Crypto and Stablecoins in Tanzania w/ Victor Muhagachi

I spoke to Victor Muhagachi, co-founder of NEDA Labs, building digital asset payment infrastructure in Tanzania and East Africa, about what it actually looks like to bring crypto to communities in this context.

Victor grew up watching mobile money transform how people transact across Africa but also watching 15-20% of people's money disappear just in the act of digitizing it. We dig into NEDA Labs work on Tanzanian Shilling stablecoin rails and the experience of talking to regulators. We also get into the savings circle pilot they ran with the JUKUMU Hub, a local community space, and Solar Foundation whom we had recently in a Bread Cooperative community call.

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Transcript

SPEAKER_01 0:00

So this is a 2009 bill. If I wanna digitize this, I'll lose almost 20% of this by just moving it to my phone. Kids that grow up playing Call of Duty, playing like FIFA, like being on TikTok, they're gonna be the middle class and they're gonna be aware of the digital economy. Being from Tanzania, I think I see a lot of problems that need technological innovation. And I think technology can really blend so well with community, but the infrastructure is still I say at 1% built in terms of even payments and also just getting people online, not even on chain, online to begin with. But what changed was not the currency was the utility around what you can do with it. If I can exchange it for something else or buy with something else, that's what it might be. That's what gives something a currency. So if we can do the stand for tokens and say it's like, hey, I'm gonna just allow this token to be spent in this community, then you start creating this circular economy around that area. And this is because the economy is not designed for you to spend the way you're from, it's designed for you to get out and earn money and spend it outside your community. I think people should get paid what they spend. Like every time I spend my money, I should own instead of losing.

SPEAKER_00 1:06

And I think there's just going to be a certain breaking point where people are going to be looking for alternatives, more so than not just speculative crypto tokens, but actually how do we protect each other and protect ourselves and our communities so that our wealth isn't just being extracted. This episode is sponsored by NIM, the world's most private VPN that protects your internet traffic and metadata. Unlike traditional VPNs, NIM uses a decentralized mixnet to scramble your internet data, hiding who you're talking to, when and how often. You can switch between full Mixnet mode for maximum anonymity or a faster VPN mode for everyday use. Pay in crypto or fiat, and even your payment stays anonymous thanks to ZK-powered anonymous credentials. Take back control of your online life at NIM.com. Sign up today using the code BlockchainSocialist and get an extra month for free. Hi everyone, you're the same to the Blockchain Socialist Podcast. I'm Josh, and I'm here today with Victor Mogogachi. He is the co-founder of Nita Labs, which is an organization that focuses on building digital asset payment infrastructure in Tanzania and Africa. And we've been in discussion for a little bit to um just because recently at Bread Cooperative, we've been working on a new application called Stacks, which is basically a crypto implementation of saving circles, which is a really interesting kind of financial arrangement that's very common among people in places where you they may not have access to lots of more institutional forms of finance. I came into contact with Nia Labs because they've already been doing a lot of this type of work, have already built something quite similar. And so I thought it'd be really interesting to have Victor on to kind of talk about that experience, talk about the experience of being in Tanzania, building crypto applications and payment infrastructure applications in Tanzania and in Africa to get a little bit more of that context and that and to share that with all you guys. Victor, thanks for coming on. If you want to give maybe like a quick introduction to who you are, and maybe we can start off what got you into crypto.

SPEAKER_01 3:14

Hey Yoshua, thank you so much for having me. This is quite an honor. My name is Victor Morgachi from Tanzania, East Africa. If you've never been to this side of the world, I welcome you. It's quite a beautiful place to be part of. Yeah, I'm a co-founder and a builder based in East Africa. I've been building in the Web3 space for I'll say six to seven years now. Called the CryptoBug early on, after I would say just being exposed with my friend David, who's also my co-founder. He was really heavy into contributing in different DAOs. And we started at Prime DAO and just writing research and just you know getting curious about technology. We really started the journey of building tech back in 2018. I've been passionate about building products. My background is in finance. I studied economics when I was in uni and like during my schooling year. And then from that, I really just was trying to be an entrepreneur. So build a music streaming platform. Had a lot of learnings from there because at the time it was just the excitement of just being a founder and building startups. But then when I met David, uh, he introduced me to crypto and his whole new infrastructure around blockchain. And from there, we founded Middle Labs and it's been the anchor point around all this. Being from Tanzania, I think I see a lot of problems that need technological innovation. And I think technology can really blend so well with community, but the infrastructure is still, I'll say, at 1% built in terms of even payments and also just getting people online, not even on chain, online to begin with. So we find this quite an exciting challenge to kind of be part of, and we see it as a long-term vision. And Middle Labs, our mission is to say, hey, can we not only get people on board but build infrastructure that lasts, but it's also adaptable and also looks ahead, like, okay, we're not building something that's a silo, but something that's can be interpable, that other systems can join and people can find value in it. And I think blockchain is the closest thing to kind of achieving this. And I'm super excited to, you know, always meet new people in the space, the community aspect of being in the Web3 space and yeah, meeting Joshua was quite exciting and what is building out the stacks. I think it's really, really cool and bred as well, being around tokenization from deposit, from like ownership of like trust, and how we can prove that as a value as an asset. So I'm quite excited about all these things and how they kind of tie it all together. And yeah, looking forward to this session and sharing more about what we're doing out here.

SPEAKER_00 5:32

Yeah, so maybe just uh uh slightly more context. If you guys are interested in learning more about stacks, we ran a webinar a couple of weeks ago about showing off kind of stacks and and what we're what we're trying to go with it. And unfortunately, the video was corrupted that we recorded for the webinar, so we had to re-record the presentation. But the re-recorded presentation is on YouTube. Um if you go to the Bread Cooperative YouTube channel, so you'll find it there. Um and you'll see kind of what we what I do is uh I create a showcase or kind of like uh what ideally the end product would look like that we're trying to build to kind of take you along the journey and the story for building these types of more mutual aid and solidarity finance focused applications and where I believe that can take us in the long run. So um I'm very biased, but I think you should check it out because it's interesting. Um but maybe to continue with with this conversation, what would be I think important to contextualize kind of the work that you're doing and and and why you find value in it and why why it's interesting. If you want to talk about the context, maybe in a little bit more detail of Tanzania in relation to payments and crypto, um just to kind of understand like the kind of what what is the the environment you're playing with.

SPEAKER_01 6:48

By the way, I I had a chance of checking out stats. So, guys, trust me, what Joshua is telling you, something you should look forward to. I think it's quite quite amazing. I like the ethos around what you guys are building, which is quite quite interesting. Now, even in the context where I'm from. So from Tanzania, I grew up to spend the majority of my life in Tanzania. Uh I would say it's uh it's a hidden gem in this place because we speak Swahili as a national language, so you won't find anybody speaking English. So there's always that barrier to begin with. But I won't call it a barrier necessary, but I would say an opportunity because that creates community that have one operating system because language is the operating system of the mind. But then now, how do you build context around technology that kind of like embodies this? So even for us, what we're doing with Washikadao is kind of like creating and translating and abstracting a lot of the jargon and uh what is under the hood to what is the functionality of tech. So as a Tanzanian growing up here, it's like instead of changing or redefining the will, it's like how do we make tech that adapts? So we have over um over, I would say 30 to 40 regions around the country uh divided into the eastern, west, and central. Now, the east coast is where the Indian Ocean meets uh the Tanzanian coast and shoreline. And then as the further down you go, you have mainlands and you have northern lands, and there's a variety of activities happening throughout the country. So you have businesses, you have people doing agriculture, people doing like, you know, I'll say middle class businesses, people doing tourism. There's a lot of industry happening in the country, but all of them rely on the same payment infrastructure and value infrastructure of like traditional banking in terms of how value moves, how businesses interact with one another. So this comes with a lot of architectural barriers, especially mobile money was a huge innovation that happened in Africa. Popularized by Kenyans and started in East Africa, so Tanzania as well, we have mobile money. So you find a lot of us have had experience of having wallets by just having a phone. So the moment you have a sim card, you already have a wallet and I can put money in it. So you can find we're quite ahead in that space, but then this comes riddled with a lot of infrastructure barriers where a lot of fees come with it, and a lot of it comes with the context where you have agent networks that help you top up your mobile money. So I have most people will have cash that's their cash is king in Africa, and then I need to digitize this cash into a digital value equivalent, which will be mobile money, so I can top it up on my phone and then use it for everyday payments. But then this creates another barrier because now you realize I lose almost 20% to 15% just digitizing that Tanzanian shilling. Now, this is what's happening right now. If you have 10,000 Tanzanian shillings, I think it's it's quite funny whenever we talk about it. So this is a 2,000 shilling bill. If I want to digitize this, I'll lose almost 20% of this by just moving it to my phone. And I think a lot of people complain about this, but when you do research, even for me when I started, I was like, wow, this is so unfair. But then the more you do research, it's like there needs to be agent networks, physical hubs where you can take your cash and somebody will unwrap it for you physically and put it on your mobile phone. Now that process means there's a middleman, there's a network service, there's a company that allows this to happen. And then what that tends to happen, it raises the fee, then you find the same process costs you more. Now it happens when I want to take it out, same thing. When I want to send it, for example, if you show you in Tanzania, I want to send you money, I will lose maybe 10-15%. They're trying to bring this cost down, but then it's still quite a burden. Now this is the landscape at the moment. So you find the infrastructure is there, but it's not heavily utilized. It becomes a backbone because we rely on it, but it's inefficient in a sense, it takes more than it actually gives. So you find as a business as an individual or a business owner, I'm losing a lot of money in just moving it from wallet to wallet, from buying things. So I'd rather have it in cash than actually move it. But then you realize, okay, what are the things that we're missing out on in terms of digitizing the economy? Because we're seeing the huge rise of like people buying things online, digitizing, seeing banking is becoming a huge rise. Now, the technology uh that's meant and designed for traditional banking is really lacking behind because of the fees and the infrastructure it's built upon. So, this is what's happening right now in Tanzania, I would say, and that's where we see an opportunity in and we really want to shape this industry and be part of it. Now, our our way into it is like we want to bring tokenization in deposits and use the same rails, but then allow people to have more like cheaper rails when they want to move money from peer-to-peer transfer, from business-to-business transfer, from merchants to network transfer, and even to cross-border payments. And I think that infrastructure has already been showcased that stablecoin can do this, blockchain can do this, and we want to not only do it, but localize it as we do it. I wonder if it's the same where where you are, but in Tanzania, we are here, but it's quite rated with pay with like fees.

SPEAKER_00 12:00

Right. So yeah, what what I was gonna um I was gonna ask if you can explain maybe the mobile payments a little bit. I mean, if I understand correctly, it's very similar to, or I don't under know for sure if it's like the same thing or very similar to M Pesa, which is what I understand is like the system in Kenya. But if I understand like basically, is it just like your SIM card is your wallet? And the SIM card is basically you can just buy any SIM card and that's basically a wallet, or because when you buy a SIM card, you give some ID and like there's like a little bit of KYC, or you can just like find whatever SIM card and that's basically a wallet that makes sense.

SPEAKER_01 12:38

Now the SIM card is your wallet, and this started like a while back. You could just get multiple SIM cards, any SIM card. But I think now all the providers, net mobile network providers, they're allowed, they have stringent KYC, so you need a national ID to activate your SIM card. So everything now is tied around your national ID. But if you're a foreigner like yourself, you just provide a passport. If you were to come to Tanzania and you're not Tanzanian native, you would just provide a passport and they'll give you a temporarily SIM card that maybe after uh what's your stay in 90 days it'll expire, and then you can just renew it. Now, for me, I've had the same SIM card for years, and it's just tied into my national ID. And the cool thing about it, I can even now open a bank account with just my national ID.

SPEAKER_00 13:24

Like in terms of a new bank account or in terms of like your mobile money is like your bank account?

SPEAKER_01 13:29

There's a new new companies are coming up. So this you like even like last year you couldn't do this. There's a new like neo bank that started that just you just put your SIM card and they tie in, they tie that to your to your bank account. But what they really do is tie your SIM card to your national ID because that's the unique number that you will only one time you will have it, and then create an account from that national ID.

SPEAKER_02 13:53

Okay, okay.

SPEAKER_01 13:54

Essentially, we can even it's like your one source of truth for KYC, so I can always know whom who's the the the owner of this account is. And I think that's one of the biggest like push that's happening in Tanzania and East Africa in general for the past like five years. It's like national identification, it's gonna be the backbone of like how everything happens, like the way social security is used in America. Uh, I don't know if Europe also has social security, social security number. So that kind of ties your KYC and then provisions of wallet happens with that. And now say if you're a regulated financial service provider, you need to have KYC that ties into your national ID. It's just a way to safe practice. But in PESA is similar, yeah.

SPEAKER_00 14:35

Okay, so essentially in Tanzania, there's been this big push around digital payments and digitizing the payment system to some degree. However, there's some hurdles and obstacles. In particular, it sounds like the fees to digitize the money. And I guess it sounds like you can go to certain hubs you were mentioning where you can give cash and then you can digitize it in that way. You don't have to hold the cash, you basically just hold it in your wallet, and that might feel a bit safer for some people. Or yeah, you just don't have to carry a bunch of cash and you can make payments online and across distance. Now that we understand more of the context of of Tanzania, I'd love if you could maybe just give a bit of an explanation of what is Neida Labs and what are some of the things that you guys are building in this space.

SPEAKER_01 15:14

Yeah, so maybe I'll give you an introduction around the name. The name kind of came from a combination of national, electronic, digital assets, and our vision for it was more like create like a space where traditional finance means the digital world. So we also look at it as a asset because we call it national because we believe technology like this needs to be used by everybody, right? So I think as an infrastructure, we're open source in the sense of can we create equity around tech, but in a way that adds value, and especially in financial rails and payment rails, is there the way for you to get access to even on a feature phone, you can have a mobile wallet. So we can see the value of getting people financial tools is already being been created. Now, what happens now is like, can we upgrade this system now to the next level? Like in any software, anything that you're building, it's like, hey, stage one is done, how do we go to stage two? But building stage two for us, the way we're thinking about it as Nether Labs is like it needs to be something that thinks not today, but even future products that are gonna come. What kind of technology are they gonna consume? Now, blockchain kind of shows the value of interoperability. I keep saying this because today in Tanzania, most people already have a SIM card. Then the next thing is that they'll have a bank account. The next thing they need now is a mobile wallet. So because all these are wallets, but one of them is traditional, comes with your phone. Second one is also traditional, non-institutional, like hey, I have private banking, most people use it for financial record keeping and say if I want to get a loan or travel, like you know, have I'm employed, we go to the traditional banking route. So I think you see how the traditions kind of grow together. So at NetLovers we're thinking, okay, what's the next step after that? And I think we believe is having a digital world that can hold crypto assets. And when I say crypto assets, I'm not necessarily just meaning Bitcoin, Ethereum, or like DAI or any like, you know, tokens. It's more like the value of what that can bring in traditional economies, right? So you see, MPESA was essential in getting people to have wallets from just a SIM card. And then banking was essential in the sense like, hey, come and have record of your transaction and become worthy to get loans and have a credit score and have like a financial trailer. Now MPESA is doing that as well with your MPSA card. And then now we feel like okay, these two areas already works. Now, what crypto allows is interoperability. Now I can be able to hold digital assets from all over the world, and they allow me to kind of like tokens around me to contribute, make decisions, vote, pull together. And I think this type of economy already happens in Africa, but it's not, it doesn't have the infrastructure to happen on. And we're trying to use Web2 and banking system to do it, and you see a lot of limitations in it, from regulations to onboarding fees to moving money for peer-to-peer transfers, like we spoke about earlier. So at Nether Labs, we're really trying to see can we be the pioneers in this space? Predominantly issuing deposit tokenization inflows, but then on top of that, also being able to kind of be the backbone for the digital economy in sense of like creating DeFi products, creating a virtual asset licensing and policing around it, but also use cases and pilots of how it works. We launched a UBI token, and I have a crazy story about that. So I think that's one of the things that to me was like, oh wow, this works. And maybe I could talk more about that and then to really showcase like how like we're thinking about this technology. But yeah, I would say Nether Labs is just trying to be the next like financial service layer that helps people get into the digital economy, not just by being it, but participating and contributing from no matter where you're from.

SPEAKER_00 19:04

Right, right. I think it's interesting. I mean, um, you know, the contextualization that you gave about Tanzania and and in East Africa at least, and it's been kind of reported quite a lot in the news around like the I guess the usefulness of stable coins for a lot of people in these types of regions. But yeah, I guess the what one of the things that I know you guys have built. So I'm curious to hear about this this UBI project. I actually didn't know about that, but also about like some of the like need a pay. I know is like one of the one of the big products that you guys are are working on as well.

SPEAKER_01 19:34

We started with data collection. So I'll take you a couple of years back. So we did the proof of impact, proof of person hold, like collect like uh a pilot where like, hey, if you can get this much plastic and verify it, we'll buy it from you and then give you a token that you can redeem. And did this pilot, but then we realized a lot of people can get on chain. It's quite expensive for people to get on chain. So the idea was like, okay, we see the value in blockchain, but then there's a lot of these limitations. I need to go to Binance, I need to pay somebody who's holding stable coins, and they need to refund me, and I need to be able to kind of like refund them. So you find I'm losing a lot of money just buying UCDT or any stable coin. Because at the time, stable coins are the easiest, it's the easiest entry to crypto, and then you swap it to other tokens, right? So as we're building this, we saw a lot of limitations. So we're like, okay, we need to build a way for you to pay and take your Tanzanian shilling and convert it into a digital asset. So that's how Netapay came. So I tried out for better. So we had built it, but we couldn't get Rails because it's not regulated in Tanzania. So a lot of like Rails for you to come in. PSPs were like, we don't want to touch that. So we even went a step ahead and get like robotic agents to use traditional calais to ping that hey, if you get your transaction ID and you send it, we've tied this ID with MetaMask that will see the equivalence and give you your tokens. So a lot of patching of things that should not be patched together just to achieve something so small. So that's how Netapay came to life. That demand of like, okay, I have my Tanzanian shilling, but I cannot tokenize it and get into the token economy. So NetApay was built to kind of become an on-noth umprail, predominantly for stable coins. So we're all in one stablecoin platform that allows you to convert your shilling or any currency to stable coins and vice versa. So we're in five countries still testing out. The biggest limitation is still the regulator, not really, because the regulators scare away providers to come and do it. So peer-to-peer transaction becomes the alternative, but then pre-to-peer transaction has a lot of fragmentation and liquidity. So let's say I have a thousand Tanzanian shillings or a thousand dollars, I want to convert it to stable coin. I might need to find five or different people to kind of pull from. Like this guy might have five hundred, two hundred, three hundred, and then together I'll have. So that's very Inefficients, but the guys who have a lot of liquidity are banks and fund managers, but they don't want to touch crypto because you know it's not regulated. So we build something of a payment orchestration tool that allows them to never touch crypto, but just touch the order, and then you send your equivalent, and then in the back end, we refill you with stable coins once the order is fulfilled. Now you've with that kind of like structure, a lot of PSPs, a lot of banks are kind of comfortable with this. So we're we've been working with the central bank here trying to be in the sandbox to show them the impact of this, and hence that's how we got into the UBI token as a way of proof. Like, hey, this technology has value. You just need to not think of it as because when the regulators in Africa, when you tell them crypto, they think Bitcoin, right? They think volatility 40. They say like, yeah, they just see the candles dropping every day. Because most of the I met this regular time we're talking to central bank, one of the guys is like, hey, this is very speculative. And I'm like, and when you get to investigate and ask them questions, they entered crypto when it was at a bull market, everything was so hard, and they bought and it dumped, and they never want to hear about it again. So you're like, hey, you know, yeah, we're not telling you to buy Bitcoin. So I mean, uh, there's a lot of maximalists in the in the space for Web3, but I think let's not take away from the innovation of around blockchain, especially in tokenization. I think even with the rise of AI and how people are consuming tokens without knowing, I think the genetic creation is gonna bring a lot of rise in tokenization, and that is gonna require a deposit to be tokenized. And I think this is where spaces of where net pay comes in and say, hey, this is an entry for you to tokenize any asset. We start with deposits because it's quite easy and it's pegged one for one. So I'm equivalent, like my deposit of 10k is equivalent to the tokens I'm receiving. And I think this is what I really like about what you're doing with bread as well, comparing with dime and stable coin, and then creating stacks around it. It's really abstracts what you do, and the entry point for me becomes almost traditional, like e-commerce. But now I just buy points that allow me to get on this platform, same way I would do in a game. Or because this is the generation that we're gonna serve in the couple years. Kids that grow up playing Call of Duty, playing like you know, FIFA, like being on TikTok, they're gonna be the middle class and they're gonna be aware of tradition the digital economy because they're content creators, they've seen their parents come from community saving pools, so they don't they do understand how money moves economically. Right now, we're not at that stage yet, but I think five, ten years, we'll have those consumers. But right now, being the infrastructure for them. So need a pay is like, hey, you want to move money internally and across the country, we have the product for that. Now, the other products that we create kind of like tying in that space of okay, I want to make payments, but I'm tied into one rail that is like you say my mobile network, but I want to get out of that network and get into this economy that allows me to move. Now, this is where tokenization really thrives, right? So if we can create the entryway for that, I think we can now start creating products and utility around it.

SPEAKER_00 25:15

No, yeah, I think that I mean it's so yeah, the comparison with with bread cooperative that that you made is interesting. I think we're the the approach that we're taking, right? We we kind of we tokenize something that is already tokenized in in the way that that our work is like a wrapped stable coin. So it's like the re and the reason being is that we didn't want to deal with we don't want to, I mean we would just want to like have distance from like regulatory pressure or like any issues with with like regulatory things and versus like if we created our own stable coin, which is like in in my view, just a lot more a lot more work. And the reason that we went that way is just we wanted to move fast and we but and we wanted to just like prove prove things quick. But what you guys have done that I think is interesting and that I'm you know interested to hear more about is like this how you guys have been able to navigate the the regulatory and like legal. I mean, really, I mean to me it's like it's a it's a bit of a maze, you know, how to like getting around this all this all this legal and regulatory stuff and and I'm sure there's complications when you want to do cross-border things and just like getting even just getting like within within one country to get permission to start like uh because I know what you guys have done as well is started providing a a Tanzanian stablecoin, but I'm wondering if you can kind of like talk what were those conversations like? What was it that experience like trying to do that? I know you mentioned the central banker who hates Bitcoin because he lost some money. I wonder what the other ones are like.

SPEAKER_01 26:38

Yeah, uh the conversations are always ongoing. Even right now, we're still we're still in talks with them, always like testing parameters of like okay, how how everything works. I think the the the importance of it is what matters, right? Because when you're in finance, trust is very big. Because whatever we do, especially where saying, hey, I'm gonna give you a rail for moving money, and I'm gonna we don't custody use the funds, but we orchestrate and kind of route it to like you know, to allow them to have value in these spaces. So they need to trust us. So being regulated is a plus, it's like a huge bonus. So we don't shy away from that, like you know, most Web3 products and finance because they're like, I'm against finance. And I was even talking with John about this from the solar foundation. Well, hey, they'll do we need like you know, custodianship to be held by banks. And I'm like, in Africa, our biggest problems is infrastructure, not really regulators, right? The regulators are there to even build this infrastructure because they lack like they lack builders. So if we can build and build with them, it's a huge plus. Now, you can understand a mandate for a central banker in Africa is probably inflation tied into like you know, employment and also collecting yields, sending, selling treasury bills and bonds. So the government has enough liquidity to provide for the economy. So when you tell them like I'm gonna revolutionize payment, speed and all this, they don't really care about that. It's like I don't care if it takes a day or three days, I care if it reaches there and the economy doesn't fumble, you know. But we come from this this like, no, it could be better from technology. So what we like, the biggest finding I would say, and if anybody is listening to this and wants to connect with regulators, speak their language from pain points they that you care about. And this has been huge for us in a sense, like, hey, uh, people are gonna interact with crypto whether you like it or not. People are gonna always find ways around finding value and trading value among each other. That's how economies work for times for generations and years and years, right? So, what you need to do as a central bank is like, hey, create environments that allow them to use you as a legal, like a proof of reference, trusted layer, also market maker that observes, right? That's do what the central bank does. And instead of you shunning and limiting this, you're missing out on tax you can get, you're missing out on liquidity that could flow in your country. So, for example, in our in our case in Tanzania, the bond market and treasury market is one of the highest in East Africa. Compare that with our inflation, our currency inflates at 3.5% yearly, which is really good compared to Kenya, Uganda, Nigeria, these are the biggest economies in in Africa. We are helding really strong. So if you hold a Tanzanian Treasury bill, even you yourself, you would earn up to 10%, 12% guaranteed per annum, whatever whatever it can become in. Now, if you're holding stable coin right now, if you're holding USDC, you will never receive this type of returns. Like you the most you get is maybe 5%, 4%, and then 7, 8% if they are mixing it with crypto and like you know, Ethereum and Bitcoin as your as investments, like tools. But if you purely hold treasury bills in Tanzania or like money market funds, you're guaranteed 10%. Now, this is liquidity that a lot of files or communities or products or people in the space could tap into and generate this yield. Now, when we speak to regularly, we're like, hey, we see a lot of value in increasing liquidity by people holding treasury bills, but they cannot hold it through only the traditional ways of banks and this. But can they hold it through stablecoin, like a local stable coin that is issued by us and then verified by you, audited by the central bank, and we have we use traditional rails, same thing you do, but it's just a ticket, like a digital ticket. Now, this is a conversation that a central banker can understand. Like, okay, so you're telling me I'm gonna have an X inflow that comes to my treasury, like yes. You're telling me I'll have this, this, and this, like, yeah, how's your KYC standard? Same one you use, how's your uh fund management? I'm using regulated rails. So the way we collect our funds is to regulate a rails, mobile money banks, traditional sense, but then we cover, we try to, since we're gonna get yields, we'll cover the cost with the yield. So I can your onboarding fee moves from 10% to 1% or 2%. So now this is like value to the user. Now, if I say I'm gonna like now give you 10% yield, that's even safer because the market is at 12, 14. So still 10 is good, it's a good buffer. So now this language is easy for the regulator to speak and understand. So I would say how you engage this is first, it's good to build trust, it's good to be recognized, it's good to be known. And secondly, it's important to speak the language that resonates with the person you're talking to. You understand that the tech and how it goes and the value around it. Now, persuading or getting someone to also understand comes from the pain points they have and the value they see. So when once we communicate this, we start seeing a lot of acceptance and people saying, like, okay, I see where you're coming from. And it's easy to get a sandbox environment and test things. And then we do a lot of pilots as well. So all of the stuff we've been doing, I say from 2021 to now, combination, the majority of it has been pilots driven. So we did a UBI token where uh around is proof of personhood. We say we launch a token on Kusawa. So ideally, it was hey, meet up every 10 days, you scan a phone, you get you each get$2. Ideally, save your money, spend this$2 in your community. Now, this token, since it's a native token, you can only spend it where you accept it. So imagine if I had this is a 2,000 shilling Tanzanian bill, it has value in Tanzania. I can probably buy like a meal with this. But if I was in Germany, no one would accept this. It's not because it doesn't have value, but because the person accepting it would have nothing. It's like, where am I gonna spend this? Just be a souvenir to them. But if this was a US dollar, you would accept it, right? You'd be like, okay, I'd probably find it somewhere I can change it to a euro or you know, see, but the what changes was not the currency, it was the utility around what you can do with it. If I can exchange it for something else or buy with something else, that's what it might be, that's what gives something a currency. So if you can do the same for tokens and say, like, hey, I'm gonna just allow this token to be spent in this community, then you start creating this circular economy around that area. So our idea was this we see a lot of capital move from African communities. If I live in where I stay, for example, where the side of town I stay at, I don't know, spend money there. I all the money I make goes away from that community and goes where party I work or where I go shop, and you know, so that could really, if that community does not see that capital circulation, you see like capital flight in most communities in Africa. And this is because the economy is not designed for you to spend where you're from, it's designed for you to get out and earn money and spend it outside your community. So you find the local shop doesn't do it. So, but if you create a native currency for just that area, then you start seeing people spending more in that area. But then you don't want to just influx it with just that currency. You create it almost as like a discount system, like a point system, more or more like a they say if I was gonna buy something for 2,000, I can buy it for 1,000 and an extra like new top like token for it. So it becomes like a discount system. So I accept this half 70% in fiat, 25% in or 30% in the digital currency in that area. So for the users, like, hey, yeah, I've saved 20%, right? Money that I got from just being part of this community, and the shop owners like, oh, I've you know, I've got a I've given a discount, and then I'm probably gonna spend discount in my community again. Now, your job or the job of the community or our job was initially to kind of like educate people on this, but also allow them to understand the idea is not to hold your token, but to spend it and use it as a cash like subsidy. So you end up at the end of the the 10 days, at least save like five dollars. That's the idea. You have an extra five dollars you can spend your community. So if save that five dollars and spend it in something else, either your child school fees or you know, maybe a groceries added to your grocery bills. So these types of utilities can all happen with like stable coins and UBI token. Now, when you go to the regulator and you'll be like, hey, these are the use cases we're finding, this is how we can trap more capital in communities. And as Nether Labs, what we're truly trying to do is say financial tools at the end of the day should not leave you depleted, they should add on to you. Because these banks, these MOs that hold our money, they make stupid amount of money from our yields, from earnings that we make. They charge me on fees, they charge me on credit. Every time I take a loan, every time I move my money. So I'm like, okay, that's an outdated like Rockefeller 1920 banking model that's really in 2026 we shouldn't abide to that to this day. I really go, I would go even further and make a controversial statement. I think people should get paid when they spend. Like every time I spend my money, I should earn instead of losing. But we live in a world where I'm losing money by giving other people money that my money they spend in investing for me that's give them yields and then come and tell me I I don't have financial literacy. It's like, no, you know, systems are rid of for me to never get out.

SPEAKER_02 36:30

Right, right, right.

SPEAKER_01 36:31

So that is the that is the the powerful thing that I think this technology can unlock. Not redefined the way.

SPEAKER_00 36:39

Yeah, uh, interesting to say that I think one of the things that that I find really interesting about what you're saying um is very similar to a lot of things that I've been interested around this concept of community wealth building, of like local currencies as like basically ways to keep wealth within within a community so that yeah, you don't have capital flights where people are just kind of like buying things that are from outside of the community and then uh maybe brought in, or they can or maybe they leave the community, what have you. And this is something that, yeah, and I mean neoliberalism has kind of promoted through globalization. One of the kind of side effects of all this has been kind of capital flight from different places and concentration of capital in particular particular places. I think one of the things that why like why I can understand why this is like so interesting for people, maybe like your context and maybe in another context is that it gives more yeah, like ability to govern and control economic and financial life in the hands of people who who like just want to go and do it, which is what I find also really interesting, and what you know with bread, we're not I like to compare it to a to a local currency, but without like a physical locality necessarily. But yeah, it definitely resonate with with a lot of the things that you're saying, even though your your context is maybe slightly different, but yeah.

SPEAKER_01 37:58

No, so check this out. So, for example, right now, if I wanted to get a mortgage in Tanzania, that would take me back 16 to 18 percent. And I I have friends who interest with interest rate on the loan sixteen percent, eighteen percent. Now, depends on the ticket size and your credit scoring, and some of these things, they're not even native to a lot of African communities. Now, if you're trying to grow an economy and your your interest rates are that high, it's quite dangerous for you to see, like, hey, you create a lot of like even not social gaps, but also a lack of liquidity in the in the market. Now, how does this happen? It's quite complex because it's it's like this because also the treasury bills of the country, that's the ticket they go for 14%, 13%. Oof, I need to charge my laptop. Now, because uh because this happens, you get you get this like the biggest holders of the treasuries are banks. And these banks, they are required because if they are they are holding like treasury bills from the government at that rate, and they're gonna lend the money. This is my money that I'm putting at their banks, right? And they take it and buy government bonds for them to mature 12%. So if I go and try to borrow from them, they will give me a rate higher than what the say what the ticket is. But then we live in an economy, if we're gonna use the same standards, can we not now invite other ways for liquidity to flow in so we reduce the interest for our country? Because you meet all these bankers and you ask him, if people are borrowing at 18%, what is the default rate? Um, they might, I mean, they it's probably they default a lot, that's why you're charging them. They'll be like, no, our default actually went down to one percent. And you're like, so why is the interest rate so high? It's like, but then you really realize most people making decisions in Africa are treating Africa as a third-world country, which is I mean, to use loose terms, but they're even the gauge of standard how we're marking economies is benchmark. So whenever you do that, you create a mean average. When you do a mean average, there's always going to be a discrepancy. So, and the reason why a lot of people are not in the economy is because the infrastructure is not built, it's not because they cannot participate. So, when you use that equation, you will always find the majority of people do not qualify in your metric, but not because they don't fit your metric, because the infrastructure of even how you can measure this equation is not built for them to be included in the equation. So when you do that equation, you didn't factor in. Did I factor in this guy who's SME in bear but does never use formal economies? He probably uses cash mostly than anything that we've accounted for. So you're you're cutting him at 20% less than what he actually circulates. Now, when you start using this metrics, you find it it's never gonna work. But then I'm not an economist for a nation, so I don't want to interfere with what they do. But I always believe we live in a time where everything you think applies in Africa does not apply. You need to rethink it differently. This is my personal opinion. We need to rethink credit scoring to credit investing, we need to rethink payments to investing. We need to think everything that we traditionally do does not work for us. Because if it did, in the last 30 years, it would have matured to something that is you know helping people. So when new technologies appear, like blockchain, all this, we should not only we should not jump on them like without any research, but we should look at it like this. We are so behind in infrastructure, but the world is so ahead, like right. So we don't have to reinvent the world and start from scratch. It should have like, hey, what works here? How can we kind of build parallel going to find alternative routes to get here? So we don't have to start like, hey, let's go and do this. We can start slowly, but then do it like outwards, like like routes, and not like the conversion or like XY graph that you go up, especially now when we're entering a new era where productivity is going to be so different with AI and a lot of jobs are gonna be disrupted, especially in major industries that run Africa, because Africa is run by middle economies. Now, I know I'm going a lot of points, I'll land to my point, which is the way we score people's value should not be parallel to what they create, but to what opportunities they can create so we can bring more liquidity and supercharge their growth. The same way you would treat a startup model if you're a VC, you'd be like, hey, I'm gonna invest in 110x platforms, and if one of them 10x, it saves me 10% of what I've invested in. So even if I lose my money here, I'll make it back for one of them and exponentially grow. So Africa should be treated like that. So you say, look at the industries, look at the value the communities have, and then flood it with liquidity, alternative from different spaces. And I think digital assets can do this. Same way what you're doing with stocks, Washkadao can be like, hey, these groups are they come together and they pull this much liquidity together. Can we match their funds? Can we like, you know, create alternative ways for them to kind of grow how they pull money together? And that becomes a way to kind of like anchor it. So it's like, oh, your interest rate went from 16% to 2% because you have a new collateral asset that is matched with like social equity rather than you know collateral from your house or something different.

SPEAKER_00 43:32

Thanks for sharing your your perspective. It's like very, very interesting to hear to hear it and hear it in like very financial terms, which I think is is interesting. But one of the things that maybe, you know, going from maybe the more this more institutional or like kind of high level financial way of looking at things, and because what what is interesting about what you guys are doing is that you're also working on a lot of like community oriented things, really on the ground stuff. There are two projects specifically I want to kind of get you to talk about before before we run out of time. One Is Washikadao, which is one one project that I believe, like maybe you guys started quite a few years ago. You've mentioned a couple of times, and maybe just to share what exactly it is. And and then the other project is one that you're doing with Solar Foundation, with Jukumu, which is the actual saving circle project. So maybe we can get get those two out.

SPEAKER_01 44:20

Yeah, is something that I I think even the name itself came came came to us because it was it just tied in so well. So we've been working with uh community saving groups. It's not they're not new, and especially in Africa. You know, a lot of the backbone of economies is run by saving groups. My mom's been part of saving groups since I was young. She, whenever I told her, like, hey, I'm interested in doing stuff like this, she always gives me this book that uh part of the groups they're in, it's like almost they have like a thousand people in it, and they have like yearly reports, and she's like, Yeah, you should check this out. Because they never had like a platform or tech, so they use brands to move things around. So I was like, Wow, I think this needs to be digitized for the longest time. And then I came up with the concept of DAOs. This is like 2021, and people are like, hey, decentralized autonomous organizations and how they work, people can vote. I was like, okay, there's some heavy, strong principles that DAOs work on, especially with blockchain, voting and stuff like this. So you find groups already do this. Now, when we did the UBI token, we did it with Yukumu. Yukumu is a network of small entrepreneurs around Africa, especially in Tanzania. What they do, they learn, they come together, register, and work, operate as groups, and then people with the same interests are grouped in this together and they do activities together. They pull together and save money, and then you know they land among each other because the interest rate is low compared to traditional banking, like we spoke about earlier. So what we try to do with Oshikadow is create a protocol, a DeFi protocol, that can allow all these decisions to be done on chain. And when we started, this we have faced the same problems where you can't buy tokens still to this day. It's really hard to buy any digital tokens with Fiat. So that's why we built build our stablecoin. Now, one of the huge developments that happened this year and the end of last year was now we can integrate wallet as a service around this protocol that we build. So Washkanao is a place for you as a member of any group, you can come and join the platform, create an account, and we'll give you a wallet inside it where you can fund it and move money for free inside it. And then your group can you can invite your group as well. They can create a portal and then they can have a wallet, and then you can come in together, make decisions by proposing. The idea behind it is this come as yourself, join a network of community, people that are aligned and doing something together, and make decisions in how your money moves. And then you can do this by contributing to like you know, buying shares or putting a pool together, and then you can dispose that pool among each other with mechanisms that you want and decisions making that you want, and the governance happens because you can now use your wallet as testation as a proof, like hey, I'm part of this group, I've contributed, and the money can be dispished among ourselves. This is not something new, but what's what's innovating that we're bringing is the wallet aspect and the decision made peg to proposals, right? Now we let the members or groups do whatever they want with it, because at the core of it, we're just enablers of the tech and not the decisions they make. So it's like a wide label coming in with the wallet and rails for you to put money and move it. And the cool thing is we want to be big on the features we add. Ideally, is if you guys can come together and say, for the past six months, we've all contributed this amount of money, and this is the proof and trail. Can you become investable? And then see each member that came of this group has earned more than actually lost. So saving pools coming together. There's a statement you mentioned last time on our call that I really liked. It's almost like uh, what's the name? It's like stuck in the back of my head, but it's more like social enterprises having equity, so they can you can borrow against social community saving pools and not like you're treating them almost as entities, rather. You see cooperative banking become a big thing in Africa. You see cooperative banks, especially in Kenya. Some cooperative banks have huge market share, like competing with big banks. So, and this is people like groups coming together, churches, uh religious groups are really big in Africa. So churches coming together, entrepreneurs, network coming together, pulling money together. So if they have a platform that can do this, it's really about giving them the strongest feature, making it safe, making it, you know, reliable, making it a place of proof of like a source of truth. Because one of the good examples, my mother, she's part of these groups, but she doesn't even know how much their group has. She uses them because every time she gets a loan, it's approved and the interest rate are low. She just has to pay every month. But if you ask her today how much that your group has, she's like, I don't know. And quite frankly, she's like, I don't really care. So you see the trust embedded already in these groups. I think it could be a new asset class that could bring more investment opportunities and bring that work down. So that's the work we're doing with Fosh Kadav. And then from it, we got to meet the Yukumu Hub and tested it with them, and we tested the UBI talking with them. And it's been quite like you know, a learning curve for both of us. And from that, we bring like the technology learning centers, like a hub for education and to utilize these tools, and then adding resources. So my friend David met Colleen just being a part of Carmadal, and then found about what our work she does with Solar Foundation. It's like, hey, we have working with these groups with the UBI talk, and you want to like also help them in terms of like being more sustainable with energy practice. So we give away like a thousand lanterns and pressure cookers, and then build a solar panel at the hub so they never have to worry about electricity. Now we're putting a broadband network so they'll be having internet at the hub 24-7. They already do right now. Another cool thing we're about to do by June is uh learning center where people can come. And we'll have we're thinking of having 10 computers. So if you want to help us get more computers, please reach out. So, ideally, is create a center, people come learn and get certificated, get you certified and have soft skills they can use on a day-to-day base. So then in that group, they use their technology to kind of pull together, save together, but also learn. Now learning tools that they can actually use. So even if even our technology and the tools we do, they come with embedded wallets that you can actually use to grow your income. Not just a story, like, hey, come in, deposit, learn, you know, earn, cash out, see the cash in your hand. This incentivize you to come back and tell a friend. And then the idea is build trust around your network. Um, yeah, that that's kind of like two touch points on all three. So the Kumo Wash Kado and Solar Foundation are pillars that work together in helping communities actualize, you know, earnings in their community so they can individually have more income and as a group as well.

SPEAKER_00 51:03

Right. Yeah, thanks for coming, all those things. I mean, it's a lot, but it's all super, super interesting work for me. I think, you know, you know, one of my interests in the crypto space has always been how do we kind of make more available these types of community-oriented financial arrangements? And I think, at least in the context like I mean, where I've lived in the West and in Europe, in the US, where there is there, unless it except in like certain maybe immigrant communities, it's very, very it's quite rare for anyone to be engaged in any any sort of financial arrangement that's more community-oriented. I mean, it's different in different countries, of course, but it's something that I think given given the kind of context that we're living in and the kind of trends that are ongoing in the West with the rise of kind of right-wing politics and the rise of like kind of increased inequality, I think there's something really interesting to look at in places where they maybe never even had these types of like institutional finance organizations around that could like you know had very frictionless types of experiences that maybe people are kind of used to and like idolize in a certain way here. Is that actually what is going to be increasingly more important to bridge the gap for a lot of people, I think, even if they are in the West, is going to be community-oriented financial arrangements. Things like saving circles, like Rosca's, savings groups, like these are all things that I think are going to probably become potential solutions that people are going to want to look for because, or else right now, just the way that things are going and the way that things are regulated is that a lot of the money just gets extracted to the top. A lot of the wealth gets extracted to these big banks. And I think there's just going to be a certain breaking point where people are going to be looking for alternatives, more so than not just speculative crypto tokens, but actually like how do we how do we protect each other and protect ourselves and our communities so that our wealth isn't just being extracted? So um, just saying that as like uh kind of contextualization, but um, what I find super interesting about the Solar Foundation project, just to comment on that, is that you guys combined saving circles that were already being practiced in the community with like the the solar-based appliances that you mentioned, like the pressure cookers and the lanterns, which I found super interesting, and that's that's in in collaboration with with Solar Foundation. How has that project been so far?

SPEAKER_01 53:31

Quite smooth, actually, and love the work that Colleen and John are doing with Solar Foundation. They're very intuitive in like how they want it to happen, and I think they're also aware, like, hey, these communities already do things. Let's empower them by not like changing what they do, but also just like you know, building parallel with them. And I think that's quite huge, and it's been different from like experience with working with other organizations. I don't work with a lot of NGOs or organizations like that because yeah, I think everyone has sometimes people have a narrative to sell more than actual like solutions. So whenever you see people active on solutions, I really tend to gravitate towards that kind of movement. If I come with my solution, that's me, I'm solving my problem. I did not like you know understand what these people actually need. But if I use an enabler, like okay, where are the gaps? Can I put a bridge? Can I facilitate? Can I like you know, transition new, or can I help speed charge something? Like a catalyst. When we were in when in secondary school we learned this thing called Magnesium 4, it's a catalyst that speeds up the rate of a chemical reaction, but that it itself remains unchanged. And I think a lot of solutions we need right now should be catalysts, because you don't need to reinvent the wheel, but you need to either speed up or like slow it down, so you just become a catalyst that does something. So I think that's been the sweet spot with what we've done with Solar Foundation and Yukumu and the Washikadao movement, and I think that's kind of like the parallelism I'm excited for, or in the long term, you know, because it's quite dehumanizing thinking that these guys don't know what they're doing and they need better solutions. Because who told you that? Right? Yeah, I could have there's so many things I can change, but then is it really necessary to change this? Is it a problem, first of all? Like, do you need to change this? And I think this is one thing is quite too hard to grasp, especially if you're a builder, because you really want to build, you're like, oh, I see this, I want to change it, this needs to happen. You're passionate about innovation or change in communities. But then context is very important as well to understand, okay, why is it like this first? Why would people do this? Because then you might realize you are actually not solving a tech problem but a culture problem. Sometimes people use certain tools not because they're better, but because that's what's comfortable in their culture to do. Like, I don't use MPSA. My biggest problem with mobile money is not fees. So I, you know, for a regular person, tell them, like I mentioned earlier, we will when we started, we're talking about with we think about it's the fee. People are paying so much. People would rather why would you pay 14% or 16% on interest? The person who's doing this at that point, they don't care about the interest. It's like, hey, I need cash right now. I don't care how much I get it for. I just know if I press this button, I'm gonna have 10,000 shillings. How I repay it, let me worry about that when I'm in that situation. So sometimes we find like a motorcycle rider who will take a loan in the morning for 30k, gas up his bike, do some runs, you know, start earning money at the end of the day, repay it at a 14% interest. You're like, whoa, dude, you just lost 15%. It's like, yeah, I'd rather lose that than not work at all. When you solve that problem, you need to solve it from the the initial decision you made in the morning to take that loan, not because why is the loan available at 14%? Because then you realize it's it's already entrenched in convenience because it's like, hey, if I press this button, money's gonna come. Now, coming back to the community saving groups, if we say, like, okay, so that's your logic of reasoning, what if you could get a loan from your community, right? So you start pulling from that community, like, hey, this guy is part of our community, he does this particular business, he's gonna work, and then he's gonna pay us. So we have the social equity. And even if we default, we will you know most of these companies that when you when you borrow from them, they want you to pay at once. But like, dude, you have my wallet, you know you can just take a thousand shillings every day and still keep me in your ecosystem, still make your money back, and my overdraft does not have to kill me every time I repay my money. So these types of innovations is what technology should solve, not reinvent access points. Yeah, that's just my one my two comments on that, in terms of like the synergy we should bring with innovation should match what's happening, and then from there, new inventions will come. And I'm not saying that we shouldn't invent new things in the process, but then you realize amazing inventions come once the problem is really solid and clear, and there's never a lack of those in Africa or most places in the world as we see.

SPEAKER_00 58:13

Well, thank you so much, Victor, for coming on the show and sharing about the work that you guys are doing at NeedA Labs. I super appreciate it. And for the listeners, if they want, I highly recommend to check out the links and resources that I'll put in the show notes so you can learn more about uh what Victor is talking about because there's a lot more that we could have gotten into. We didn't have the time to, but yeah. Uh thanks so much, Victor.

SPEAKER_01 58:37

Thank you, Joshua. Always a pleasure talking to you. I think you're building something quite incredible with Stacks and Bread and your podcast as well. And it's quite an honor to be in the guests here. And yeah, looking forward to any collaborations we can do and maybe get Stacks to be consumed in Tanzania as well. That would be something quite, quite exciting to get to see if it rolled out out here.

SPEAKER_00 58:57

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