The most exciting space in Africa to raise money at the moment is in fintech. Agtech (agricultural technology) comes second but the separation is huge. Fintech is raising money because Africa is still largely a cash-based economy, as I noted yesterday. Investors understand that the future is going to be digital, and they are pumping money into startups working to digitize African payments. Despite what we have done so far, about 98% of all consumer-to business-transactions are still cash-based in Nigeria.
According to research done by The Fletcher School and MasterCard, of the $301 billion of funds flow from consumers to businesses in Nigeria, 98 percent is still based on cash.
Yet, most firms are focusing too much on “clicks” neglecting “bricks”. If 98% of your revenue is coming from bricks today, you cannot neglect the physical. Do not listen to them when they say that today is mobile and online. Sure, the future promises mobile and online, but we have to survive today.
Do not be intimidated with the alarms on online disruption: the glory on the clicks is a promise. But “bricks” is on our hands. You are investing too much for clicks and your management is focusing largely exclusively on clicks. No one cares about the bricks. Unfortunately, the “bricks” customers are noticing. They are not happy in your stores.
So, digital payment companies have 98% of opportunities ahead to be tapped. If they can move from 2% digital payment penetration to 50% of the $301 billion, they would be earning about $4.5 billion on fees if the average commission is 3%. This explains why you are seeing foreign and local investors throwing cash on fintech companies with specific focus on payments. Yes, those companies include Paystack, Flutterwave, and just few hours ago Cellulant. Cellulant raised $47.5 million from TPG Growth fund (along with others).
The Rise Fund owned by private equity firm TPG Growth, led a $47.5 million investment in Cellulant, an African digital payments provider with operations in Kenya and Nigeria.
The deal which includes Endeavour Catalyst and Satya Capital and was announced on Monday, 14 May, is the first of its kind in Africa not just for the firm but it is the largest involving a fintech company that does business in Africa. The last time a fintech company received equity investment exceeding two digits was in 2017 when Flutterwave secured over $10 million.
“This accelerates the company’s goal of becoming the number one digital payments and financial services provider,” Bolaji Akinboro, co-founder of Cellulant and CEO of Cellulant Nigeria said on Twitter on Monday morning.
Cellulant was established in 2004 by Ken Njoroge (Kenyan) and Bolaji Akinboro. Initially, the founders focused the company in providing music and news content on mobile to consumers in Kenya and Nigeria. The company began to diversify into mobile money services in 2005. It was awarded a mobile payment license by the Central Bank of Nigerian in 2014 which helped to facilitate its partnership with the Nigerian government to supply fertiliser to farmers using a mobile wallet scheme.
Cellulant has operations in 11 countries including Ghana, Tanzania, Zambia, Zimbabwe, Uganda, Liberia, Malawi, Botswana, and Mozambique, with 94 banks and seven mobile money platforms that have a combined potential customer base of 130 million
This is just a starting point – the startups would need multiples of these amounts to scratch the sector. The challenge is really that they would have to build the foundation infrastructure since government has not provided most basic amenities. Think of offering merchant digital payments when there is no electricity and connectivity. And that is also why what they are doing is exciting: if they build these systems now, they could lockup the opportunities if everything runs on their pipelines. There is no doubt – fintech would offer Africa the first major exit in the startup world.
by Mehmood Khan, Chief Operating Officer at SAP Africa
The term ‘exponential organisation’ was first introduced in a 2014 book by the Singularity University founding director Salim Ismail and co-authors Michael Malone and Yuri van Geest. An exponential organisation is one governed by an assumption of abundance, where the typical constraints of linear organisations – for example, building more offices in new locations and equipping them with the requisite staff and facilities – are bypassed through clever use of technology that enables low organisational demands.
Airbnb is a typical exponential organisation: instead of establishing new locations for guest houses and hotels, building and equipping those locations, maintaining the properties, and sourcing and retaining staff, Airbnb accumulates listings around the world without incurring the capital expenditure to which most hotel groups are subject, leveraging technology to deliver a seamless and enjoyable customer experience that is often largely self-governable.
The DNA of exponential organisations
What nearly all exponential organisations have in common is a digitised supply chain that enables rapid scaling and frictionless customer experiences, often across global markets. They make use of technological innovations to compete on even footing with even the largest organisations, and then leverage an abundance mindset to move faster and more effectively than their bigger competitors.
Essentially, an exponential organisation is structured in such a way that they are able to fully realise the benefits of the digital economy. And within this, the COO plays a critical, often unseen role in ensuring the organisational building blocks are in place to enable the realisation of the exponential organisation.
In an EY study, half of the global COOs polled were closely engaged in discussing the role that operations can play in business transformation, with 57% seeing this as a fundamental part of creating organisational value. This is key to shifting the role of the COO from a largely operational one to a more strategic one.
The COO balancing act
Since the COO controls how organisational resources are allocated and prioritised, he or she must ensure that such resources are in the right place at the right time to enable the effective execution of exponential organisational strategy. However, in the same EY study, only half of COOs polled had identified opportunities to get operations involved with strategic decision-making. This creates a dilemma for the COO: their function within the organisation demands a firm focus on current demands, while their longer-term and arguably greater impact rests firmly in the future.
Technology has a critical role to play in enabling the COO to execute on broader strategy initiatives that can take a linear organisation – one focused on exploiting vertical market dominance – to an exponential one. Predictive analytics, for example, can combine sensor-based data with machine learning and AI capability to equip COOs with live insights into the current performance of the digitised supply chain. This frees up some of the COO’s time to focus on the more high-yield strategic initiatives that will ensure the organisation’s long-term competitiveness and sustainability.
A to-do list for the exponential COO
A recent IDC infographic pointed to the top five business priorities for executives right now, including reducing external supplier costs, outperforming the competition, improving security (necessitated by increased connectivity), regulatory compliance, and improved customer service. However, the priorities are going to shift greatly over the next few years, with one key priority falling straight in the ambit of the COO: improving adaptability and flexibility of the supply chain.
The fundamental role of the traditional COO is to ensure that operations quality, efficiency and customer services are improved and optimised through their interventions. In a digital economy, I would argue there is a new dimension fundamental to the effective functioning of the COO: removing friction within the organisational value chain by effecting a digital supply chain. Customer demands for personalised service and individualised products means organisations need to be highly responsive to individual needs and desires. The growing complexity of doing business also requires technological intervention to ensure COOs are not left treading water, endlessly dealing with current problems and challenges and losing sight of the longer-term strategic value that will elevate the business.
COOs can start laying the foundation of a future exponential organisation now by focusing on five key actions, namely:
1. Improved customer centricity;
2. Investment in smart automation;
3. Enabling predictive business decision-making;
4. Ensuring total visibility across all lines-of-business; and
5. Leveraging a digital innovation platform powered by IoT, blockchain, AI, machine learning and analytics, to enable secure process automation, better decision-making, and faster and more accurate responses to customer demands.
Nigeria runs on cash. For many years, the government has been working hard to make it credit-based. The Cashless Policy which encourages electronic transactions and the BVN (Bank Verification Number) policy which links biometrics with bank account numbers are some initiatives government has used to drive this redesign [electronic transactions have records which can be used to anchor credit-based systems]. Through Nigeria Inter-Bank Settlement System (NIBSS), the financial institution can build a good chart of any Nigerian banking customer through its BVN. When you add NIMC (National Identity Management Commission) Identity Number to it, you have a new dawn.
Yet, it is possible that the new dawn will come from fintech, not necessarily banking institutions, because the BVN is not open, with no structure at the moment to anchor any service beyond validating account ownership. The fintechs have to use alternative means to drive this new age in the economy.
In a copyright-free piece in APO newsletter, Oradian made this observation which I have adapted.
More than 2.5 billion people around the world – many of them in Africa – lack formal identification that enables them to access financial and government services, according to the United Nations and the ID2020 project. What’s more, less than 10% of adults in low and middle-income countries are on file in public credit registries.
The result is that millions of people in Africa are paying punitive interest rates for credit or are frozen out of access to financial services. Microfinance institutions (MFIs) in the region charge their borrowers notoriously high interest rates, often up to 30% per year. This is partly because these lenders face a higher risk of loan defaults than mainstream banks due to a lack of borrower data to support lending decisions.
MFIs in frontier markets have traditionally needed to make lending decisions without access to the sort of customer data and documentation commercial banks take for granted: credit scores, identification documents such as passports or government ID cards, bank statements, lending history and collateral.
Fintech providers, financial inclusion companies and digital finance applications are filling this information gap with alternative credit data. Credit scoring applications collect masses of data about phone owners and use these data points to produce accurate credit scores.
This alternative credit data could help the credit officers at microfinance banks (MFBs) and MFIs who make lending decisions to make more accurate predictions about loan performance. This could, in turn, help improve collection rates and profitability for institutions and make credit more affordable for lower-risk customers.
With smartphone ownership in Africa rising as the average selling price falls, an unprecedented amount of credit data is expected to become available in the years to come.
This is certainly a huge opportunity when combined with BVN in Nigeria.
While it is vital to innovate, it is also important that Nigeria makes sure that the privacy and security of citizens’ data are protected by all the players in the credit scoring business. I have noted how such a system can be built in the nation.
The alignment of the interests of the banks, credit bureaus and citizens will be catalytic in establishing a functioning credit ecosystem in Nigeria. This is not included in the current CBN’s guidelines for establishing credit bureaus in Nigeria. We cannot do it the way the Americans have done it. We need a system that provides a citizen element so that credit bureaus have clear incentives to deliver good services. You cannot be selling people’s data and yet have no incentives to serve the people and protect their data. With this proposed model, the oligopolistic system that runs in the credit bureau industry will be dismantled in the Nigerian model. The outcome will be a virtuoso credit bureau system that secures customers data as it serves its core customers, the banks.
According to Premium Times, WAEC has started registration of private candidates.
According to the statement, registration starts May 14 and ends July 6, 2018.
The statement said the registration procedure has been designed to accommodate biometric features that will be used for validation at the examination centre.
“After obtaining the registration pin, candidates should log on to www.waeconline.org,” it said.
The council also said there is provision for “walk –in” candidates and candidates with special needs.
“Walk –in candidates, who wish to write the examination after the close of entries may be accommodated provided they register less than 24 hours to the scheduled time of the paper they intend to write . The walk-in candidates fee is 25000 only,” the statement said.