#80
Had a number of things I wanted to discuss today. I’ve saved them for subsequent days so don’t worry, you’d still get all my thoughts.
I’ve been looking at this mobile money space for about a year now and the growth is…nothing short of amazing. Especially in Ghana, growing 6x from 2012 to 2017. Hockey stick growth, indeed. Anyway, I also like reading about/ from people who know what they’re talking about. And that’s why I’m always on Big Chief’s Twitter page and reading Jason Njoku’s Medium page. So much knowledge from these two guys and I’m very appreciative of the fact that they share their experience so much. Victor had something to say about the mobile money industry earlier today, and you can just tell this man knows what he’s talking about.
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If I come out strong in an argument, better be sure that I know what I am talking about and it is from real data and experience. I have however come to learn that people look at that data in different ways. They can grab a little bit of it and start talking shit. Get all data!!
The agent business in Africa is a nebulous one with very thin margins and telcos seeing agents as a necessary evil that should be expunged after a while. Using them as an example of progress means you don't understand the long game.
I am on the side of the agents. My goal is to make them the long game but the reality is stacked against them. Technology is stacked against them. The best bet is to increase the hybrid nature and maximize their utility. They are also notoriously hard to manage and train.
Financial services companies will ALWAYS opt for more reliable and easy to manage technology than trying to herd cats. If you ask a telco if they would want someone else to manage their agents, they gladly will offload them. This is why aggregation worked very well for us.
To keep an agent network, telcos typically give them most of their margins in the early days. Over time, this reduces. The agents then start looking for other means to survive. That is where we come in. They dump exclusivity and come to us. A very hard business still. low margins.
Anyone who boasts about agent numbers doesn't get it. It is not about numbers but activity levels. Spread doesn't mean profit. It may just mean more headache to manage. I can have a 5k agent network more profitable than a 100k network. Precision matters. Sustainability too.
When you start comparing ATMs and agents, you have lost your damn mind. A well-managed ATM at a great location outperforms any agent for "CASHOUTS." The agent is more than a cashout channel even though they do a lot of it. They are a temporary node to link the network together.
We used that argument initially until Diamond Bank taught us a bitter lesson at TOTAL gas stations. Their ATMs killed off our agents easily...but... ATMs are very expensive beasts to manage. Especially off-site and out of the branch. The agent is a mini branch hence - @omnibranch
We learned NOT to compete against ATMs but to complement them. Off-site ATMs are as good as the cash in them. If/when the cash runs out, the nearby agent takes over. The preference is always ATM first for cashouts. We decided to use the agent for much more than cashouts.
The first bitter lesson we learned from banks was that the POS was much more effective at serving the agent than phone apps. Even now with USSD, the learning curve is steep. The POS is a monster. It needs low maintenance and very little bandwidth to function. Also portable.
The agent business is still very much a banking business in Nigeria not just because telcos have been hamstrung with regulation, but because the infrastructure works much better. Maybe that will flip later but it is what it is for now. Even in East Africa, it is bank-grade.
Technology will win. It is a matter of time. Instead of gloating now, let’s evolve models to make agents much more relevant beyond financial services. What @OmniBranch is doing is serving the agents as businesses who can grow and not just as agents forever.
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Anyone want to start a business? Or do you know anyone in the space? Hit me up and let’s ride this MoMo wave together.
Article List— What I’m reading (10 articles a day x 7 days x 4 weeks x 12 months = 3360 articles a year).
Microsoft Japan switched to four day work week- sales skyrocketed 40% : So 3 day work week means my sales will skyrocket 80%? Wednesday is the new Friday.
The Gross Margin Problem: Lessons for Tech-Enabled Startups: Although growth solves many problems at startups, unit economics is not one of them. When you’re losing money on every transaction, you can’t make it up in volume. In fact, the more revenue that a businesses with negative unit economics generates, the more money it loses.
The danger of an unchallenged myth: The lie that is Rwandan President Paul Kagame: Difficult questions like: “Why do Rwandan opposition members keep going missing?” “How did he get 99 percent of the votes cast in the 2017 Rwandan election?” “Why is Diane Rwigara in prison?” “Why does his government regularly seize, expropriate and auction homes, property and businesses belonging to government critics?”
Highlights from the town hall meeting with Jack Dorsey and the Twitter team at Techpoint Africa: In case you didn’t realize, @jack was in Nigeria and is in Ghana now. Looking forward to our coffee chat on Thursday.
Berlin-based online car marketplace startup FCG raises up to €362 million from OLX Group: Looks like an acquisition to me, but hey.
Energy Surplus Leaves Ghana Paying for Power It Doesn’t Need: Welcome to Ghana. Wastage in every single sector. Make it make sense.
Nigerian Business Mogul Cosmas Maduka Launches $35 Million Rice Mill In Anambra State: But everyone hating on Uncle Aliko. Anyway, loved this man’s interview on Forbes’ My Worst Day. Find the interview here.
WeWork Details Its Turnaround Strategy Including Divestments And New (Old) Focus: The Next 90 days with WeWork going to be interesting. WeWork’s plan has four key planks: cutting extraneous operations, layoffs, boosting its real estate footprint, and sorting out its internal and external relationships.
VISA and MasterCard in scramble for Africa’s payment ecosystem: Patiently waiting to have one of my clients exit to Visa or MasterCard. Placed my chips in play already so we’re praying. Pity that Interswitch didn’t use a founder-led mode. Mitchell isn’t getting as huge a payout as people might think. But still fuck you money, nonetheless.
WeWork in Talks to Hire T-Mobile CEO John Legere: Funny thing is that Adam and John look alike kind of 😂😂😂😂😂😂. With the long hair et al.
Beer and Tunnel Vision: A very Nigerian story: Story of import substitution in Africa. Rice deal is not going to work, according to this article.
South Africa: Taste and Starbucks wake up and smell the coffee: Welp…what’s new in Africa? Maybe we need in Starbucks in Ghana? Burger King and KFC making a killing here.
Akufo-Addo says Nigeria, Cameroon membership of cocoa pricing floor needed: $600M syndicated loan. We know where that money is going. And this is after 1.3B loan from a bunch of banks?
Podcast— What I’m listening to (1 podcast episode a day= 365 podcast episodes a year) — Broadening my experiences through others’ stories.
Been re-listening to a lot of Business Wars tbh. I love competition and history. Learning how eBay and PayPal started and duked it out inspires me. That’s the series I’m on at the moment.
Book— 1 Chapter a day x 7 days x 4 weeks x 12 months = 336 chapters. Most books have 10-12 chapters, so 1 year = 28 to 33 books. And my book list is nearing 1000 books. Send help 🌚
Angel by Jason Calacanis: Learning a ton about angel investing. This man writes like his tweets 😂😂. Doesn’t give two shits about what anyone says.
📱📱Quote of the day
“Africa doesn’t forgive companies without good cash flow”- Cedric F.
Remember: “Until the lion learns to write, every story will glorify the hunter.”