WORKWEEK

Hey everyone! Ulises here, excited to be back with a very interesting dive into the African fintech ecosystem. You’ll be hearing more from me as I continue to interview founders, operators, investors, and industry experts within the fintech and crypto spaces!

This time I had the opportunity to talk to Mubarak Sumaila, founder and CEO of BezoMoney, a fintech startup based in Ghana that is building a digital financial platform for the unbanked and underbanked. BezoMoney was founded in 2019 as part of the MEST startup training program, and has since raised a seed round in order to acquire the necessary license to operate in Ghana, and start building their credit and investment products. Let’s dive in:

1. What’s the story behind BezoMoney? How did it all start?

The word “Bezo”in BezoMoney means group in a local Ghanaian language, in Ghana, hence “Group Money. ” The idea for the company was inspired by a visit to my mom while I was participating in a startup incubation program called MEST (Meltwater Entrepreneurial School of Technology). While home one weekend, I noticed that she and her friends who work in the informal sector were “banking” themselves by coming together to contribute a lump of saved money that is then distributed evenly among the group over time.   They also practiced a form of savings called “Susu,” a traditional Ghanaian savings method where informal sector workers give their money to a Collector, an intermediary who keeps and secures the money over 30 days and gives it back without interest and minus a 3% fee. 

In my Eureka moment, I rushed back to MEST to pitch the idea to my friends, and we decided to make it our capstone project. After a thorough deep dive, we discovered that roughly 400 million unbanked people on the African continent practiced similar schemes and about $301 billion were transacted within them on an annual basis. While paying to save seemed outlandish, it made sense given the realities of the underbanked and underserved people. Existing banking products did not fit their lifestyles, wants, and needs, as they were difficult to access both culturally and physically, and transaction costs were far too high.

After several experiments and MVPs as well as receiving pre – seed funding from MEST, we launched BezoMoney, a digital bank for the unbanked which enabled users to access a tailor – made financial ecosystem of products helping them save, invest, borrow, spend and send money. We built our infrastructure on USSD which does not require internet connectivity or a smartphone, and connected it to Mobile Money, so our users can easily and conveniently access our products. We went on to grow and acquire about 100,000 users over a period of 6 months.

2. Can you give us a little context around the Banking ecosystem in Ghana and its relationship to Fintech?

As one of the most developed financial markets in Africa, Ghana was recently ranked No. 7 by a  Business Insider report. More than half of banks in the country are foreign banks that made acquisitions to scale into Ghana, presenting a unique prospect for Fintech companies building core banking products to be acquired.

The emergence of Mobile Money, a P2P transfer service built on USSD allowing users to move money and make withdrawals at agent points, has rapidly accelerated the opportunity for financial inclusion in Ghana and around Africa. Africa accounts for about 70% of the $1 trillion global Mobile Money market with 621 million digital wallets. The active wallets, about 184 million, transacted about $701 billion in 2022. Ghana, which is presently the fastest growing Mobile Money market in Africa, has 32 million digital wallets, 18 million of which are active and transacted $120 billion in 2022. Mobile Money operators typically work with banks on the backend to secure the funds, manage their float and provide interest to users. 

Mobile Money represents an essential service for many consumers on the continent and provides a good infrastructure for Fintech companies to leverage on in order to provide financial services to the unbanked, a significant majority of Africans. This is exactly what we did with BezoMoney. 

3. What is BezoSusu? 

BezoSusu is our flagship product. It is a personal finance platform for our users, including both the informal sector and young individuals, enabling them save, invest, borrow, spend and send money. Our savings offering is the entry point for our users to  generate up to 9% per annum on their savings, create personal and group savings goals, lock their savings, track their progress and achieve them.

4. Can you elaborate on the USSD feature? How important is it to make your product available without internet connectivity?

USSD stands for Unstructured Supplementary Service Data. It is a text message – based app which works on feature phones and does not require internet connectivity, and it is a feature that is important for tech companies wanting to be successful in Africa. By building on USSD, we are able to target the mass market which is mostly informal and for whom the cost of cellular data is high. By simply dialing our short code, our users are able to access our products to create goals, make deposits, check their balance and make withdrawals. This has enabled us to scale faster and guarantee easy access to our services amongst demographics with low literacy levels.

5. Now let’s talk about the BezoSmart Series. How important is financial literacy to your product strategy?

BezoSmart Series is one of our key go – to market strategies. It is an indirect customer acquisition channel. We launched the financial literacy podcast to provide financial advice and to leverage on that offering to promote our core financial products. We run ambassador programs across many University campuses and market places in Ghana and disseminate financial literacy to rural areas through IVR technology. 

Financial literacy is an essential component of financial inclusion. A lack of it affects financial wellbeing and can severely decelerate financial inclusion. An example of this is how accessing loans through Mobile Money platforms without knowing the implications of default, negatively impacts the lives of informal sector workers. We leverage financial literacy to ensure our users are informed about how to manage their finances, make well – informed decisions on products and reduce learning curves of using our products. 

6. What are your plans around the product in the future? How does the BezoMoney ecosystem look in 5 years?

Our vision for the future is to build a branchless bank for the unbanked and underbanked, leveraging agent networks to create a decentralized and highly distributed network of financial services. In 5 years time, we intend to launch products on the personal finance side such as credit for rent and appliance budgets, investment products, BezoScore (credit score for our users), insurance and pensions products. On the B2B side, we intend to create wallets and business tools for small businesses on the platform. 

7. Your company has a very clear relationship to financial inclusion, do you consider yourself an impact startup?

Yes, we do. Social impact is baked into our model by default, but we could not have anticipated the level of positive outcomes we’ve seen for our users, 60% of whom are women. We are servicing a market that is grossly underserved in terms of financial products as well as the goods and services that result from an ability to pay for them. We make money while doing good and that money would allow us to scale exponentially to create more impact.

8. Do you measure impact? If so, how?

Yes! We measure the number of people who have savings accounts who previously had none. Second, we measure the growth of their accounts over a period of time. Third, we measure the improvements they are able to make in their lives as a result of using our services. We are currently partnering with academic and development institutions in order to effectively track and measure the impact with the goal of creating more impact on a larger scale.

9. What has been your greatest challenge so far?

Building a strong team. It took a while but we are getting there. One major problem that I encountered was finding people on the ground with enough context of how startups operate. This is  undoubtedly a reflection of the work environment in Ghana where there are robust corporations and government agencies but few startups.

My challenge has been balancing building a high performance, high growth results – oriented team that produces quality work with building a thriving team culture. The solution has been to  create structures around recruitment and implement thorough performance reviews systems. Presently, I am very close to overcoming this obstacle but I know it will be an ongoing challenge that we will have to be dealing with as we continue to grow and expand. 

10. What would you tell investors thinking about exploring fintech-intensive emerging markets, such as Ghana and other countries in Sub-Saharan Africa?

Presently, Africa has the youngest population globally with 70% of Africans under the age of 30. This growth comes with needs and wants which would drive the uptake of fintech – being inherently tech – to get access to financial services. 

According to McKinsey, fintech revenues are expected to grow 8x to reach $30 billion in 2025 with Ghana leading the charge with a 15% growth rate per annum. The need for financial services has been demonstrated starkly by the growth of Mobile Money platforms and this presents a great opportunity to provide core banking products through this infrastructure from savings to credit for both individuals and businesses. 

My advice to investors would be to look out for startups providing core banking services and also startups with models built on existing cultural practices – startups that are designing and building products based on the culture, behavior and lifestyle of people on the continent. 

The Fintech payment space in Africa has grown exponentially with companies raising large funding rounds and processing billions of dollars in transactions but there is a huge gap that has been left unaddressed and that is providing core financial services to the mass market such as savings, lending, pension, insurance, asset financing and so on, both individuals and small businesses, SMEs and MSMES. These segments of Fintech are ripe for investments.

There is a tendency of investors investing on the continent to invest in one or few players and expecting that they will dominate the market. Africa is a huge continent, the second largest in the world, with a population of 1.2 billion and 54 different countries. Each country has its unique cultural aspects, and like any country, nuances exist within each country, too. It is also important to note that more than a handful of  players are needed to address problems. Investing in companies and individuals who understand this is the most effective way to tap into this massive market – a focus of expanding across the continent starting off by succeeding within their own markets.

On a final note, it may be useful to know that exits are more likely going to be from acquisitions than IPOs.