Hey crew, here’s to another week of cutting through the noise and focusing on what actually moves financial minds forward.

Just the stuff affecting wallets, business & the economy:

🦜 Brazil Accidentally Created The Modern BNPL Movement

📈 We Lost Our Stock Table

💰 Pezana: Family Is Part Of The Budget

Here’s to the 128th weekly edition

Let’s dive in.

Skip the joga bonito, the São Paulo carnival and Capoeira fighting styles which made Brazil the famous Latin America country that it is today and you’ll be surprised to know that it also Samba danced its way into financial history 💃

Dating back to the 1950s, Brazil had (unknowingly) created the modern Buy Now, Pay Later (BNPL) movement purely out of economic necessity.

For those of you just joining us on this ፍራንክ Digest journey, we have covered BNPL quite extensively in our earlier issues.

But we can spare another line to give you a quick definition…BNPL is a short-term installment payment method that lets you split retail purchases into smaller equal installments rather than paying the full cost upfront.

The origin story is simple: Brazilian shoppers were cash strapped (High inflation and limited savings) and delaying payments were a form form of relief at the check out counter.

Although the phenomenon we’re explaining is not exactly the BNPL we all know, it does bare a lot of similarities, which at the heart can help us understand the underlying principal of that caused it.

Klarna, Affirm, Afterpay are very well know BNPL platforms that have succeeded in the US and Europe.

But they have yet to establish themselves in a country with over 213M people (Sitting at number 7 from the rest of the world).

And what does this say about market penetration?

Well, despite the concept being already established, consumer behavior is unpredictable and a simple plug and play message in Portuguese with localized commercials does not necessarily win over future customers.

But when you think about it, Ethiopia has had a somehow similar method to accommodate strapped buyers…one that has been around for ages.

Think of your neighborhood ሸምሱ that lets you buy on credit, adding another line item next to your name in his SinArLine notebook as soon as you turn your back and walk to your house.

He knows you live nearby, he knows your buying habits and frequency and he can step in if your debt balance is too high (‘No more new purchases for you until you settle your bill!’)

That’s his credit scoring engine.

In essence, this is more of a store credit but it does in effect has the same effect as the BNPL model which is delaying debt obligations.

BNPL has had a bad reputation over the years mainly due to the fact that it encourages overspending and hides enormous debt that could get out of hand.

Part of that is true.

But then again, those studies were made in very mature markets where other alternative forms of credit already exist like credit cards for example.

When we look at a country like Brazil, the narrative is very different. BNPL is not a trap but a financial inclusion tool.

Reduce the burden to buyers and open up new opportunities to sellers.

The model lives in a different form in Ethiopia: small purchases, tight monitoring but flexible payment terms…

All build on trust by the way.

Now imagine building a financial ecosystem that takes the concept from ሸምሱ’s souk to car dealerships: bigger purchase, bigger risk and yet better control.

The extension of credit is real, question is, can Ethiopia build the much needed infrastructure?

In light of the capital markets getting traction, we had started to show you a glimpse of what the market was doing.

The stock table showed you the listed companies, their market prices and how they fared compared to the day before.

Well, that will no longer available as our newsletter custodian (And we love beehiiv, don’t get us wrong), decided that HTML snippets, which was the feature that we used to display those impressive numbers to you, belonged in a higher subscription tier.

This is not a setback but rather a challenge.

As we temporarily say goodbye to our beloved table (This is not a goodbye princess, rather a see you later), the future is still bright.

ፍራንክ will still deliver fresh news on how the market is doing, updating you about new listings, big movers, not so big movers and any other relevant activity.

Happy reading!

There’s a new app on the block, making daring Instagram posts, challenging spending hobbyists and asking the question that everyone is wondering about:

Where is my money going?

Well, Pezana is the name and budgeting is the game.

Sorry, rhyming is not part of our job description but there is the poet in us that wants to impress you…

Pezana has been up for a few months now so we thought we’d give it a try.

At first glance, the UI looks great.

The onboarding is not bad and the built in mechanisms to pick up on our transactions is honorable.

The app is structured in such a way that it reads your financial notifications (Bank account & wallet activity)

So whenever CBE sends you the very comforting “Dear customer, your account has been debited by ETB 6 for purchase at Kebebush Gulit PLC”, Pezana has its ears open, marking down the amount and updating your overall balance across the board.

But all of this is quite a tricky endeavor. And this comes from personal experience.

ፍራንክ Money was our attempt at a personal finance app (Cat’s out the bag now 😉)

No interoperability with financial institution forced us to be clever and find a work around which was listening to SMS messages (your consent is requested when you download the app)

Pezana has taken the same approach.

But uncontrollable factors are already creeping in.

On some of the tests that we’ve done, the overall balance was incorrect.

This we presume is mainly due to the inconsistencies of texts we receive from our banks.

Another culprit we presume is the app not recognizing that transfers between your own accounts, which are a net zero movement and not spend nor a credit.

Push notifications also need some work, it’s part of the appeal of budgeting apps.

It’s there to alert you before you make a bad financial decision (streaks, goals, unusually large purchases etc. can be categorized as notifications)

Mind you, this is great progress.

We love solutions like these.

The more the better.

With prices going crazy and managing multiple mobile banking apps becoming more of a burden, finding your true financial self is

The app is currently available only for Android users since Apple’s privacy policies prohibit the reading of SMS messages…even with consent built in.

Overall, the value proposition is great.

Our budget conscience readers will truly appreciate an app that shields them from their bad habits.

As for Pezana, it will surely take the next steps in improving the smalls quirks.

And if the NBE decides to put on big boy pants and deploy a protocol for interoperability, the work arounds will disappear.

User growth will be the next priority. As the only player in the game, it shouldn’t be that hard.

And if the goal is to have an actual business, money needs to be made.

But the irony would be to pay for an app that saves you money. Rocket Money has done it, why not Pezana then?