In 2016, Zoona's Agents processed more than 8 million mobile money transactions valued at more than 200 million USD – a growth of over 40% year on year. Though Zoona was only founded in 2009 - it has developed into the main mode of money transfer for more than 1.5 million people in Zambia, Malawi, and Mozambique. This shows the impact that startups and Small and Medium Enterprises (SME) can have on building financial inclusion and societal impact in Africa.
The potential of startups and SMEs as vehicles of change is not a new concept - but it is one that is gathering steam and international relevance. I spent much of February participating in forums dedicated to expanding collaboration between governments, regulators, NGOs, investors, startups and SMEs for this precise purpose.
I had the privilege of speaking at the African Business and Social Responsibility (ABSR) Forum in Mauritius, and later at the G20 Workshop on SME Finance in Frankfurt, Germany - and sharing the platform with some truly inspirational and visionary thinkers. The G20 Workshop specifically focused on how startups and SMEs can shape financial inclusion of future generations.
Besides sharing the Zoona story, model and impact - it was also an opportunity to contribute to the discussion around how startups and SMEs can be unleashed to make the impact. From my perspective, three key themes emerged from the discussions - illustrating the alignment points that exist between governments, investors/funders and startups/SMEs.
1. Work together to enable customer-led solutions that leverage big data
The mantra of "we need African solutions to African problems" is overused - but holds true in the case of building financial inclusion. We cannot merely "copy and paste" products and solutions that worked elsewhere. Startups and SMEs are at the leading edge of using human-centred design and big data to understand consumer needs and then co-develop products that best serve them. But they can benefit greatly from partnerships that allow for data collection on an even bigger scale. For instance, Zoona worked closely with Financial Sector Deepening (FSD) to map the financial service points in Zambia. This type of data is invaluable in building solutions that best serve consumers.
2. Work together to achieve efficiencies by empowering women entrepreneurs
I have often said that Africa is the next superpower and women entrepreneurs will be key to the growth and development of the continent At Zoona, our business is empowering entrepreneurs to provide financial services to their communities. We focus our resources on individuals most likely to have the impact on others, while sustainably growing their own businesses. Our internal data has consistently shown that women tend to outperform men when it comes to providing better customer service, being disciplined financially and re-investing profits back into their businesses. Women entrepreneurs also tend to be more involved in their communities and share more of the wealth they accumulate. This phenomenon is well known and even has a name - the Girl Effect. So, one of our strategic priorities to focus on building a pipeline of women entrepreneurs - it makes business sense. If governments, investors and funders have limited resources - it likewise makes business sense for them to focus their efforts on initiatives, startups and SMEs that unlock the Girl Effect.
3. Work together to unleash social enterprise models that work on scale
For all the promise and potential that startups and SMEs hold for building financial inclusion - they will only fulfil it if they can function at scale. Governments and funders realise that the best vehicles for impactful change in financial inclusion are, more and more, social enterprises. But to be sustainable in the long-terms startups need to operate at a scale where they service tens of millions of previously unbanked or underserved consumers. Startups are already inherently geared for this growth (in Zoona's case, we aim to be in 10 African markets by 2020) - but that is only part of the equation.
This scaling process will require significant investment and a regulatory framework that enables social enterprises to expand and serve more people. This means that funders need to move away from philanthropy to becoming impact investors, and then take the next step by helping startups and SMEs work with governments towards more open and transparent regulatory structures.