NODO interviewed Christain Duffus, the CEO and Founder of Fonbnk, about the company's efforts to bank the unbanked in Africa and facilitate easy user onboarding for Africa's emerging crypto economy.

Africa is witnessing a dramatic shift from housing cash-based economies to digital payment hubs. In 2021, 46% of the population in Sub-Saharan Africa, or 515 million people, had mobile phone service. By 2025, half of the region's population is expected to subscribe to mobile services, with nearly 100 million new subscribers. Due to the rapid growth of mobile phone penetration in the region, mobile money services allow millions of unbanked individuals in Africa to transfer money, receive funds, and conduct business transactions using their mobile phones.

According to the GSMA, of the 1.6 billion registered mobile money accounts worldwide, 781 million are located in Africa. However, millions of Africans lack bank accounts and find cross-border settlements tedious and expensive. For example, 360 million African adults lack bank accounts and intra-Africa trade stands low at just 14.4% of total African exports.

Founded in 2021, Fonbnk, a Web3 company specializes in providing on-ramp and off-ramp services for Web3 newcomers using prepaid airtime in emerging markets. In the past, the lack of safe entry and exit points in this region has created barriers for individuals who want to participate in Web3. Fonbnk bridges this gap by providing an on-ramp via familiar, local prepaid mobile credits including airtime, enabling users to convert prepaid airtime and mobile data into digital currencies.

Fonbnk's approach caters specifically to mobile-first, cash-based economies, utilizing the widespread prevalence of prepaid SIM cards and smartphones. The company enables users to access virtual debit cards for fund transfers and cross-border payments and provides a more affordable and accessible option for financial transactions. By cutting out merchant middlemen and reducing processing fees, Fonbnk aims to promote financial inclusion.

Fonbnk’s origin

While working as an executive at Goldman during the Internet boom, CEO and Founder of Fonbnk, Christian Duffus was inspired by young entrepreneurs building innovative companies to do the same. His experience in telecommunications and interest in blockchain technology led him to explore new tech stacks for companies. He eventually started a fintech company in the crypto space, which he later sold. This experience paved the way for his venture into Fonbnk, inspired by a bet with his brother-in-law who introduced him to Safaricom's M-Pesa service in Kenya. He experimented with selling airtime credit through Facebook ads and WhatsApp groups, which laid the foundation for Fonbnk. It was then he realized that he could, through the blockchain technology, expand financial access to the teeming African population.

“This innovation acts as a link to Web3, targeting mobile-centric economies that rely on cash transactions. We leverage prepaid airtime and other familiar local payment methods to facilitate exchanges, with stablecoins serving as the gateway to various protocols," Duffus told NODO.

The platform, launched in Kenya, allows users to easily buy cryptocurrencies like Bitcoin, NFTs, and stablecoins using their phone credit and make cross-border remittances. FX scarcity is prevalent in many African countries where citizens are dealing with high inflation and weak currencies, hence the choice of stablecoins for payment.

Duffus explains that the ease of fungibility of prepaid airtime across multiple African currencies and jurisdictions makes it the best option for Fonbnk’s innovation. Airtime, the talk time a mobile phone can use to communicate on a network, is prevalent in emerging markets not only because it allows communication but also allows the transfer of money and commerce among the unbanked.

Catering for the unbanked population

Africa’s large unbanked population and thriving mobile money market set the stage for Fonbnk’s solution by bridging the financial inclusion gap on the continent, Duffus explained. “This is where mobile money has been so instrumental in driving financial inclusion across the region. They figured out a way to collect money so that the carriers can get paid, but also turn that into a financial service to better utilize their networks,” Duffus said.

“We're building on top of that, enabling not just local financial inclusion, but global financial inclusion. And this could only be done by providing at the most micro level, access to this sort of immutable, cross-border, interoperable functionality.”

Fonbnk operates as a web-based software platform where users can connect their local payment systems to access financial and commercial services. These activities include buying a variety of goods and services like media subscriptions, online tickets, and tipping influencers. Additionally, individuals can access traditional financial services like savings, investments, and currency exchange.

Fonbnk currently operates in twelve countries, such as Nigeria, Kenya, Ghana, Uganda, and South Africa, and plans to expand to twelve additional countries by the end of the year.

Serving as a payment infrastructure

Fonbnk works with local providers to connect buyers and sellers, referred to as liquidity providers or seekers, who facilitate transactions. Its API provides the technological infrastructure that enables these connections. By investing in various mobile protocols, its platform can be accessed via GSM phones worldwide, making Fonbnk's services accessible to a global audience.

Fonbnk collaborates with Layer 1 blockchains like Cardano and Avalanche to bring in new users and support developers in creating various projects such as tokens, dApps, savings platforms, and DeFi projects. With Fonbnk's assistance, developers can easily integrate projects into their workflow and utilize alternative payment channels for seamless on/off-ramping. Users can conveniently top up their accounts with mobile credits, convert them to fiat or prepaid time, buy gift cards, or use USDC, among other options.

Africa is the world's youngest continent, with an average age of 19. Fonbnk is targeting young Africans who want to connect to the global digital world and access the tools necessary to participate in the global economy. “As more and more individuals worldwide migrate their lives online, young people in Africa are no exception, although they may have fewer opportunities in some cases. Through our tools, we aim to unlock these opportunities for them, enabling active participation in the digital economy,” Duffus remarked.

In the past year, Fonbnk has collaborated with various liquidity providers such as MiniPay, Avalanche Protocol, Celo Ecosystem, Celo Protocol, Stellar, and others. Fonbnk’s focus is on integrating new partners and liquidity providers and engaging with new wallets of liquidity providers who facilitate the seamless conversion of mobile credits to digital assets.

Additionally, Fonbnk's partnership with NODO allows users to convert their NODO Gems tokens into airtime credits on a preferred network at the current exchange rates.

“In a way, our role is similar to that of Airbnb hosts or estate owners, creating a seamless utility for our users where transactions happen effortlessly in the background. As we expand our utility and make it more widely accessible, we envision a future where individuals, families, and communities can rely on our platform for their financial needs within these economies. Our goal is to attract more liquidity providers and broaden the availability of liquidity in our ecosystem,” Duffus said.