Bolaji Akinboro & Ken Njoroge: Payment priorities
The idea was hatched in 2001, and sketched out on a paper napkin in the restaurant of the Intercontinental Hotel in Nairobi. “Actually, we didn’t set out to do payments,” says Bolaji Akinboro, co-founder of Cellulant. “We set out originally to sell music through mobile phones.”
But what he and co-founder Ken Njoroge had stumbled on was a wider problem in need of a solution. Musicians were using mobile phones to sell to audiences. The payment processors at the time were the mobile-phone companies, and they were taking an eye-watering cut.
“About 70-80% of gross value was going to a billing partner. So if we solved that problem, then we would have a business that would be attractive to other people, too,” says Njoroge. Cellulant pivoted from being a mobile-content music provider to a payments platform for music. It started doing bill payments and ultimately became a multinational fintech company.
While Kenya’s mobile-money platform M-Pesa might seem like a natural competitor, Njoroge argues that it helped create the market. “The early traction of M-Pesa validated the thesis that there was something in mobile,” he says. “It drove a lot of [our] early customers who were taking our services more out of fear than conviction.” M-Pesa’s success may also be why Cellulant focuses so relentlessly on other niches like business-to-business payments, rather than the peer-to-peer payments M-Pesa provides.
Cutting out the middlemen
One of those niches is agriculture. Cellulant partnered Nigeria’s ministry of agriculture when it rolled out a programme to distribute subsidies by mobile phone in 2012, under then agriculture minister Akinwumi Adesina. The idea was to bypass the legion of corrupt middlemen who would ensure farmers received crumbs of subsidy, rather than the whole loaf.
Millions of farmers were registered, alongside merchants, input producers and the extension workers who communicate with farmers. Subsidies are now delivered to farmers’ phones as a digital credit to be redeemed at stores.
“We had to go the whole nine yards, build the database of farmers, set up the supply chain of merchants to farmers and connect everyone on the same platform. It had never been done before,” says Akinboro. “But it was a very successful programme. All the years that Adesina was in office food prices crashed and were stable for four years. Food production started hitting 21m metric tonnes a year.” The scheme is now being taken to Liberia and Afghanistan, with Uganda, Ghana and Kenya all in the queue.
As technology changes, Cellulant is changing. “One of the properties of blockchain that is very important for Africa, not just Nigeria, is that on blockchain you cannot change the records,” says Akinboro. All the farmers eligible for the subsidy are now on a verifiable database on a particular ‘block’, the subsidy from the Nigerian government is on a block, and all the merchants, too. And because different parties – Cellulant, the government, the big private-sector companies – have access to the ledger, fraud is that much harder.
“That’s how we can move closer to the Holy Grail that they have in Europe and the US: traceability,” says Akinboro. “The reason why there is no McDonald’s in Nigeria or Ghana is for a simple reason: nobody can prove what goes into the potatoes that people are eating at the McDonald’s.” Blockchain will give a level of transparency, showing information about chemicals used and production levels, right down to the farm level.
All that verifiable data is also useful for farmers looking for finance. Everybody in the Nigerian subsidy ecosystem is now the holder of ‘smart contracts’, says Akinboro. “Before, the bank had to go and figure out who is a farmer, who is the merchant, who is the supplier, what is being produced. Now, everything on the blockchain [is a] smart contract, everything is visible to everybody, and it becomes easy for people to get a loan fast.” The first set of loans piggybacking on blockchain data provided by Cellulant are being extended this October by its partner, Letshego Microfinance Bank.
For Njoroge, “payments is basically just a piece of the infrastructure […]. It’s phenomenal in itself, but what it does is create an enabling platform for a lot of other very cool things to happen.” He points to pay-as-you-go solar power as the next growth area.
The founders’ biggest fear is, ironically, the company’s success. Especially after a huge $47.5m fundraising round in May. “We are entering a very rapid growth period – basically our goal is to begin to double, triple year-on-year from this year, and to do that is really about people, how they are organised, how they are motivated. So that really keeps me awake at night”, says Akinboro.
This article first appeared in the September 2018 print edition of The Africa Report magazine