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How Dare Okoudjou Turned His Pains Into Largest Digital Payment Company
How Dare Okoudjou Turned His Pains Into Africa’s Largest Digital Payment Company
His name may not ring a bell in certain quarters, but Dare Okoudjou is well known in the e-Payment world as a revolutionary. He is the founder and CEO of MFS Africa, a leading Pan-African fintech company operating the largest digital payments hub on the continent.
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How MFS Africa started
At 18, Dare, in a bid to obtain a better education, left his parents back in Port-Novo, Benin Republic, and travelled abroad. But life in a foreign land was not quite what he expected because the sudden weather and cultural change were a constant battle.
Dare kept in touch with his family by calling and sometimes helping out with some cash. Over time, the process of calling home significantly improved, but the same could not be said of money transfers.
So every time Dare wanted to make remittances to Port-Novo, it was an uphill task.
The challenge was not exclusive to Dare; it was a common problem for millions of African-born diaspora citizens.
But where others saw problems, Dare saw solutions. In 2010, he decided that instead of just complaining about the situation and doing nothing about it, he could become the solution provider. That led to the establishment of MFS Africa, a pan-African payment company.
Funding
Like most startups, MFS Africa had to rely on angel investors for its take-off. The company built a brandnew network that connected disparate mobile network operators and then experimented with using mobile money for insurance, loans, and other financial products to solve development challenges.
Struggled to pay salaries
If Dare thought starting a company would be easy, he was confronted with reality very early after the initial funding was exhausted.
The liquidity problems exposed him to hazards that pushed the company to the brink of bankruptcy. Dare struggled to fulfil essential obligations like salary payments and utilities. The electricity at home was cut off as a result.
“To survive, we needed to focus on scaling the MFS Africa hub, narrow down our use cases to those that were simple and scalable, and find investors. Despite this pressure, I was hard-nosed about getting into the right partnerships with credible partners,” Dare explained. Amidst his trouble, MFS Africa turned down an opportunity to be acquired. This could have provided the much-needed liquidity, but Dare said he didn’t think it was the right decision for the company’s future.
“I decided that this move was simply not right for the direction of the company at that time. I made this decision with less than two weeks’ worth of cash left in our account. The two weeks following the decision required a lot of determination, as we urgently needed to secure additional funding from a different source,” he recalled.
Partnership with Vodafone
It turned out that the decision to reject the acquisition proposal was the best because shortly after that, Vodafone came into the picture and offered to partner with MFS Africa.
Dare said it was a great moment for the company. According to him, the partnership radically improved the business profile and credibility of the young company as well as accelerated growth.
MFS Africa Growth
After the initial struggles, MFS Africa has enjoyed solid growth. By 2020, ten years after it was launched, the company’s operations cover 35 countries, with more than 80 partners connected and over 200 million mobile money recipients covered.
e-Payment industry in Africa
The e-payment industry in Africa is a fast-growing wealth creation space for young African tech-minded professionals like Dare.
In the last few decades, many young Africans, some of whom acquired education in top universities abroad, have set up multi-million dollar e-Payment platforms and created thousands of jobs.
In a recent report, the electronic payment segment on the continent is expected to sustain the growth of 18 to 20 per cent per annum until 2025, reaching $27 billion, up from $8 billion in 2018.
And according to the World Economic Forum, two of the countries driving the fast growth are Kenya and Nigeria. This reality is why Dare is optimistic about a much brighter future for the African digital payment industry.
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How Peter Njonjo’s Failure in Banana Export Business Led to the Establishment of Multi-million Dollar Twiga Foods
According to reports, consumers in America spend just over 6.2% of their disposable income on food, while in the European Union, it is between 13%. But here in Africa, the average household budget for food is between 50% to 60% of their disposable income.
This has put a lot of pressure on African consumers to earn more to satisfy their basic needs. Sadly, while food production is a big problem on the continent, the lack of an efficient supply chain mechanism is the bigger problem. The result is that a lot of what is produced on farms across the continent ends up being wasted, and the ones that make it to the market attract a high price tag.
Peter Njonjo Business Failure
This realisation gave birth to what is now known as Twiga Foods in Kenya, a B2B food distribution company using technology to simplify the supply chain between fresh food producers, FMCG manufacturers and retailers, and cutting out many intermediaries that contribute to the high cost of food.
Twiga is one of the few African tech startups that have secured the best funding. In
2017, it raised US$10.3 million in Series A funding. The startup got an additional US$10 million in 2018, US$34.75 million in 2019, US$29.4 million in 2020 and US$50 million Series C round in 2021.
Explaining how the company was formed some years ago, Peter Njonjo, a former Coca-Cola executive, said it was at a point he decided to venture into banana export to the Middle East. His feasibility studies showed a huge export market for bananas in the Middle East.
After making the initial contacts and making orders for the banana in preparation for export, Peter and his business partner Grant Brooke encountered a major problem which led to the failure of the business.
“We thought it would be very easy to put everything together, but sadly, we couldn’t export a single container,” Peter recounts. The pair found the local food industry lacking. The farmers couldn’t offer any traceability, there was no recordkeeping, and agricultural practices were substandard – if they were present at all.
“Everything was super informal. People didn’t even know the types of varieties they were growing,” Peter says. Confronted with this reality and burdened with seemingly worthless stock, a decision was made to pivot,” he explained in disappointment.
Fragmented Retail Food Market in Africa
retail market was so badly fragmented; this retail fragmentation made the food selling business more clumsy and less profitable.
To put this in proper perspective, the entire Europe food market is controlled by about ten big retailers. But in a city like Nairobi, one could count no less than 180 retailers.
Realistically, this led to a lot of inefficiencies in the supply chain architecture and, of course, massive wastage.
Another important discovery that the partners made was that by cutting off the wholesale market, they significantly increased their chances of making a profit from the sales of the bananas. So rather than recording losses, they actually made a profit. It was a major eye-opening moment for them.
How Twiga Foods was founded
This discovery was indeed the beginning of a new journey. “I couldn’t believe that the pricing at retail was higher than the wholesale market to the point that by bypassing wholesale, we could sell at a profit,” he explains.
“That’s what led us to understand why Africans in urban cities are spending a fortune on food in this day and age.” This realisation also led to the formation of Twiga Foods, a business-to-business food distribution platform based in Kenya.
Socio-economic changes start with food
Encountering disappointment was a frustrating experience for Peter and Grant, but they did not allow their experience to stop them; rather it became a springboard for success.
Seeing they could no longer export the loads of bananas they ordered, the duo decided to sell the products in the local markets from the boots of their cars in a bid to cut their losses.
In the course of doing that, they were confronted with another problem - the Twiga Foods aims to organise the supply chain in Africa’s food industry to align with global best prices and ensure affordable prices for consumers. This is done by sourcing fresh foods from the farmers and delivering them directly to the retail market at a fair price.
Peter’s conviction about his line of business is rooted in the fact that the greater social and economic changes in Africa begin with food.
Partnership with Goldman Sach
For several years, Twiga Foods has stayed focused on its objectives of providing fresh foods to households in Kenya and growth has come as a result. Every month the company serves 50,000 retailers.
The company, which now boasts 700 employees, supports over 800 farmers. “That’s a testament that we’ve managed to find a model that works in terms of recruiting and retaining customers,” he says.
Twiga has also signed major partnership deals with global brands like Backers and Goldman Sach to the tune of $60million.
Experts believe that if the company sustains its growth projection, it is on track for a $1 billion valuation in 2025.
