Mukuru

MUKURU

MUKURU

African Solutions

for African Money Movement PRODUCTION: David Napier

Moving money around Africa has never been easier and quicker than it is today. Thanks to Mukuru, a mobile-based money transfer company, if you are working in one country and looking to send money home to another, you can do so safely, securely, quickly and affordably.

CEO Andy Jury talks to Enterprise Africa about the success of this African FinTech business.

2 / www.enterprise-africa.net

INDUSTRY FOCUS: FINANCIAL

//

Aguinaldo, from Mozambique, was working in South Africa and sending money back to his family with taxi drivers. The money was not arriving.

Humble, from Malawi, was living in Johannesburg and sending money to loved ones back home but the transfer was taking 48 hours at least. This situation was a problem.

It ties into the story of African money transfer company Mukuru’s origins, stemming from the desires of its UK-based Zimbabwean founders to send money to their loved ones to help during the hyperinflation crisis of 2008.

They quickly realised that in attempting to solve their personal needs they were potentially building a solution that solved the need of a myriad of other African migrants. This marked the start of Mukuru, a company focussed on moving money around Africa quickly and safely.

It was the answer to Aguinaldo’s and Humble’s problems.

An African FinTech business, the premise of Mukuru’s offering sees customers able to use their mobile phone to move money. After a quick and

4 / www.enterprise-africa.net

easy registration process, customers can place an order – typically $100 or less – and they will receive a text message with a coded voucher. They take the code to a participating partner and pay the cash sum. A text message is then delivered to the intended recipient informing them that the cash is ready for collection, wherever they might be.

It’s an idea based on the migrant worker market in southern Africa as CEO Andy Jury explains.

“Most of our African market diaspora is underbanked or underserviced and typically don’t have access to formal remittance channels, or if they do, they are prohibitive either from a price perspective at the amount they want to send (less than $100) or the level of documentation that is required every time they want to undertake a transaction. There was no process that had been designed to meet this relatively straightforward need of somebody in the migrant diaspora wanting to remit home between $50 and $100.”

Intensifying its intra-African footprint from 2009 onwards, the company quickly found that the problem

was large and the idea was scalable.

It initially focussed on the needs of the Zimbabwean migrant population, primarily in South Africa, but it has expanded to be cover a network of over 70 send-receive corridors.

“We designed a process around our primary customer – someone in the migrant diaspora, who is not in longterm formal employment, without access

// MOST OF OUR AFRICAN MARKET DIASPORA IS UNDERBANKED OR UNDERSERVICED AND TYPICALLY DON’T HAVE ACCESS TO FORMAL REMITTANCE CHANNELS OR REMITTANCE THROUGH BANKS //

MUKURU

to a typical bank account, who does have access to a mobile phone, with cash to send,” says Jury. “Our business model now takes all sorts of tender types and there are many ways that you can pay for and receive money, but initially, and still largely today, the bulk of the business is still done via cash-to-cash transactions.”

PROBLEM SOLVING Since its establishment, Mukuru has grown significantly, signing-up more than one million users and establishing more than 40,000 cash distribution points across the continent. While cash remains king, Mukuru continually innovates its offering with solutions for sending funds to and from a plethora of mobile wallets, bank accounts and even Mukuru’s own card product. Partnerships have been nurtured with the majority of southern Africa’s big banks and retailers, and the brand continues to gain traction

by delivering a quality service that solves a real problem.

“A process that, using informal channels, could to take anywhere between two and four weeks, that was fraught with risk, was expensive, without communication channels can now be very clearly, transparently, simply and easily concluded in a matter of minutes,” explains Jury. “Essentially, it has lubricated a process with that had an immense amount of friction and delivered tangible value to our customers in the process. There is immense white space for us to continue rolling out this approach in Africa.

Typically, money goes from countries that have higher concentrations of economic activity (South Africa, Botswana, Zambia), with large migrant communities, and we have spread our network to other receiving territories, so we are connecting the dots.”

Money can be sent for any reason; school fees, medical bills, grocery shopping, rent – whatever the scenario, Mukuru can provide the solution.

According to Stats SA, more than 1.2 million people will migrate to South Africa between 2016 and 2021, with most coming from other African nations and most heading for Gauteng and the Western Cape. This will add to an already burgeoning market place and will offer Mukuru further opportunities for growth.

Fortunately, for both the company and its customers, the process is easy.

“Let’s say a Malawian now finds themselves in South Africa with gainful employment, and wants to send money home to loved ones. Typically, their journey with Mukuru begins via an introduction with one of our Mukuru ambassador-agents in the field. We set out with a high-tech/ high-touch approach so the agent would speak

www.enterprise-africa.net / 5

INDUSTRY FOCUS: FINANCIAL

in their mother tongue, building trust, and help to sign the customer up and get them registered using bespoke technology deployed onto a smartphone.

“When the customer has been verified the agent will very often assist the customer to create their first orders, either using USSD technology that is common in Africa, WhatsApp, our own App or phoning in an order to our call centre. Upon the order being created, a text message with a code instructs the customer to one of our partners to pay the money. Our partners include most of the big retailers, so you could walk into Pick n Pay, Shoprite, Pep and many others, head over to the financial services desk and pay the Mukuru bill for the equivalent voucher number and the money is then instantly available for the recipient on the other side. The recipient gets a text message or SMS that they can go and collect from any of our partners or any of our Orange Booths,” details Jury.

Working closely with industry regulators across Africa, Mukuru has consistently been at the forefront of innovation in customer verification, onboarding and solution delivery,

6 / www.enterprise-africa.net

greatly expanding migrant worker access to industry-leading financial services. Having people on the ground in this early stage of the relationship is vital. For the Mukuru target market, assistance with first-time registration is so important, despite being extremely easy. Documentation must be correct and regulatory forms must be completed without mistake. While technology assists, the first sign-up can be daunting and different for each individual, this is why Mukuru employs such a force in the field.

“Businesses that start by addressing a particular customer ‘call to action’ succeed in organically building scale,” says Jury.

AFRICAN DIFFERENCE The money transfer market in southern Africa has no shortage of players. International companies, local independents, and regional providers are all active and offer different types of service. But Mukuru maintains its position as one of the only players that can handle international money transfer, across borders, while also dealing with domestic transactions,

fully understanding conditions in each market, and committing unwaveringly to its core client base.

“A lot of domestic money transfer services linked to Mobile Network Operators (MNO’s) don’t do international money transfers, and for traditional global money transfer operators, the business model is priced for a different market – usually people who send larger amounts. Many first world FinTech platforms have sprung up in the last two years and they do a good job sending from the UK or USA into Africa, but they are focussed on facilitating transactions virtually, that typically rely on access to bank accounts/financial institutions in order to settle transactions. In our core markets, there is still significant demand for businesses that have strong first-andlast-mile capabilities designed to be able to settle and disburse using cash, and we see a lot of benefit from having a highertouch initial onboarding with customers.

“We have an agent army that activates on the ground in areas and communities in which our customers live, work and feel comfortable: we aim to go to where the people are. We have an entry point when it comes to

MUKURU

building trust, assisting people and getting over the inertia of transacting. It means once we do get a customer into the fold, and we demonstrate how using our services can eliminate key points of friction in their lives, we are able to establish a long customer relationship/ lifecycle,” details Jury.

He explains that by focussing on the informal sectors of the economy, Mukuru has been able to grow the size of the formal market. “We have seen most of our business coming from the informal sector. The informal sector in Africa is much bigger than the formal sector. We have taken market share from the unregulated, informal arrangements that were sending money on buses or through trade communities.”

Customers like Aguinaldo in Mozambique are now transacting safely and securely; no more sending cash with taxi drivers; his money is getting to where it is supposed to be. Mukuru aims to provide certainty for people whose lives often have few day-to-day certainties.

Mukuru’s branding is also a distinguishing factor when it comes to separating it from the rest. The word itself has been taken from Zimbabwean

culture and the Shona language where ‘Mukuru’ can be interpreted to mean the wise, elder, chief, or someone who imparts wisdom, a character of substance in the community – “that is the idea around which we were formed,” says Jury.

Dealing in the informal sector means that installing convenience for clients is fundamental. This is why Mukuru has partnered with organisations that already have considerable reach. Retailers, banks and others are all potential partners for the company and, to date, it has created an impressive network.

“It wasn’t straightforward to get in the door in the early days because we were an upstart at the bleeding edge and no one else was trying to have these conversations,” says Jury of the challenge building relationships. “It has become easier as we have demonstrated there is an untapped market that represents a substantial growth opportunity. We now have amazing partnerships with retailers and other partners who have good footprints and are used to handling cash – particularly those with a pan-subSaharan African presence. Typically, it is a very harmonious relationship where we are effectively filling white space

for them and they turn what would be costly infrastructure for us into variable cost, and the result is win-win.”

In South Africa alone, you can complete Mukuru transactions via its extensive network of over 30,000 formal and informal physical payment locations using cash, Mastercard and Visa credit or debit cards, as well as online via bank transfers/EFT or instant transfers from Mukuru’s own prepaid card product.

Similarly, extensive networks have been created across Africa in Botswana, DRC, Kenya, Lesotho, Malawi, Mozambique, Namibia, Nigeria, Uganda, Zambia and Zimbabwe, as well the UK and EU, and Asian countries including Bangladesh and Pakistan.

GROWING REACH After a decade building its intra-Africa network and now celebrating a number of successful partnerships, Mukuru is obsessing about how it can continue to deliver hypergrowth. Jury says there is certainly more room for development in the markets where it is already strong, and there is further opportunity in new geographic markets.

“We are an entrepreneurially

7 / www.enterprise-africa.net

INDUSTRY FOCUS: FINANCIAL

minded company and we still see ourselves as an upstart FinTech business that still has much to do to deliver on its potential. We are constantly looking at where our growth trajectory can be fed from. We have lots of opportunity to roll out our core person-to-person remittance product across new territories as well as deepening our share in our existing markets,” he says.

“We know our potential addressable market is huge. We are looking at expanding our network and growing the flows into and out of Africa and this will encompass other regions like Europe (where the UK in particular is a big territory sending into Africa) as well as Asia (where countries like Bangladesh and Pakistan are increasingly large recipient territories for transactions from Africa). Seeing how we can link all those together will be key to unlocking value for us,” he adds.

But the company will not allow growth to risk its core. “Our primary focus will continue to be capturing intra-African migrant diaspora and entrepreneurial flows,” states Jury.

He is confident that there are still hundreds of thousands of opportunities for the company to have an impact and grow its basket by introducing complementary products.

“We are also looking at how we can continue to vend new products to customers and add a lot of value to their lives. We have a prepaid card

8 / www.enterprise-africa.net

in South Africa that is allows people to deposit and store funds as well as transacting digitally and that has been transformative as it’s the first opportunity many of our customers have had to use this sort of product and we’ve seen great uptake. We also have a range of other products looking at life insurance and other financial services, so there is scope for growth by scaling the corridors into which we roll out our core products and scope for growth by increasing the number of products that we can introduce to customers in our eco-system.”

This diversification will help build strength and sustainability into what is already a robust offering. By becoming a more turn-key financial services business, entrenched in the lives of its customers, Mukuru can become hardy when facing economic challenges.

“We operate in Africa, we operate in uncertain times, we operate in areas that often lack key infrastructure elements, and we are constantly exposed to all sorts of changes in our operating landscape. We have had to build resilience and layers of protection to ensure we can get things done even if business as usual is disrupted,” says Jury.

ECONOMY UNCERTAINTY? The various economic climates that make up the sub-Saharan African region are prone to unpredictable peaks and troughs. Just a few years ago, the region

// PROCESS THAT USED TO TAKE ANYWHERE BETWEEN TWO AND FOUR WEEKS, THAT WAS FRAUGHT WITH RISK, WAS INFORMAL, WAS EXPENSIVE, WITHOUT A COMMUNICATION CHANNEL CAN NOW BE VERY CLEARLY, TRANSPARENTLY, SIMPLY AND EASILY CONCLUDED IN A MATTER OF MINUTES // was home to a number of the world’s fastest growing economies but today, growth is much more difficult to come by. Tomorrow, the picture will have changed once again. This is why product diversification, exposure to different markets, and sound business principles are so important. Having been successful in these areas has helped Mukuru to avoid significant exposure to weak economic behaviour.

“We are a pro macro-economic exposed business. Typically, our customers require a form of gainful employment or economic opportunity to be able to send money home,” acknowledges Jury. “If there are economic headwinds, that means there are less jobs/opportunities, and that has a dampening effect. However, we are still very much targeting a market with untapped potential, so we continue to see upsides for doing the hard yards and converting customers from informal channels to our products.

While the overall macro-economy has had an impact on the number of people being employed, there have still been

MUKURU

significant opportunities for growth.”

More than 10 years of solving African problems has helped develop almost unrivalled experience in the industry, and that brings a level of resilience which others might not have.

“We are very pro-African. We’ve tried to develop an African-do attitude with African-centric solutions for the problems that are faced on the continent.

Responding to the ebb and flow of the global picture is in our DNA. We feel confident that we can adapt our business to deal with headwinds or tailwinds.”

Away from economic impacts, both regional and global, Jury is clear that, while there remains huge scope for growth, the main challenges to Mukuru’s expansion come in the form of competition.

EY said at the start of 2019 that sub-Saharan Africa is a ‘region of opportunity for FinTech investments due to its unique economic and demographic environment. The region is characterised by less-developed financial infrastructure, and an unbanked population of about 60%. By ensuring access to financial services to this population, FinTechs have the potential

to profoundly change the financial services landscape and play a pivotal role in improving financial inclusion’.

Jury agrees, saying the rise of new competitors is a regular occurrence.

“We do see a lot of new activity in the market. Typically, those that come with good ideas that they want to implement struggle unless they have started from the perspective of looking to solve a particular customer challenge/ problem/need or requirement.

“So, a lot of folks have entered the market with great ideas, that look and sound phenomenal at the outset, but they haven’t started with a customer need, requirement or want in mind, so they end up drifting because they can’t scale the business organically. Those that focus on solving a customer need typically fare better in being able to entrench and grow.”

Mukuru is well-established and has already ridden the waves of various economies. It has been present for its customers while others have come and gone. And it is already looking to provide solutions to the needs of clients in the future.

“We are perpetually trying to

explore new concepts and new ideas in order to stay fresh,” says Jury.

“Hopefully, the end result is that the customer base has an improved offering to choose from. We know we must constantly evolve and it’s a challenge that we welcome. It makes things exciting and vibrant, and ensures no two days are similar.”

The future looks very bright for Mukuru and for the likes of Humble and Aguinaldo, and the many others that have benefitted from its work; safe, secure, fast, and reliable money transfer is never something that will cause worry again.

“We are very excited and happy with the opportunities we have, and we are strongly focussed and motivated to deliver on them,” Jury concludes.

WWW.MUKURU.COM

www.enterprise-africa.net / 9

Published by CMB Media Group Chris Bolderstone – General Manager E. chris@cmb-media.co.uk Sackville Place, 44-48 Magdalen Street, Norwich, NR3 1JU T. +44 (0) 20 8123 7859 E. info@cmb-media.co.uk www.cmb-media.co.uk CMB Media Group does not accept responsibility for omissions or errors. The points of view expressed in articles by attributing writers and/ or in advertisements included in this magazine do not necessarily represent those of the publisher.

Any resemblance to real persons, living or dead is purely coincidental. Whilst every effort is made to ensure the accuracy of the information contained within this magazine, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved.

No part of this publication may be reproduced or stored in a retrievable system or transmitted in any form or by any means without the prior written consent of the publisher. Š CMB Media Group Ltd 2019

AS FEAT UR ED IN

ENTERPRISE AFRICA

J ULY 2019