Sprawling across the African continent’s rural regions from Cape Town to Zambia, Mike Quinn’s legion of 750 agents and “tellers” are operating as virtual banks, delivering mobile money transfers and transactions to thousands of rising Africa’s new consumers from their branded booths and small retail stores.
His international venture, Zoona, has become a sensation in his new home South Africa, where the company has dozens of employees working out of a head office in Cape Town, servicing a swelling number of workers who need a place to store their cash during an era of robust economic growth.
From Morocco to Kenya and from Malawi to Mozambique, Africa is enjoying a period of promising expansion that has survived war, dictatorship and famine.
For Mike, CEO, business has been booming since he left the UK six years ago after an MBA program at Oxford’s Saïd Business School. The entrepreneur has been tapping into the continent’s rise and has been helping to drive an internet revolution spurred by low-cost handsets in tech-savvy southern African countries such as Zambia and Malawi. “The stars have aligned for me several times,” he says.
Mike’s venture signs up Zoona agents who sell services on the company’s mobile money transfer platform to the majority of the regions’ adults whom have never owned a bank account, and for whom moving cash physically is a risky burden. “People still need to move money around,” he says.
Zoona, founded in 2009, has grown to have 700,000 consumers that send and receive $30 million in money transfers each month. It has received $5 million in funding from investors including Omidyar Network, Accion Frontier Investment and Deutsche Bank Foundation, and became the first start-up in Zambia to raise a series A venture capital round from international investors.
The company is generating revenues of more than $800,000 per month, growing 240% a year with a gross margin of 97%, Mike says.
Zoona’s vision is to build a global business that enables thousands of emerging entrepreneurs to make money and serve their communities by helping people send and receive money on demand. “Suddenly anyone with a mobile phone and a bit of cash float can essentially operate as a bank machine,” Mike says. He’s one of a talented crop of new MBA graduates who are entering Africa’s emerging economies for business opportunity but also to improve the prospects of its citizens.
He is not the only one to seek a new fortune in the sub-Saharan region. The African Development Bank estimates that this year the continent will attract nearly $85 billion in foreign inflows, surpassing the 2013 peak and setting a new record.
This surge of capital from funds, multinational conglomerates as well as big global banks including Barclays and Citigroup is moving steadily away the traditional area of investment in natural resources, and is being poured into services and manufacturing.
It is helping to spur a new breed of entrepreneurs among Africa’s young population, many of whom despite robust economic growth cannot find jobs. African gross domestic product per capita has surged almost 40% since 2002 – but growth remains unequal and poverty and unemployment are on the rise.
“They are deploying their talents to improve the condition of the communities in which they work, and are opening up new market opportunities for other entrepreneurs to pursue their dreams,” says Dr Pamela Hartigan, director of Oxford’s Skoll Centre, which funds individuals like Mike with social goals to pursue business education.
This is a problem that Janet Bollo, an African entrepreneur who studied in the UK, is keen to see mended. She hopes that young people can contribute to the development of Africa’s countries through entrepreneurial ventures or by working meaningful jobs. “Employment opportunities are not available for every person and entrepreneurship is the key to bridge the gap,” says Janet.
She’s an MBA graduate of Aston Business School who spent five years working for professional services firm Deloitte in Tanzania and Kenya but who plans to use her newly acquired management skills to run a social enterprise in the latter.
Her venture, Step Up Social Enterprise, seeks to deal with the youth unemployment dilemma in the east African country by providing entrepreneurial and leadership skills training for local youths. Janet is in the process of registering the social enterprise with a partner who is based in Kenya and has started working on small consulting projects to raise funds.
“What they need are the skills and habits necessary to succeed in the modern economy, and the opportunity to make use of them,” she says. Janet sees a young population of entrepreneurs as a key source of career growth at a time when domestic unrest is on the rise.
This is a problem that some social entrepreneurs, who are being nurtured at western business schools, are keen to solve. It is not just Kenya that has high levels of unemployment. Nigeria, Africa’s largest economy, has seen its unemployment rate rise from about 15% to 24% in eight years, according to the IMF.
“More jobs need to be created and it is upon the entrepreneurs to create these jobs by offering products and services,” says Janet.
It explains why a host of the world’s highest-ranking business schools have set-up campuses in sub-Saharan Africa. By enhancing their skill sets with education, the thinking is that the continent’s citizens will be better equipped to compete for the limited amount of jobs on offer.
“There is so much more to do but I believe entrepreneurship is a huge part of the solution,” says Mike. He says that Zoona is trying to prove that you can build a business in Africa that generates returns for investors but that also has a positive social impact. By funding his business, investors are also helping to drive Africa’s widespread adoption of technology.
Swedish telecoms group Ericsson forecasts that the number of mobile subscriptions in sub-Saharan Africa will rise from 635 million at the end of 2014 to about 930 million by the end of 2019. Zoona is not the only company trying to tap into this expected growth. Vodafone launched the M-Pesa mobile money transfer system in the region in 2009 and it has grown to have more than 15 million customers.
But Mike says his company is different. Zoona’s business model is betting on consumers to prefer transacting at a kiosk as opposed to doing it themselves on a mobile phone, cutting out the need to buy a handset altogether and potentially opening up a wider customer base. “The market will shift towards people using mobile wallets to store value like [it is happening] in Kenya, but we think that’s a lot further away in most places,” he says.
Most of the company’s revenue comes from Zambia but he plans to “expand rapidly” in 2015.
This technological innovation is helping to drive an entrepreneurial trend that crosses borders. Start-up hubs are emerging in east Africa as governments take steps to cultivate entrepreneurship with improved access to training and funding. “We believe that this is a step in the right direction,” says Janet, who adds that she has seen an entrepreneurial community begin to emerge in Kenya.
Global Entrepreneurship Monitor figures published earlier this year show that sub-Saharan Africa is the region with by far the highest number of people involved in early-stage entrepreneurial activity. There are also a bevy of start-up accelerators emerging in east Africa including the Savannah Fund, which has invested $8 million in early-stage tech companies, and 88mph which aims to raise a $200 million fund to help SMEs.
For Mike in Cape Town, investment was hard to come by. He had to convince a fund to pay for his initial plane ticket to Zambia, and he borrowed $100,000 from his parents after they mortgaged their retirement home to lend him start-up cash. “It is still far too difficult to attract investment and we were lucky,” he says.
But he adds that the MBA gave him credibility and has helped him to open doors. “[It] gave me the confidence to take a huge risk and move to Africa in search of entrepreneurial opportunities.” That risk, however, is already paying dividends.