“I do not think anyone in Nigeria needs persuading of the need for urgent action on the environment. Desertification in the north, floods in ... the centre, pollution and erosion on the coast are enough evidence. For Nigeria, climate change is not about the perils of tomorrow, but what is happening today,” President Muhammadu Buhari said during the UN Climate Change Conference (COP26) in October. And today means Nigerians are finding it increasingly hard to afford basic food items.
Cellulant plans to start operations in Ethiopia early next year, initially in Addis Ababa with a view to wider expansion, Grover says from Nairobi. He took over as Cellulant CEO on 1 October after previously holding the job on an acting basis.
Ethiopia offers an “interesting mix” of opportunities in offline and small-business payments, Grover says. One aim is to provide in-store payment solutions for retailers. “The number of small merchants in Ethiopia is very large,” Grover says. “We want to focus on this part of the business.”
Competition in Africa’s payments industry has focused on online payments, leaving an attractive, underserved offline market, Grover argues.
Ethiopia’s levels of financial inclusion are among the lowest in the world. According to a paper from the Centre for Global Development (CGD) in Washington in July, the use of cash payments in Ethiopia is well above the sub-Saharan average. In 2019-2020, only 15.8% of the adult population had a mobile-money account, the CGD says.
The dominance of public enterprises, Ethio Telecom and the Commercial Bank of Ethiopia, as well as high digital infrastructure costs, has kept the prices of digital payment services high, the CGD paper argues. Digital payments suffer from a “flawed market structure” partly because the government has “a marked interest in keeping control of the telecommunications sector for both economic and political reasons”.
“Unless these institutional binding constraints are removed, digital payment services in Ethiopia, and digital financial services more generally, will hit a very short ceiling,” the CGD says.
- Cellulant has rolled out its in-store payments solution in six of its African markets, Grover says.
- The company is in the process of meeting Ethiopian government requirements but does not need a specific license for entry, he adds.
- Small businesses will be able to onboard themselves online for Cellulant services.
- The company also plans to offer overseas remittance services in Ethiopia.
Cellulant, set up in 2004, operates an electronic-payments gateway via its app and website for individuals and businesses to process transactions. The company is still focusing on the digital side of its business. In Ghana, Cellulant wants to partner with the government, banks and insurers to enable digital payments for utility and other services.
In September, the company entered a five-year partnership with the Kenya Trade Network Agency, Ecobank and GAINDE 2000 to provide a payment solution for trade, revenue and tax collection for governments and multinationals.
In March, Grover said that Cellulant was likely to seek to raise about $150m in the first quarter of 2022 to fund its expansion. Those plans remain unchanged, he says.
Cellulant has a presence in 18 countries and services customers in 33. Entering Ethiopia is part of a broad expansion into eight new markets, also including Morocco, Egypt, South Africa, Senegal and the Democratic Republic of Congo.
Grover says Cellulant will seek to deepen its presence in its existing markets before expanding further. “We feel we’ve got our hands full.”
Cellulant is betting that in countries where digital payments remain underdeveloped, offline payments offer a faster route to growth.
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