ZOONA
ZOONA
Driving An African
Financial Revolution
PRODUCTION: Timothy Reeder
Zoona is a mobile payment company which exists to make communities thrive, providing essential financial services and earning the trust of over one and a half million consumers who have transacted over $1 billion through its agents.
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Zambia-based Zoona was founded in 2009 by the Magrath brothers, Brad and Brett, and unlike most other similar companies, Zoona is neither owned by a bank nor by a telecommunications company; rather, the company competes with bigger firms in the space by making its services available in key places and retaining customers due to its reliability. “People can send and receive money using an agent network - essentially kiosks all across the country - without the need of an account; they can just walk up with cash which the receiver can then just withdraw from another kiosk,” explains CEO Mike Quinn, before giving us a potted history of Zoona and its subsequent rapid rise and expansion. “Brad and Brett [Magrath] are the two founders, so they were behind the creation of the business at the outset. I joined in 2009 along with Keith Davies, who followed perhaps a year later, so this comprised the original management team of four. We then raised a Series A equity round in 2012, which resulted in our bringing in the Omidyar Network, a Silicon Valley-based investor capitalised by the private wealth of Pierre Omidyar - the eBay founder. “The other of these equity investors was a group called Quona Capital,
ZOONA CEO MIKE QUINN
ZOONA
which is a Washington DC-based Fintech investor. We also converted a loan from the Mennonite Economic Development Association (MEDA), who still owns some shares, and then took in Angel Investments from the former Chief Financial Officer of Google, Patrick Pichette. “This all formed our Series A round, which provided us with $4 million, and more recently we also closed our Series B round - just last year. This enabled us to raise another $15 million of equity, in which our existing shareholders all participated and were also joined by several others. We brought on board: The International Finance Corporation (IFC), which is the private investment arm of the World Bank, for one, and also the Lundeen Foundation, which makes both for-profit and non-profit investments on behalf of the Lundeen family and its $13 billion oil and gas and mining empire.” This gives the company its present
structure, as Quinn details. “This means that the original band of four of us are still centrally involved, with somewhere in the region of a 26% combined stake, and we have also set up a 14% stock option pool to allow each of our employees to also have some ownership of the business. All of the investors then make up the remainder.” Quinn’s own path to Zoona is punctuated with a number of landmark events, and has included extensive work across the continent. “I joined a Canadian start-up NGO at the time called Engineers Without Borders, and was sent to Ghana to work for a year on a small-scale agriculture project. I had never been to Africa, but then signed up for a second placement with them in Zambia where I spent a further year and a half again primarily in agriculture. “I have always been interested in how economies develop, and how to
bridge the gap between the rich and the poor, and I knew I wanted to be an entrepreneur. The third of my criteria was to do something that would have a major impact in Africa - that was not simply profit-driven. I convinced an investment fund to buy me a plane ticket to Zambia to source deals and entrepreneurs in whom they could invest - people who were changing their communities, and on the first day of this consulting contract I met Brad and Brett. They were just starting Zoona at that point, with a vision of building a payments company that could achieve the dream of a cashless Africa through digitising and driving electronic payments.” Since the trials of Zoona’s early days “we ran out of cash for three years all the time; we just bootstrapped it for three years,” laughs Quinn - the growth of the company has been remarkable. “We now have operations in Zambia, Malawi and
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INDUSTRY FOCUS: FINANCE
Mozambique. This is backed by a planned pilot for the DRC with a partner we are approaching there. We have around 1.7 million active customers right now and process over $50 million per month in payment value, and are growing at a rate of nearly 40% year-on-year and trying to accelerate that growth. “We feel that we are capable of achieving 100% growth year-on-year,” Quinn states, “as this is the current growth rate of our transactions. If we can get moving in some of these new countries and the new products pick up then we think we can accelerate it quite a lot further to hit a real growth phase. “We currently have around 2200 agents, and this figure is growing at somewhere near 150 per month. We have concentrated on agent quality instead of the sheer number, and have found it more important to ensure that the agents are in the right places with the correct personnel and behaviours to suit what we do. We have controlled the growth of agents to assure a good quality of supply of them,
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and we are now accelerating on this base. We are up to 1600 in Zambia, 500 in Malawi and 100 in Mozambique with it still in its pilot phase. We are aiming to hit 3000 by the end of this year and this looks fully attainable.” As part of this growth, Zoona drives what it calls ‘The Girl Effect,’ specifically targeting young women with no formal business experience and supporting their transformation from job-seekers to thriving business owners. There has never been a better time to come on board with the company, as Quinn takes us through how its business continues to burgeon. “We are diversifying in two ways in what we do; on the market side we already have Zambia and Malawi as our core markets, but what is changing is that these are now bolstered newly by the presence in Mozambique and the DRC. “On the product side, we are moving from what was for many years primarily simply a money transfer product designed to help people move money within the country. Now, we have a savings product,
our agents do Airtime and bill payments, while we too are launching a mobile wallet and even starting to explore a credit offering. We pay out international remittances from South Africa, and soon to be globally, so the product side is diversifying significantly too.” This new addition to the Zoona line is going to be vital to attaining the goals the company’s four key players set themselves. “Right now, we are paying out the equivalent of $300,000 over day in remittances from South Africa into Malawi, and we will be expanding this to include remittances into Zambia very shortly as well to increase value. A lot of transactions, and therefore a lot of money, are moving around at this time; people are paying their bills, buying Airtime, receiving salaries; farmers are receiving payments for their crops and subsidy vouchers. We see a lot of opportunity to further grow both the number and value of transactions.” Zoona is in a prime position to profit from what Quinn sees as a field rife with scope for its further
ZOONA
domination. “We are very much needdriven in our service offering. The population of Africa is young, unbanked and underserved, and we think that there is a huge market opportunity for financial services and products and the ability to use agents to provide access to them. This will create employment and entrepreneurship that can make a huge and long-lasting impact in a lot of these places, and really build a new type of financial institution for the future. “The banks have had their shot for the last 100 plus years,” he continues, “and the majority of the population remains unbanked, so in that sense they have failed to penetrate the mass markets and small businesses as we are positioned to do. Those that have achieved this penetration are the likes of MTN with their Mobile Money product, but the core products of companies like it also revolves around Airtime and, increasingly, data, and they are huge multinationals that do not have a focus on financial inclusion
or innovating with their services quickly as we can. “We are trying to show that an independent start-up can fill a badly needed gap in between those two major entities of banks and TelCos, with a core business that helps communities thrive through providing financial services and products, and equally enable entrepreneurs to build these agent networks that can create jobs and deliver services to their communities.” Mike Quinn finishes by laying out for us the three aspects of Zoona’s business that are most pivotal to keeping it ahead of the rest. “Firstly, our culture and ethos is centred around entrepreneurship, not prioritising profit over purpose or the reverse; it is a combination of the two, which allows us to attract the very best people to work for us and gives Zoona an overarching reason to be chosen over others. “Culture trumps strategy and so
we invest a lot of time into it. “We also believe that our agent network and our model is very unique. We ask ourselves how we can turn an 18-year old young woman in Africa, for example, with a high school diploma, into a thriving entrepreneur. In our product development, lastly, we seek to truly understand the informal economy and customer segments in Africa better than our competitors, and be close to the ground in order to develop these products that meet customer’s real needs. Combining these three things will give us the requisite space which we need to grow for a long time to come.”
ZOONA +27 21 421 3618 info@ilovezoona.com www.ilovezoona.com
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AFRICA
THE BUSINESS MAGAZINE FOR AFRICA’S INDUSTRY LEADERS
Published by CMB Multimedia Chris Bolderstone – General Manager E. chris@cmb-multimedia.com Sackville Place, 44-48 Magdalen Street, Norwich, NR3 1JU T. +44 (0) 20 8123 7859 E. info@cmb-multimedia.com www.cmb-multimedia.com
Issue No.62
www.enterprise-africa.net
G4S DEPOSITA:
When Cash
is King
ALSO IN THIS ISSUE:
Van Schaik Bookstore / Zoona / IPSS / Safire Insurance
A S F E AT U R E D I N
ENTERPRISE AFRICA
SEPTEMBER 2017