUTsurance, and MiWay in South Africa. Moreover, for domestic workers and repairmen, the law isn’t clear on who would be responsible if a platform worker breaks something while on a job. Lynk is exploring per-job insurance so that if a Pro (i.e., a worker or artisan on Lynk’s platform) breaks something while on the job, both Lynk and the Pro understand who is responsible and how the insurance plan will pay out. In both scenarios, there is an advantage for platforms to source and offer straightforward insurance plans for workers.

Platforms are standardizing payments; worker pay, performance, and incentives; and identity validation.  

Financial inclusion opportunities do not arise solely from the standardization of transactions. Platform hosts collect payments from customers and, in turn, pay merchants and workers. In doing so, platform hosts are standardizing both the tender types that are commercially accepted and how workers and merchants get paid (how often, which accounts/wallets are accepted, whether deductions can be made by the host or third parties, etc.). Platforms take care to keep worker engagement high and, to the extent possible, own the transactional relationship with both workers and customers (e.g., saved banking details—consumer or worker, white-labeled digital wallets, etc.). For some financial service providers, particularly insurance providers, this can make providing insurance easier. As revealed by MicroEnsure,

Traditional channels for insurance are tough in Africa because you have to collect payment —this works in developed markets where you can deduct from salaries, do direct debits from accounts, charge credit cards, or outsource payment collection. This infrastructure does not work in developing markets. So we look for partners who have [a] connection to [a] target market and have ability to collect payments from clients.”

Jumia is also starting to look into offering insurance as a revenue stream in its own right. They are partnered with AXA, a global insurance provider, to offer device, health, and life insurance. They offer device insurance as an add on when the customer purchases a device. Other insurance offerings—health and life—have been added to Jumia’s services catalog and leverage Jumia’s check-out and payments infrastructure.

For other platforms, like Lynk, a combination of standardizing transactions and worker pay, as well as capturing KYC info and worker credibility is enabling the platform to offer loans directly to their “Pros”. The company is trialling loans which Pros can obtain to purchase expensive power tools they need to improve output or quality. Lynk CTO and Co-Founder Johannes Degn commented it is already standard practice to collect KYC information on Pros. They have also introduced standard paycheck processing. Based on the additional information the platform collects—transactions history, ratings, timeliness of communication, and delivery of goods/services—they can rate Pros’ creditworthiness, analyze profit expectations, and calculate fair repayment deductions from Pro’s paychecks. In a new FIBR 2019 project, BFA has provided Lynk with $100k to explore this process through loans of up to $300/each to tradesmen whose transactions exceed a certain threshold (quantity and value targets exist). The project is also conducting AB testing to compare whether or not spending money on tools impacts productivity.

Concluding thoughts: financial inclusion is good for consumers, but also producers

The platforms’ entrance into African markets is changing the prospects for financial inclusion, and, as a result, new opportunities and challenges arise for workers, merchants, and others that use platforms to support their livelihoods. By unpacking platform business models and describing the mechanics that give rise to financial inclusion opportunities, we are contributing insights that can further partnerships between platforms and others across the African continent.

Taken together, these three insights illustrate the benefits of thinking about financial inclusion as a spectrum that varies depending on the needs of both the producers and the consumers. When digital platforms service very low-income producers, they tend to actively provide financial services because this offering has a tangible impact on the success of low-income producers, and as a result, the success of the platform. As we’ve discussed, the intensity of financial service offerings has, in many cases, been high in order to address the needs of one side or the other—because the platform business model depends on each side growing and maturing. Through their work standardizing and onboarding users, especially producers, platforms are not just creating transactions data, they are also doing the difficult work of bringing people into the digital economy as fast as possible. As such, platforms are important partners for the financial services industry and for anyone concerned about development. Many may be fledgling startups and volatility is to be expected as they tackle very young markets. However, by supporting platforms to diversify revenue streams and strengthen their relationships, the rewards for both platforms and financial inclusion may just come down the road.

Read about other FiDA partners working on this topic:

Three business model changes to make African platforms work better for financially excluded workers and merchants

In 2018 FiDA Partnership conducted interviews with several key platforms in Africa looking at how platform business models are evolving in terms of financial services.

As we explored platform business models, we found examples of practices that we hypothesize could impede the participation of the financially excluded. We discuss considerations for improving several business practices that could be problematic for financial inclusion, and we highlight three problems and offer suggestions for organizations to consider or areas for researchers to explore more deeply:

  • issues around platform participant payouts;
  • “pay-to-promote” practices and revenue streams; and
  • open and portable profiles, ratings, and benefits.

Platforms should reduce friction around payouts for their participants.

Platforms have been accommodating for customers without bank accounts or who don’t want to use credit cards. Many now offer a cash-on-delivery option or accept mobile money during checkout. Few platforms, however, appear to be making similar investments to accommodate the bank connectivity constraints and cash flow challenges of the people doing the work. Most of the platforms we explored require platform workers to be paid via bank accounts while some allow workers to use M-Pesa accounts in Kenya or interface with PayPal or Western Union (see insight2impact’s research on provider payment methods for more details). Yet, many restrict the frequency and withdrawal destinations that participants can use to transfer money from the platform’s pocket to their own.

Platform workers and merchants experience a time delay between when the work is performed or when the sale happens and when they are paid. Some delay is unavoidable—platforms need at least several days to settle transactions with banks and credit card companies and up to a month in some markets, such as Brazil. Of course, paying workers before transactions are settled would require significant cash reserves or a factoring arrangement; platforms, especially smaller ones, may not have the former, and they may not want to get involved with or may not be able to obtain the latter. Accordingly, it’s reasonable for workers and merchants to expect some delays and aggregation of proceeds. What can be problematic, however, are restrictions that severely limit the frequency at which participants receive payouts (sometimes also called withdrawals). This is felt most acutely by platform participants whose liquidity affects their ability to take on more work or sell more goods. For example, gas costs for drivers, costs of supplies or tools for artisans and domestic workers, and inventory for merchants can all impact platform workers’ ability to earn via the platform.

A merchant we spoke with in Nairobi who must keep store stock up in order to run a successful business.

Because only 20% of sub-Saharan Africans have bank accounts, platforms that only support bank accounts are gatekeeping many would-be workers and merchants from onboarding. And PayPal and Western Union withdrawals are not reasonable workarounds—they charge additional fees and create further friction because the money must make additional hops before it reaches participants’ pockets.

Platforms seem to pass the buck—100% of withdrawal fees—which we assume are imposed by the platform’s bank or an intermediary, to workers and merchants. If an employer needs to pay an employee, the employer bears the cost of payroll software, which can cost 1-2% of payroll. Likewise, enterprises paying contract workers pay transfer and other fees to pay invoices. However, unlike other enterprises, platforms treat finance charges as an income stream rather than a business expense. This could be a problematic practice because (1) it normalizes the idea that businesses can generate revenue from paying workers, particularly as the costs to move money trend down, and (2) it removes the imperative for the platform to find cheap and efficient ways to pay workers.

What needs to be explored further?

  • How can payments to workers and merchants be as frictionless as possible, so that time delays and bank account connectivity constraints don’t (a) constrain the number of merchants and workers that can onboard to platforms and (b) eat significantly into earnings on platforms?
  • How much flexibility around paying workers could platforms build into their models without significantly impacting costs of doing business?
  • Why are wallets and platforms disconnected? Is it technically difficult and time consuming, less of a priority, or something else?
  • What APIs or intermediaries could connect platforms directly to major mobile money accounts or mobile wallets? What would this cost?

Platforms should consider how “pay-to-promote” revenue streams impact the success of low income participants on their platforms.

“Pay-to-promote”, meaning workers or merchants pay a fee to promote their products or their profiles, is a popular offering on platforms—online work platforms particularly are moving towards micro-tendering. We have observed that some platforms use “pay-to-promote” as a primary revenue generating strategy.

Pay-to-promote practices create an uneven playing field for participants without the liquidity and disposable income to invest in promoting themselves. To some extent, allowing or encouraging participants to market themselves on platforms is a digital translation of a normal business practice that happens in the real world. It’s to be expected that individuals and businesses that market themselves will generate more leads and greater opportunities. Our concern is that, should platforms become the primary place of business for workers, this practice could further amplify existing income disparities: those with the means to market themselves stand to win and those without to lose. The devil may be in the details of how candidates or products are displayed: bolded or emphasized, sorted first or appearing on page 1, or not short-listed at all.

What needs to be explored further?

  • How do paid profile promotions affect outcomes for workers on various platforms?
  • What solutions can micro-tendering business models provide to include workers that lack the economic means to participate?
  • Is it possible for platforms to reconsider monetizing profile promotions directly? Could loyalty points, for example, be a possible solution?
  • What is the opportunity cost for platforms who do not shift strategy? That is, are they limiting growth with the pay-to-promote approach?

Platforms should consider the making profiles and ratings open and portable.

None of the platforms we profiled currently make verified or validated profiles and related credibility ratings portable to third parties. Profiles and ratings lock workers into a given platform. This reinforces a tendency for platform economies to trend toward monopolies and reduces labor mobility between competing platforms.

What needs to be explored further?

Would these in-training SafeBoda drivers want their ratings open and portable?

Concluding thoughts

There are at least 277 online digital platforms operating on the African continent—of these more than 80% are homegrown. Put differently, there are at least 277 opportunities to bring the store of the future or the future of work to the informal African merchant or worker. To do this successfully, platforms need to meet merchants and workers at their storefronts and workbenches.  Platforms need to work for their workers—those selling, coding, crafting, and delivering— not just for the consumers.

The number of Africans that could benefit from platforms is huge, however, lack of connectivity to formal financial systems and financial services to invest in micro-entrepreneurship is negatively impacting the realization of this potential. As platform business models become the future, it’s imperative that businesses avoid the pitfalls of reinforcing divides; rather, they need to problem solve to create stores of the future and futures of work that are inclusive and mutually beneficial for merchants, workers, hosts, and consumers. This discussion has raised complex issues that need to be addressed, however, more research is needed to understand the extent to which these practices are having negative effects and the best solutions.

Why African platforms are adding financial services to their business models

Why would a tractor company need to be in the insurance business? Why would a ride-hailing company start offering credit? It’s actually an old story. From store credit cards in the US and carnês de loja in Brazil, to Ally Financial—the bank started by General Motors—the line between financial services and consumer goods and services has always been blurry. We’re seeing this again: in the recent wave of platformization, platforms are getting into the finance game to support their core business. We’ve seen platforms leveraging financial services to:

  • Increase their user base by reducing barriers to platform adoption for workers and merchants,
  • Boost transaction volumes by increasing worker/seller productivity,
  • Increase the lifetime value of workers on the platform by soliciting their loyalty, and
  • Diversify their revenue streams.

We’ve been looking at how platform business models are evolving in terms of financial services. This blog discusses why adding financial services to their offerings is good for African platforms’ bottom line.

SafeBoda has an interesting approach to bundling insurance for its workers as a way to support their core business.

Reducing barriers = user acquisition

African workers face several barriers to joining digital platforms: internet connectivity, financial account ownership, identity documents, ownership of assets required to perform the work, the necessary skills and literacies to successfully complete onboarding steps, and more.

Offering financial services is one way that African platforms can address some of these barriers and increase their user base. For instance, the ride-hailing platform Bolt (formerly Taxify) has partnered with Autogenius and AIICO to launch “Drivers Shield” car insurance in Nigeria. This is an important initiative because insurance is a prerequisite for ride-hailing drivers, and  high-cost insurance requiring upfront premium payments can be prohibitive. The cost of smartphone ownership also bars some would-be drivers and merchants from platform use. Accordingly, some companies, like Sokowatch and Uber, offer small, affordable loans that can be used to purchase smartphones.

Another barrier is bank account ownership. Lynk and Jumia have been using M-Pesa to pay their workers in Kenya because, while most lack bank accounts, they do have M-Pesa accounts. However, restrictive transaction size limitations have led both companies to explore how they might facilitate bank account access for their workers.

Boost transaction volume and revenue

Many platforms’ monetization strategies are transaction based. Offering financial services is one way to increase users’ platform activity and thus transaction volumes. Interestingly, because platform transactions—and not financial services—drive revenue, there is less pressure for the financial services to generate revenue in and of themselves. Accordingly, platforms may be able to offer more competitive lines of credit, and so on, than banks or other traditional finance providers. These efforts have the added benefit of helping participants to earn more on the platform.

One example of this is Lynk, which is exploring a partnership with Bosch to provide loans for tools to qualified artisans under the assumption that access to power tools will improve productivity. This project is being piloted with support from BFA’s FIBR project.

Similarly, both Jumia and Sokowatch provide merchant credit to increase platform transactions. Sokowatch offers shopkeepers net-7-day terms on consumer goods ordered to sell in their shops; the revolving credit helps shopkeepers avoid stockouts and the resulting missed sales. Jumia offers credit to sellers to increase their ability to purchase and manufacture stock, therefore increasing their sales through the platform. An initial pilot was conducted with Branch and they have scaled solutions through other partnerships—with Baobab, InvoicePay, Umati—in every country in which they operate.

Increase lifetime value

We also found examples of platforms offering or exploring financial services benefits as a way to reduce worker churn. Ride-hailing platforms, such as Bolt in Kenya, have offered vehicle finance schemes with low deposits in an effort to keep more people behind the wheel. The deal is available to drivers with good ratings, helping them access significantly greater net profits—loan payments are smaller than vehicle lease installments—and work towards vehicle ownership.

Bolt, the first ride-hailing company to do so, also offers health insurance in Nigeria, and Lynk is looking into health insurance and savings accounts for their Kenyan Pros but is facing several challenges. These soft benefits help motivate and engage workers. Sokowatch mentioned that they plan to offer capital loans (e.g., to make improvements to physical stores, etc.) as a way to increase stickiness. Additionally, Lynk is exploring how to offer “per job” insurance for its workers in an effort to retain worker and customer loyalty by mitigating the financial risk to both in the case that damage is done on the job.

We had a chance to talk with two Lynk Pros in Nairobi to learn a little more about their work with Lynk.

Offering worker benefits makes sense both because of statutory obligations—although whether digital platforms must comply with laws around worker benefits is not always clear—and from a business perspective. Because platforms rely on network effects, the greater the number of workers and merchants active on the platform, the greater its value for customers. Drivers waiting to match with passengers, artisans on standby ready to make furniture, or domestic workers that can be scheduled instantly.  Moreover, the longer a worker or merchant remains active on the platform, the more lifetime revenue they generate. Consequently, we at FiDA Partnership hypothesizes that adding worker benefits has the potential to increase loyalty to the platform and the lifetime value of a worker or merchant.

Diversify revenue streams

Many platforms view financial services as a potential key revenue driver in their own right, or, in some cases, even the main revenue driver. Such companies believe the predominant platform model from the Global North (i.e., charging a transaction fee) isn’t viable in Africa where many customers are extremely low income. Although transaction volumes and values are low and customer acquisition costs are high for now, these platforms believe in the long-term value of the data they gather—particularly for financial services providers.

One example of such a partnership is Hello Tractor, a platform that connects tractor owners with booking agents and farmers that need them. Hello Tractor does not charge transaction fees to any actors on their platform. Instead, they aim to monetize through commissions by providing financial services to farmers, tractor owners, and booking agents in the future, and they see the data they are collecting as enabling financial services providers to make better decisions about risk. According to Jehiel Oliver, Founder and CEO of Hello Tractor,

“Once you establish the marketplace there is [a] tremendous amount of de-risking that can be done with the data that you have, reducing customer acquisition costs for financial services providers. This is the unique value that we can deliver to banks on the pre-loan decision and portfolio management side.”

Lynk, an online platform partnering with Kenyan artisans to showcase and promote their products and services, also alluded to making money by offering financial services, rather than charging transaction fees. They are actively exploring how their data may unlock opportunities for Pros (i.e., workers or artisans on Lynk’s platform) to obtain loans.

Concluding thoughts

These new opportunities for platform merchants and workers that were previously excluded from mainstream financial services are truly exciting. However, bringing these benefits online is not without challenges as we explored in our blog “Three pain points of African platforms adding financial services to their business models.”

Finally, we note that further research into the user and business impact of financial services to reduce barriers, increase earnings, and foster loyalty would be an interesting follow-up to this high-level briefing. It would be particularly relevant to look at whether such offerings interfere with workers’ and merchants’ ability to choose with which platforms they engage and their de facto mobility between platforms.

Transformational Upskilling: How teaching skills to digital platform users can increase value for all

An opportunity

Platforms—a dozen massive ones, and perhaps 500 smaller ones—play an increasingly critical role in the livelihoods of hundreds of millions of people around the world. In almost every economic sector, platforms have introduced new “multi-sided” markets, matching buyers and sellers in attention, goods, services, and labor at massive scales. Websites and electronic supply chains are replacing bazaars and storefronts. Gig work is augmenting salaried work. Algorithms and finely-tuned digital user experiences are supercharging traditional buyer/seller relationships.

Platformization will transform markets and livelihoods everywhere, but perhaps nowhere more so than Africa, where there is an urgent need—and a unique opportunity—to provide new forms of livelihoods to a young, growing population eager for better access to dignified work.

In this project of the Mastercard Partnership for Finance in a Digital Africa (FiDA), we seek to improve the relationships between platforms and sellers—the small-scale producers, the self-employed, and the gig workers that rely on platforms to sell their goods, services, and time.

These platform-seller relationships can be either at arm’s-length or more mutually beneficial. Our work in 2019 and beyond is to engage directly with platforms to explore and promote the latter. The key is “transformational upskilling.”

Transformational Upskilling

Transformational upskilling allows platforms to prosper by facilitating learning, in win-win-win relationships with participants and labor markets. Platforms win by accelerating sales and increasing the quality of goods and services on offer. Producers win by learning new skills, improving their craft and increasing their revenue. Regions and countries win by increasing the human capital of their workforce.

There is a great deal of training happening on platforms around the world. In regions with high Internet use, Amazon, Facebook, eBay, and other platforms invest considerable resources in training their producers in order to improve the quality and volume of transactions on the platform.

In frontier markets, global platforms as well as dozens of regional ones are discovering the best ways to help the digitally nascent become more adept digital producers. These range from Africa’s e-commerce giant, Jumia, which offers financial literacy lessons to help entrepreneurs do their books, and Kenya’s Lynk, which provides training modules to gig-seekers, to the ridesharing platform Bolt (formerly Taxify) that texts the locations where users can maximize their earnings to drivers in 20 African cities.

Why is some training transformational? Because it creates value for several parties

Our core research question for 2019 revolves around what forms of training can be called transformational —whether because they give producers skills that they can bring to other jobs, and/or because the training increases the level of human capital in the workforce of a city, region, or country. Both are critical to providing more and better livelihoods for young people in Africa and beyond. Transformational upskilling is win-win-win:

Platforms win by accelerating sales and increasing the quality of goods and services on offer. Training can coach or nudge producers to be more effective, ultimately leading to more sales of higher quality goods and services on the platform.

Producers win by learning new skills and improving their craft. Producers can diversify their professional and business skills and thereby keep up with market demands.Cities, regions, and countries win by increasing the human capital of their workforce. Training modules have the potential to transform the workforce towards higher paying digital jobs across cities, regions, and countries.

Our process

Now. We’re talking to micro-entrepreneurs in Kenya about their platform practices and learning needs. We’re also doing a landscape of the best practices in transformational upskilling.

Soon. We’ll be working directly with platforms in Africa to (1) identify their producers’ key learning needs and (2) help delineate specific, cost-effective but high-impact improvements to training that platforms can use to support their users and the economies in which they work. And a bit later. We’ll be inviting more platforms around the world to get involved, sharing best practices about the potential of transformational upskilling, and offering specific toolkits and support to bring more transformational upskilling to more platforms, users, and regions.

What we’re learning about different kinds of Transformational Upskilling

We’ve observed several types of Transformational Upskilling: Direct Methods deliver training clearly labeled as such (e.g., training videos). Indirect Methods deliver cues through nudges and feedback (e.g., ratings systems). Third-Party Methods arrange or endorse off-platform training with support from the platform (e.g., in-person training with subject-matter experts).

We’ve also distinguished three primary content areas where platforms upskill producers: Domain-Specific Practices (i.e., how to be a better professional); Digital Literacies (e.g., what makes a successful e-commerce advertisement); and Financial Literacies (e.g., tips on how to manage finances as a freelancer).

Combined, these two classifications offer a “menu” of Transformational Upskilling opportunities.

How to get involved

We’re looking to spend the better part of this year using this chart, our research, and our interactions with platforms to better understand the strategy, approach, value proposition, and execution of transformational upskilling in Africa. We would value your support throughout the process. Here’s how to get involved:

Community of practice: We want to create a center of excellence on Transformational Upskilling, covering different focus areas (social media, e-commerce, online work) across the globe by finding the best examples of Transformational Upskilling and champions who can evangelize its value.

Consultative engagement: We’re also interested in identifying a couple platforms to work directly alongside us in research with small scale producers or self-employed workers, to expand learning opportunities within digitizing markets around the world.

Do you want to be a part of the community of practice, or the research engagements, or both? Do you have feedback, or examples of transformational upskilling you’d like to share? Please send an email to to let us know! And in the meantime, be sure to watch for further updates from the FiDA team as our research unfolds.

DFS use among digital Kenyans

The Mastercard Foundation Partnership for Finance in a Digital Africa is pleased to share the final report from its first exploration of “DFS Use by Digital Kenyans”.

The report is based on a representative sample of 1,000 Kenyans with data-enabled mobile phones—“Digital Kenyans”—gathered between September and November 2017 by Caribou Data.

Caribou Data transparently recruits and compensates individuals for participating in its panels, using cutting-edge techniques such as differential privacy and on-device anonymization to ensure that participants are effectively anonymous and cannot be re-identified. As a result, Caribou Data can offer data and insights previously unavailable to most of the DFS community.  

The research includes insights on DFS use in the context of other phone-based activities, explores DFS use by activity, and offers an illustrative segmentation focused on the distinctions between “basic” and advanced DFS use.

Our findings suggest that DFS use is common but not without challenges. Most of the smartphones in our sample are older/outdated, underpowered, or nearly full—all factors detrimental to the user experience. Urban users take advantage of 3G and Wi-Fi coverage, while rural users spend the majority of their time under slower 2G signals. A “metered mindset” alongside uncertain income streams lead many users to top up data in small amounts. And yet, people still spend more time in DFS sessions than WhatsApp or SMS, perhaps because SIM menus remain the most popular interface for payments.

Our data reaffirms and reflects existing observations: not everyone in Kenya is an active DFS user, and not everyone uses DFS in the same way. Indeed, only 13% of 90-day active users in our panel used DFS  frequently enough to be considered effectively “daily” users . Our “cash flow dashboard” illustrates how some users keep cash digital, while others may be quicker churners. And, even though we have found that top-ups, P2P, and cash-in/out are common among active users, savings and loans are much rarer.

To illustrate some of these differences in DFS use, we created a behavioral segmentation of our 90-day active user base, contrasting infrequent vs. frequent users, and  “savers” vs. “borrowers”.

Considerable differences emerge between these segments, including demographic (borrowers trend male; savers, female) and the degree to which users keep cash digital (infrequent users keep funds digital longer than daily users). Even among “advanced” users in the saving and borrowing segments, there are indications of challenges to effective use, notably evidence of overpaying for unused data, and gambling.

Products need to be designed for simplicity and resource-constraint. Short codes still outpace in-app behaviors. Feature phones are common, and many smartphones are underpowered, old, and “full”.

Nevertheless this analysis underscores that there there is plenty of room (and need) for digital Kenyans to move into more advanced and regular DFS use. Only about half of our sample were active DFS users, and of that, the majority only infrequent users of “basic”.

We offer this for product managers, fintech entrepreneurs, policymakers, and DFS practitioners alike. Please download and share, and let us know your thoughts.

What forward-looking considerations could impact conversational interfaces in the future?

In this post we highlight factors that might influence how conversational interfaces (CIs) are viewed, used, and interacted with across emerging markets in the future.

Risks in using messaging APIs:

Stemming from the recent GDPR legislation on data sovereignty, privacy, and security, companies like Facebook and Telegram quickly had to adjust their messaging applications to, ultimately, restrict the amount of information CIs can extract from users. Given these new rules, and potential threats to these companies’ core business, messaging application companies may choose to restrict and close access to their messaging API, making it considerably more difficult for CI providers to build on these platforms.

To hedge against this risk,  CI providers should plan to build across different channels (SMS, different messaging applications, web). They should also limit dependency on these applications for critical business functions and instead focus on using CIs as acquisition channels rather than for business functions. So, hypothetically, Messenger can be used to acquire customers through Facebook ads; once acquired and customers have bought into the tool, users could potentially be migrated from Messenger to an independent application.

Considerations around disclosure:

Throughout our research, we heard questions and concerns around disclosure : Is the conversational interface obligated to let the customer know they are talking with a bot instead of a human?

Whether or not CI’s are ethically obligated to do so is unclear, but currently, none of the conversational interfaces we’ve investigated volunteer that information. While some insinuated that the interaction is automated through button pushes and stock responses, many prefer to not explicitly disclose that a bot is in play.

Regardless, some users—particularly those in rural and peri-urban settings with limited digital experience—are willing to try the interface if it helps answer their questions. As they become more familiar and comfortable with the interface, it is likely that s/he will trust whatever information the interface provides. If the content is accurate and well sourced, the user will may well benefit; however, if the content is inaccurate or fake, the user may suffer negative consequences.

There is no immediate solution, but in time, new digital users will become savvy enough to understand that they are talking with a machine and, hopefully, savvy enough to discriminate between flagrantly false information and accurate information. Meanwhile, it is unclear how to address this cost-effectively. On one hand, if the conversational interface openly informs the user that they are talking with a machine versus a human, it could discourage use of the interface. On the other hand, by not letting the user know they are talking with a machine, it may be unethical to mislead the user into thinking they are talking to a person when they are in fact talking to a machine.

Emergence of voice as alternate interaction tool for conversational interfaces:

Text-based tools to interact with customers will continue to grow, evolve, and reach new populations globally, while the illiterate will continue to face barriers. This demographic, who likely cannot fully understand messages received and/or struggles to type out their own messages, will presumably be locked out of these new services and further marginalized.

However, some companies, such as Hishab and Maya Apa in Bangladesh,, are developing voice solutions to address literacy challenges. Unlike interactive voice response (IVR), these solutions interact with users through voice rather than number prompts, creating a more authentic and lifelike experience. As this technology matures, it should help address literacy considerations and make for a more meaningful user experience that can be easily accessed over airtime rather than through mobile data.

However, it is our understanding that building an emerging market language voice solution like the one Maya Apa built currently requires an extensive amount of time, technological capability, and data storage. According to these two providers, building the language database in Bangla took several years and required painstaking recordings of different pronunciations of words and scripts to produce a minimum viable language database capable of responding to basic conversation prompts.  Building a similar oral language database from scratch in sub-Saharan Africa—given the dearth of local language content —would probably take just as long .

Nevertheless, it is encouraging to see that companies are making the effort to solve for this often slighted demographic. Applied to financial services, this technology could make real headway in addressing issues relating to education and capacity building that would otherwise be ignored due to literacy challenges.

Path forward

Conversation interfaces are starting to emerge as a viable business resource for financial service providers across the emerging market. Their ability to cost- effectively interact with users and extend an array of different services, from the transactional to the educational, may help businesses connect with new customers while providing consistent and reliable support to existing ones. And, as the technology barriers to building a conversational interface continue to fall, we expect that more and more businesses will  look to these tools as critical revenue generating and cost reduction strategies.

Nevertheless, these tools will only succeed if they consistently solve for customer needs. To best calibrate expectations with what customers challenges they can address, businesses need to not only understand the technology that powers CIs but also users’ digital behavior . Accordingly, businesses need to source content that is accurate, present it in a way that is easily understood by the user, and construct the application so that it is intuitive and reliable. If they are able to accomplish this, the CI will likely earn the user’s trust, which would ensure the tools value. However, if the CI either begins to provide inaccurate information or operates inconsistently, the user is unlikely to trust these tools, potentially rendering them obsolete. It is our understanding that, because these tools are so new, the emerging market user is often unwilling to retry them after a failure  Thus, it is imperative that, once deployed, these CIs work and work effectively.