The Last Frontier Market: How Africa Can Bring the Next Billion Users | KBW2023

thank you thank you hi yeah welcome to joining uh our panel today my name is Si Lee I'm actually from Korea pan I don't know how many of us of you guys know pan uh there's a beautiful city down in the South uh I'm honored to actually hosting this conversation here and then you guys are probably wondering why is this lady from pan is hosting this conversation uh a little bit of my background uh I started my crypto Journey decades ago from West Africa Mali I built one of the first Bitcoin SMS wallet inspired by my trip from Africa so I have a big heart for Africa and uh other impact related work and uh blockchain technology so I am really excited to uh have these two amazing gentlemen to share their view on the Last Frontier Market uh you know why Africa is Last Frontier Market what are the opport opportunity there what are the challenges what are the risk and then uh what we can do if you want to jump into Africa market so we're going to cover a lot of those things in short 30 minutes so stay focused uh yeah and let's get started and I will ask James to uh introducing yourself it doesn't have to be 30 second but tell us about who you are awesome um thank you everyone for showing up right now I know it's after lunch so bear with us um my name is James co-founder of Jambo uh building a web 3 super app of Africa quick personal background um grew up in kassa in the DRC I was there for about 16 years family's been in Congo three generations one of the first ethnically Chinese to go um ended up in New York studied CSN NYU got into crypto ran a crypto fund fund fund for a few years before starting Jambo in 2021 when I realized you know I got in crypto trying to solve crossb payments remittances and banking the unbanked so anyways Jambo as of today we're trying to build the web 3 infrastructure to Africa um there'll be some very exciting updates ID love to share with you guys such as we're both doing hardware and software on the hardware front we're actually releasing our 00 web3 phone next month um the guy sitting in the front row with a Jambo hat right now has it and our our Partnerships I can demo it to you guys but pre-installed web3 applications across 14 countries in Africa next month so hopefully this panel can come over some of that thank awesome James so exciting uh ysep please go ahead uh my name is ysf I am originally from Ethiopia and Liv the majority of my life between Ethiopia Kenya Tanzania and Nigeria um the internet changed my life I learned most things online including most of my English uh and it's been a game changer for a lot of people across the African continent uh but internet has been and continues to be game ated in the traditional form uh based on your location and zip zip code um so the narrative that I grew up in is that if you want to do great things in the world you got to leave the best building we had was the airport the best road was the road to the airport so that's what I did um I I went to the US to do Minard at Harvard and then moved to the Bay Area to work in Tech because those are the center of gravity um and I've been very fascinated about this notion of global citizenship and kind of challenging the status quo of nation states and so I spent 10 years working on a new immigration program with the government to basically hack the natian state apparatus to create a layer of um ability for folks to move around the world um but then I discovered crypto and that's like amazing this is a whole new layer of global economic coordination and this makes so much more sense in Africa than anywhere else crypto is doing a lot of amazing things in the west and in the East but let's be honest if you're talking to the average person on the street uh is not really solving a fundamental problem for the daily lives but in Africa it is and that's where the crypto Primitives and tools make so much more sense so what I'm doing right now is I'm identifying just raw amazing talent from across the continent investing in them and backing them because they are the ones who are building the future economic infrastructures of the continent and the blockchain is a power tool to help them do that thank you so much so whenever it comes to Big tag and mass adoption we talk about like a frontier market and then China was a frontier market India was a frontier market and Africa right now for some reason is the the Last Frontier Market that we have and I would love to hear from you too why you think that Africa is Last Frontier market and how we can actually bring the Africa can bring the a billion users for the crypto in the next decad or more yeah James you can step first yeah um well before we even answer that question let's ask ourselves this question first right what is Africa like I grew up in Congo DRC colonized by Belgium French speaking 150 million people Heart of Darkness central Africa the two largest markets in Africa right now is Nigeria and Kenya Central and East Africa more than one2 million people english- speaking you go to West Africa Sagal Walla French point I'm making is payments is very fragmented in this region because the entire continent is fragmented from culture religion everything there is no venmo you can't send money to your boy from Ghana to Congo from Kenya to Nigeria um with that out the way how can Africa Ono the next Billings users to a to web 3 I think what is web 3 right web 3 railes is circumventing Legacy Gatekeepers circumventing the guys that were doing taking you know the App Store that takes 30% from you when you release a app right so Progressive web apps like frch things like this can come out same thing in Africa right now by using payments Africa has already surpassed the computer system mobile has already Le frogged that 50% of Africa has mobile penetration right 50% that's ridiculous but they're still 40% unbanked you might ask how is that even possible for Mobile Banking Challenger Banks everything like that the reason is cuz people there genuinely do not know that using their phone they can act actually access broader Financial access well the one blocker for that in pretty much every country in Africa is it's a cash based economy so no one has a credit system right it's like your phone number in Africa is like your ens domain so sort of what Jambo is doing to try to onboard users in Africa um is Bridging the infrastructure and we think that the infrastructure at the highest level is Hardware so so it took more than a year for us to come out of our phone we'll have a lot more announcements coming out since stealth right now now but like I said if you want to see the phone before anyone else has it's the first time we showing it at KBW the guy sitting in the front with the Jambo hat yes sir thank you um but yes I think every region is very different number one in trading volume right now in Africa is Nigeria number two is Kenya the value of Africa but number three might surprise yall a country of 2.6 million people in East Africa batswana just came out with a crypto license the first one of 54 countries to do so what does that even mean a crypto license means you can actually have a real bank account with a bank like Echo bank right not a Neo bank that might shut down your business tomorrow morning you can actually have a consumer facing app that you can actually Market to your users um so many things I just think that every decade we wonder is Africa is this the decade that entrepreneurs will make it happen because we see the GDP we see the user we see the young numbers we see the mobile penetration but every time we has this a decade and I think because we're sitting up here ysf and I can't speak for you but we believe so so that's me I guess uh a few things I would say is uh Africa is not one country it's 54 countries we have 2,000 languages so it's and it's 1.4 billion people today and it's doubling in the next 27 years as a whole population median age is 19 was do you know the median age in Korea it's like in the 40s so it's half the age of Korea but not just that in 27 years from now the median age is expected to be 25 so it will continue to be the youngest population in the whole world and so it's got that demographic Dynamic going for it where a third of the world's young people are going to be in the African continent so that that's a really important thing to kind of keep an eye on and it's not just Young Folks now who are just hungry mouths to feed or International Aid um middle class is growing really fast the the projections for Consumer and business spending is is expected to be 4 $4.2 trillion by the end of this decade right so there's real money that's being spent from local Africans and middle classes growing in that space and when it comes to Tech as James was saying like Africans because we haven't had hundreds of years of institution building that many other places have you know Korea is a really interesting example you guys build so much in the last you know 60 70 years um so much Africa is doing that right now by jumping on board with mobile phones when instead of like building line line cables we just jump straight to mobile phones and now that's the highest number of penetration that we have um and Banks we don't have ATMs in every corner like you have in other countries right so mobile money now this is your bank this is your kyc this has got so much more capacity for you to transact and do things in the financial system and that's been a game changer in Kenya more than half of the country's GDP P runs through just one application right that's that's incredible um so there's that sort of first adopter mindset when new technologies arise but traditional Tech reaches a ceiling because again when Africa is 54 countries right so if you're doing something that crosses one of those borders you run into the Global Financial system access to Dollars the payment systems that we have with Swift and all of that those are amazing tools but they're not made for Africa because if you're trying to send $50 $100 you're spending 10 20% of that just on fees alone right Africa is not a subscription based economy it's pay easy go and it's a lot of micro payments so the The Primitives of web 2 are not set up sort of for the next chapter of where the African economy wants to go and that's where crypto makes so much more sense and just to kind of boil it down at a practical level the killer app of crypto in Africa today are stable coins period that's where the mass number of crypto uses at right now and it's not just for people kind of to do some DJ stuff it's actually traditional institutions we're talking about uh oil and gas companies manufacturing companies companies that are actually trying to do real business sustain themselves saying hey it's actually easier for us to go to stable coins because we'll have to go through five six seven Banks to get the liquidity that we need versus one application that can give me $50 million liquidity in one day and they're doing that by using stable coins now we're over leveraged on just one US dollar stable coin I think there's an opportunity to expand that and diversify that Beyond just us US dollar but also other types of stable coins so um just and that's just one example you can go down in different sort of segments of where real use cases are so Africa is a frontier Market when it comes to crypto because to actually fulfill F the potential of the crypto industry we all need Africa we need a place that is using it on a daily basis to sustain Our Lives to sustain our economies on an ongoing basis whether it's bull market or bare market and I think that's what's going to take crypto to a level of maturity and mass adoption it's not by onboarding people into our crypto conferences it's actually cre taking the crypto perimeters and tools directly to where the users are and where is the mass users right now that are using this it's in Africa awesome this is really exciting stats and then the movement I can even feel the energy from you to you know and then it I lovely to see that uh you know in Africa it's like it's not competing you know we have to grow high together which is this narrative is actually extend to the whole ecosystem and it's not time for comp competition but we have to work together to really support uh different Market different silos and all of that um yeah great so we were going to be doing some hot and cold and hot and cold so we just did a really hot thing why Africa is the next Frontier market and doing a little bit of cold um uh what are the challenges why you guys are building why you guys are interacting with the uh Africa Builders and uh industry and uh maybe maybe two or three things that you can imagine yeah um yeah honestly I I just have one thing I'll tell my mind like there is not enough money going to Africa from VCS when's the last time you heard an African company closing around the guys that rais money for Africa you know don't actually grow up in Africa you know things like that like if you you from Africa in the region you're doing a project in Africa you know what I'm talking about um so the problem that I'm seeing is there is an information gap between the actual talent in the region because it's extremely talented I assure you all of our devs are from Africa you know um not saying we have the best product youall haven't seen a yet it's coming out next month but I just really believe in the town the region and I just don't know how VCS like for example we raised our last round from Paradigm panta Alliance Dow tiger Global how are they supposed to go to Africa and have a thesis on the region on the people there on the entrepreneurs on a day-to-day basis that are grinding in the trenches if you don't have an office there and you don't see the people and you're not African no disrespect I just don't know how you invest in that so I think the biggest problem growing challenges for the region not just for Jambo is more money needs to come into the region more attention more Spotlight hopefully more panels at a um you know uh conferences like this but I think that's one one of the main problems where uh I think just need more recognition on what's actually happening in the region uh I'll answer that question in two fold uh on one side just at a macro level some of the big structural challenges that are happening on the ground um one is uh there's you know a lot of capital controls that is happening in many African countries because we don't want money to leave and so the dollar issue is a multifaceted very complex challenge right so as I told it's like the killer app has been used dollar stable coins and if you kind of let it free then there's a potential risk of the whole economy being dollarized right and what that what that means is basically African countries are subsidizing the US economy right so there a tension Point around that um and that is felt when you talk to regulators and governments as well they recognize that the upside of that is opening it up allows for folks to earn money globally so one of the things that I've been doing when meeting every regulator is calculating how many people does it take earning $3,000 a month to increase the country's GDP by 1% and you'll be surprised it's actually not a lot in Kenya it's around 33,000 people can increase the country's GDP by 1 % each of them earning $3,000 a month in Ethiopia it is about 22,000 in Nigeria is in the 60,000 range so it's it's just you can make huge dent in the economy in a meaningful way that way but it comes at a risk um talking about Regulators uh the big issue that I keep seeing is there just not enough awareness and understanding of what crypto is and you know in our worlds here we're kind of a little bit Anarchist or want to kind of break away from the nation state Paradigm and and all that which you know is amazing um but we need a lot more bridge building to let governments really see the value of this because ultimately I believe even governments are seeking sovereignty there are many African countries that don't control their own monetary policy right they don't even print their own money 40 out of 54 African countries print their money in Europe they pay 6% of the total money supply that they have as printing fees and transportation cost right so from their side you know here we talking about sovereignty from our own governments they're trying to get sovereignty over their own monetary policy right so these are like a lot more complex sort of things for us to flesh out um on a more practical level in the crypto industry and and specifically you know the the few things that I see is one there's a physical as well as social graph disconnect between the local crypto community and Builders and Global centers of gravity so I'm trying to help on that front we took vitalic over to Africa and spent a whole month going around four countries and meeting Founders and ecosystems doing a number of these trips for layer Twos for people to see like the unique market dynamics because what Builders what users are optimizing around is so different from what users here and Korea or in the US are optimizing around and you see sort of like helicopter projects just coming in like great we're going to save Africa or we're going to throw a bunch of money here or we're going to farm users because it's easy to get 2 million users in a short period of time in Africa so you can inflate your token price elsewhere like we see a lot of those behaviors that aren't actually building the core economic infrastructures of the continent and it doesn't allow players to succeed with that earlier I mentioned to you about one payment application right where more than half of the country's GDP goes through those guys are printing money but they've been playing a long-term game for 15 years right so if there are players that are playing long-term game in the continent your position to be part of the furniture as the economy grows but we don't have enough sort of that level of of play thank you so much uh so now we are going back to the H and uh despite of all these challenges that you guys mentioned and there I'm sure there is more challenges and you know we have some African Builders here as well as to hope to uh hope you to get to talk to them after this uh but still there is an amazing opportunity I guess when people want to come to Africa and do something with the African ecosystem or developer whoever and what are the few key like opportunity you see uh from the Africa continent and working with the African Builders I mean I'll just put it this way right um I I grew up in Africa but I went to University in New York um my friends in Africa that I grew up with you know who have All Families Two through three generations in Africa what that means is you've seen different different uh political regime changes right Rebel president because democracy okay this is getting politics but what I'm saying is um they've been there for a long time and if you can survive in Africa for two three generations a family you're doing well those friends I grew up with use crypto every day on a daily basis for real life stuff my friends that I went to New York University with they only trade crypto they believe in it just like I'm sure everyone in this room I'm not saying youall don't use crypto on a daily basis but believe in it but you might be trading and doing other speculative things but not on a real life basis where you need to use this to say you're a manufacturer of furniture you need to pay your supplier of Redwood from the Congo in Congo East Franks right but you cannot get those Capital controls through so you need a company that does on-ramp offramp that you can give stable coins to to your point of stable coins adoption Africa I agree with that sir to be able to help you facilitate that so it's all use cases in Africa we're talking real everyday stuff but how many times will Tech crunch or the news report on actual usage of crypto in Africa the things that they report on is more funding news things like that so I mean just one extra question for James uh you know you guys are obviously bringing this uh smartphone that is a fall role and they have like a web three native abset what are the what what's the future let's say you know you guys launch this in Africa like this this month and then one year later we come back to this stage what do you want to see and then what do you want to share with the audience as a success all right um so our goal right our phone launches in end of October um so first let me quick on the African smartphone uh context 50% of smartphone Africans of smartphones one and two Africans of smartphone 70% of that market share of smartphones is by a company called transan TR R an SS and transient it's a Chinese company started like a decade ago did 7 billion Revenue last year 38 billion market cap on the NASDAQ so is proven factories are of China selling phones to Africa ethnically I'm Chinese we Source on the same thing um took more than a year to develop this phone now in one year if you ask me what's the bull case scenario that can see is more than 1 million jumbo phones sold across 14 countries in Africa but not sold just to users for a phone it's the earn economy because within our phone we don't make any money from it it's being sold for $99 but the specs is the same specs as a two2 to $300 phone because we can run this like a tech company we break even where we create value you might add like James why you even doing this then just to bridge infrastructure is the software the apps that will be pre-installed inside of this phone imagine you're a 19-year-old in Legos you come on the phone you see the applications and the gamehub and everything you can play the games you can do you're rewarded for your time these tokens go to our Jambo wallet which is a multi-chain wallet now even if you got these tokens in your multi-chain wallet it's no good to you as a local in Nigeria it only makes interesting and it's fun and Word of Mouth will spread if there's an offramp where you can actually convert that into the local currency naira and then spend it at night if you did this in the day so a lot of if you ask me my bul Cas scenario in one year is our phone can actually help to enable a lot of the infrastructure and the offramp and offramp in some regions because we're starting with Nigeria and Kenya for the offramp yeah thank you y you want to share like one or two like opportunity points yeah I guess uh the main thing I I'll keep kind of iterating is that um it's a very underestimated and underunderstood uh part of the global economy and so my recommendation is uh spend time really getting below the surface I think there's a lot of sort of surface level learning that happens but we don't get direct underneath it and my my sort of philosophy um around like even investing or supporting it is on one side is just start creating value start giving contributing right I think there's and if you start doing that in whatever shape or form you're in you're more likely to stand out from where 90% of the global presence is there which is basically basically just trying to capture and trying to take right so I think uh once you start doing that you raise more missionaries instead of mercenaries uh and and that's framework to think about um and the beauty of crypto is that it just creates a lot of openness right so there's a way to build Ventures or projects that is closed uh and there's a way to build it that is open when we build something that is closed or that is kind of basically trying to capture and control and keep users in one place then their level like your offering is going to only be based on the pace at which you can execute and it's just so hard to out execute a much more open environment and ecosystem right so my philosophy and view of how like a lot of financial applications are going to be built in Africa is just so many different services that built that are built as Legos that work seamlessly with each other uh but the catch is um a lot of folks in the crypto World we're so good at building for ourselves not building really for the end users so the things we optimize for is really for users like ourselves and I think very few people actually see the world for the lens of the user so before I like started doing the work I did I spent a year plus just talking to over 200 normal people like very normal I wish we do panels with normal people in crypto conferences just to hear like how they think and how they see the world and what's important to them I think that's so important uh and I think the applications that are built for the end user that doesn't really care about all the sort of microt topics that many of us love to geek around um but is really looking for a seamless user experience and you know I think that's really important yeah thank you so much we um only have a two more minute uh and I would love to close this panel uh with the uh advice and invitation so uh maybe after listening this talk and you guys are probably here because you're interested in Market uh if there is anyone wants to build in Africa with African Builder what are your advice and what's your invitation and how actually they can connect with you guys more uh to discuss further oh thank thank you for giving me the stage um so I'm G be a little more selfish right if you are a project in web 3 that has a mobile ready application that wants free distribution to an African user base pre-installed in our jumbo phone find the guy with the hat sitting right there call Sam please so that that's uh I'm not going to give you any generic you know this and that just if you have an application you think African users will love it or you want to test out we can straight up pre-install you in our phone and within a month we can collect 10,000 data points you'll see what the African web through user base will like or not uh from my side uh multiple Falls uh basically if you know as James mentioned like let's invest in African Founders because they are the ones who are going to build the future economic infrastructures of the continent uh and they're very close to the market and the pain point so I think that's the lens uh H put a chat and coest and all of that with folks um come spend time on the ground just enjoy the beauty enjoy the smiles enjoy the food um I think Afric African culture is all over the world as well um but very few of us are good at capturing that and hopefully crypto helps with that but come just enjoy the space and and really get below the surface to really understand what's truly happening and sometimes you know it's easy to just look at things that face value what I love to look at is actually what's the trajectory so create like if you're coming come for multiple times and have conversation with the same people to see what's been their growth as individuals or projects that more indicative of where things are going versus just what you see in one point in time yeah thank you so much for joining today uh on our stage and looking forward to see you guys more here in Africa thank you so much thank you once again ladies and Gentlemen please give a big round of applause for this two Talent