How would you assess the African fintech industry in relation to its global peers? Are we lagging behind or ahead of others? Where is Africa in the emerging industry?
My take is that fintech businesses in emerging markets – Africa, India and China – are front-runners in developing technology to put fintech services and products out there. And they, in my opinion, are often significantly ahead of businesses in other parts of the world. But the question is whether everything is about being ahead. My sense is that being relevant is much more important than being ahead. Let me give you an example. You might have tap-to-pay on credit cards being a highly accepted solution in many developed parts of the world. Now, tap-to-pay is not relevant in Africa today because in comparison the Internet penetration on the continent is low. Debit card penetration is also low, whereas mobile money penetration is high, especially if you compare mobile money penetration in a country like Kenya with many other parts of the world.
If you look at the number of digital money transactions in many African countries, you will find that it is very high. But it would be very low when you look at credit card and tap-to-pay solutions. I think the question really is not so much about whether we are ahead or whether they are ahead. It should be: is there a significant pace of innovation happening in Africa? I think the answer to that question is, yes. We are really being considered equal to many of our peers in many other parts of the world in terms of innovating on products and solutions that we are offering our customers today in Africa.
Do you mean Africa is doing very well and not lagging?
I am 100 per cent sure that we are not lagging.
What will you say, in particular, about Nigeria compared with other African markets?
There are very many lenses through which people look at a market. One is the market size, and I would say that Nigeria is top of the line in this regard. Another lens is how many new fintechs are coming up in a market. Here, I would say probably that the top two markets are Nigeria and Kenya, Nigeria being ahead. The third lens could be the availability of technology talent in the market. Here, I believe Nigeria stands out. So, when I think about different lenses, I think Nigeria definitely is a big player in this space. What I would wish is that the macroeconomic environment in Nigeria would be sort of better. This would make a huge difference, not just to the fintech industry but to many other industries in Nigeria.
How has the development in Nigeria shaped your products and corporate strategy over the years?
Nigeria is one of our top two markets. So, it’s a very important country for Cellulant as a business, and I think there are not too many fintechs in Africa that can claim to be very large without being significant in Nigeria. All the multi-million or billion-dollar businesses that have been created over the last three to five years in Africa have a significant presence in Nigeria. I do not think that is a coincidence. In my mind, this is a market that will continue to be of great strategic importance not only to Cellulant but also to most fintechs.
Could you tell us more about Cellulant as a leading pan-African fintech and how it has emerged as a market leader?
Cellulant is a Pan-African business, and we have licenses and are a legal entity in 18 markets across the continent. Our top six markets are: Nigeria, Ghana, Zambia, Kenya, Tanzania and Uganda. We have also recently added Egypt and South Africa to this fold. We are also reasonably large in Zimbabwe, Botswana, Gabon, DRC, Cote D’Ivoire, Cameroun and Senegal. Cellulant is one of the few businesses in Africa that have spanned two core services – Collections & Payouts. We cover the entire payment chain. The reason this is important is that we are able to provide an end-to-end payment solution for our customers. A good example of this is what we offer our customers, Bolt. Bolt collects money from its customers through credit cards, bank accounts, cash and any other means it may want to. More importantly, Bolt also needs to pay all its driver partners as it owes them a commission once a service has been provided. Cellulant facilitates both the payments for the Bolt customer and pays out to the Bolt drivers making us a very strong partner for Bolt. We are this kind of partner to several other leading companies. The second important area that we differentiate and pride ourselves in is the fact that we are a Pan-African business. Very few fintechs in Africa are legal entities or are licensed in 18 markets even when they have a market presence. We have legal entities and licenses to operate; we have Central Bank approvals and no objection certificates to operate across these markets. The third thing that differentiates us as a business is product innovation – the pace at which we are launching new products in new markets or in markets where we operate. We make the payment experience for the customers flawless.
Let us look more into Cellulant operations in different African markets. Where are your current portfolio and product offerings in these markets, including Nigeria?
Nigeria is a very big market for us. We do not offer all the services in all the markets where we are present, but we have three key products we are providing in Nigeria. Our key services include: Online checkout, which is for businesses that want their customers to make any payment online for any goods and services – it could be e-commerce goods on Jumia, a Bolt ride, a Glovo food delivery order, a hotel reservation on booking.com or an airline ticket on Emirates, Kenya Airways, Ethiopia Airlines or KLM. Those are all the goods and services that you would typically buy online, and that is part of our core services.
The second service is In-store, which means instead of paying at an online website, you make a payment at a physical store. You could do that at Chicken Republic, a fuel station, a poultry outlet, a car store or at Hotpoint which is one of the largest electronic retailer shops in East Africa. This service is extremely relevant. These are payments being made in person at a store via QR Code, USSD or even a link. That is our second largest product.
The third one is known as Payouts. There are usually two types of payouts. The first is cross-border payouts. Imagine your brother or cousin who is transferring money to you from the United Kingdom or the United States and they would use a website like TransferWise or MoneyGram to send funds to you in Nigeria, Ghana, Zambia or Tanzania. More often than not, many of these service providers would connect to Cellulant to be able to transfer the funds to a bank account or mobile money wallet in any of these markets. The second is moving funds from bank accounts to mobile money wallets. Cellulant seats in the middle connected to all these players enabling bank-to-mobile money or mobile money-to-bank transfers. This may be less relevant in the Nigerian context but more relevant where there are lots of mobile money operators such as in Ghana or in East Africa and Kenya. This is another core service that we offer our customers.
What is TINGG by Cellulant? How does it help businesses and individuals to harness the potential of the ecosystem?
TINGG is essentially a payment acceptance solution. When you walk into a store in Nigeria, it could be to book a parcel, to do some logistics services or to buy a pizza at Domino’s, you would find a TINGG banner at the checkout or the payment counter. You would be able to scan this on your mobile phone from any banking application and be able to pay the merchant directly from your phone. Without any credit card, debit card or whatever, you can pay directly from your bank account. Of course, you could also pay by debit card if you want to. But what we enable you to do is a payment through multiple channels, which means, irrespective of the bank account you have, you could pay the merchant directly from that account.
Secondly, what TINGG does for the merchant is that we can provide a whole bunch of tools. If you are a business owner who has over 200 stores of a pizza chain and each of those stores has five counters where you could go and buy, this would mean that sales are being done every day, every hour, at almost 1, 000 counters across Nigeria. This business owner would need tools that display the amount of money each counter is collecting, how much each store is collecting, how much of the money that has been collected or has come from a specific bank or credit card or mobile money, how much they owe in fees to all the people that have collected money on their behalf, how much money should be in their bank account at the end of the day among other things. We provide an end-to-end solution for the merchant or for the business owner to be able to track all of these at a single console and a single touch point, all of which are available online on the web and in an app.
So, TINGG is both a payment solution and financial management tool?
Exactly! And the next solution as we move forward is that, based on the profiles we create for some of these business owners, over time, we are launching our merchant lending solution very soon. That means we will be providing working capital in partnership with banks and financial institutions. We have access to a lot of data, and we can apply artificial intelligence tools to the data to create very accurate or reasonably accurate profiles of our customers’ creditworthiness. And based on this, each of these merchants would be assigned a score. That score would translate to what could be their credit limit. Then, we will be able to disburse these funds to these merchants, which could be for seven days, 30 days or 90 days. We are already piloting this in one of our markets. I am sure we will get to Nigeria in the next couple of months.
In the emerging competition, why would anybody subscribe to Cellulant services rather than its competitors?
The first reason is better service. By better service, I mean two things – one is the payment conversion rate, which is the rate at which transactions succeed. We have a market-leading payment transaction success rate. The second is particularly for very large enterprise customers, and it has to do with responsiveness to any problems that they may face. These are the two parameters that differentiate us. Third is that we cover the whole payment landscape. We handle both payment and collection services. Another is the pace of innovation. How quickly we innovate our products, how quickly we bring new features, how quickly we avail new solutions to our customers, our user experience etc are all what distinguish us from the rest. We pride ourselves in being the market leader. We serve top global companies including Google, Microsoft, Emirates, Kenya Airways, Ethiopia Airlines, Booking.com and many others. They trust us because of our quality of service.
Which sector of Nigeria’s economy supports the e-payment space the most?
Large enterprises are leading in the e-payments space. But then there is very big room for small and medium businesses to come into the fold. Large enterprises have, to a great degree, already adopted digital payments. If one wants to purchase a ticket on an Ethiopian Airlines or Kenyan Airways counter in Nigeria or if one goes to DHL to make payment, it is very unlikely that they will not have digital payment options on their counters. So, large enterprises have already embraced and adopted e-payments to a great extent though there is always room to improve and to offer more ways of accepting money. Small and medium businesses whether large, medium or small players still have a long way to go. The more you go down the value chain, the more you find that the level of adoption of digital payment is very low. People are still used to very significant amounts of cash although many of them have bank accounts. But the majority of the transactions at their stores are still in cash. I think this whole segment is the one that is going to lead to a very significant uplift in the e-payment growth that we are talking about going forward.
What are your thoughts about the CBN’s new policy on cash withdrawal? Looking at where we are and the history of the country’s payment system, do you agree that Nigeria is ready for this aggressive move to e-payment? Do we have the right infrastructure for this shift?
There have been directives by the Central Bank of Nigeria (CBN) to restrict cash transactions to certain limits. I think one of the things that we are seeing as a result of this is that it is pushing consumers toward digital transactions. But more importantly, for the first time, we are also seeing a level of urgency from the merchant and business owner to start accepting digital payments. Both are correlated. If consumers have a limitation on how much money they can keep in their pockets, then it imposes a limit on how much they can spend a day.
The number of merchants who may have felt they need digital support in their financial operations is increasing. They are becoming a lot more serious about accepting money through digital means, and this is going to result in significant efficiencies for the economy in the medium term. Over time, there will be more transparency, more digital transactions as well as a better ability for the government to track income revenues and cash collections.
We had a very similar situation in India some years ago where the government demonetized the existing currency. You suddenly found that the currency we had was no longer accepted. Of course, there were already payment wallets and all kinds of fintech in the market just like in Nigeria today. What we have seen in the last three or four years is that every trader on the street in India who is selling something worth five dollars or more has a QR code. What that process has done is that it has led to significantly accelerated digital payments. Today, India does the most digital payment transactions anywhere in the world, even more than China, which has a larger population.
That has shown how much adoption has happened with its population. For the Nigerian population, I believe it will impose constraints in the short term because they are used to a particular way of doing business, but the long-term benefit of this is going to transform the whole economy. Over the last ten years, Nigeria has made progress toward a cashless economy, intending to lower the rate and high cost of cash handling, expand financial inclusion, and foster transparency.
The investments made by fintech companies in developing digital payment systems have accelerated the adoption of the policy and facilitated this shift. The Central Bank of Nigeria introduced the cashless policy in Nigeria in 2011 to encourage people to conduct transactions using electronic payment methods rather than cash. CBN implemented this policy in response to the high expense of managing cash, cash-related crimes, and the restrained accessibility of conventional banking services in Nigeria. The policy encouraged using electronic channels such as automated teller machines (ATMs), point of sale (POS) terminals, mobile banking, and online banking for transactions over a particular amount.