Analysts have been worried at the dearth of the birth of Unicorns in Africa since after the emergence of Jumia, and to some extent, InterSwitch, they opine that Jumia’s success as a Unicorn born out of Africa has not halted the search for another. As many heightened expectations for the next unicorn, there is need to come to terms with the high-flying Gazelles around the continent on which those dreams are based, Senegalese venture capitalist Marième Diop called for more efforts and encouraged entrepreneurs to keep working hard.
Senegalese venture capitalist Marième Diop
She is of the opinion that Africa’s harsh business environment made it difficult to create Unicorns, she encouraged founders to try to build more Gazelles. “It might be a better option to set lower revenue expectations and have startups list on local exchanges to raise capital from IPOs when they’re ready. We may be able to create more Gazelles at home than Unicorns abroad,” she said.
According to Diop, Gazelles are startups with a $100 million valuation or more while generating $15 to $50 million in annual revenue. While these figures aren’t set in stone, we have an idea of Diop’s philosophy: Gazelles are startups that have secured eight figures in money raised and revenue, and an eight to nine-figure valuation. According to the West African Startup Decade Report highlights the funding activities of startups in the region between 2010 and 2019.
However, only Millionaire West African Startups (MWAS) were featured. In other words, startups that each raised $1 million or more cumulatively in the last decade. Research shows that although 51 startups fall into this category, only 14 (27.45%) raised $10m or more. For these startups that can be called Gazelles, the recently-acquired Nigerian payments startup, Paystack, is a hallmark. Before joining Stripe, the US payments giant, for $200m, Paystack had cumulatively raised $11.675 million in seed and Series A rounds between 2016 and 2018.
Interestingly, of the 14 startups to have achieved this feat in West Africa, only 2 (with expat founders) have gone on to raise $100m or more cumulatively. That being said, the West African Decade report also shows that only one of these startups didn’t launch from Nigeria or isn’t Nigerian-based.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
Riding against the backdrop of the disruptions caused by the Covid-19 pandemic, the pan-African fintech company Interswitch is planning to revive its Africa venture by investing in more startups across the continent. Interswitch, which is Africa’s second unicorn earlier, planned an IPO before the Covid-19 pandemic put paid to that dream, company sources say that that plan is still in the offing bidding for the right time. But for now, the fintech giant plans to revive investments in African startups.
Group Chief Executive Officer at Interswitch, Mr. Mitchell Elegbe
Founded in 2002, Interswitch pioneered the infrastructure to digitize Nigeria’s then predominantly cash-based economy. The company now provides much of the rails for Nigeria’s online banking system that serves Africa’s largest economy and population of 200 million people. Interswitch has expanded to offer personal and business payment products in 23 African countries. The fintech firm achieved unicorn status in 2019 after a $200 million equity investment by Visa gave it a $1 billion valuation.
Interswitch, which is well beyond startup phase, launched a $10 million venture arm in 2015 that has been dormant since 2016, after it acquired Vanso — a Nigerian fintech security company. But the company’s CEO assured that it will soon be back in the business of making startup bets and acquisitions. According to Mitchell Elegbe, Interswitch CEO, “we’ve just certified a team and the plan is to begin to make those kinds of investments again.” Elegbe said “this time around we want to make financial investments and also leverage the network that Interswitch has and put that at the disposal of these companies,” adding that “we’ll be very selective in the companies we invest in. They should be companies that Interswitch clearly as an entity can add value to. They should be companies that help accelerate growth by the virtue of what we do and the customers that we have,” he said.
Recent venture events in African tech have likely pressed Interswitch to get back in the investing arena. As an ecosystem, VC on the continent has increased (roughly) by a factor of four over the last five years, to around $2 billion in 2019. But most of that has come from single-entity investment funds, while corporate venture funding (and tech M&A activity) has remained light. That’s shifted over the last several months and the entire uptick has occurred in African fintech around entities that could be viewed as Interswitch competitors.
In July, Dubai’s Network International acquired Kenya -based mobile payment processing company DPO for $288 million. Shortly after the acquisition, DPO’s CEO Eran Feinstein said the company would pursue more African acquisitions on its own. In June, another mobile-money payment processor, MFS Africa, acquired digital finance company Beyonic. And in August, South Africa’s Standard Bank — Africa’s largest by assets and lending — acquired a stake in fintech security firm TradeSafe.
Since the rise of Safaricom’s dominant M-Pesa mobile money product in Kenya, fintech in Africa has become infinitely larger and more competitive. The sector has hundreds of startups and now receives nearly 50% of all VC investment on the continent. The opportunity investors and founders are chasing is bringing Africa’s large unbanked population and underbanked consumers and SMEs online. Roughly 66% of Sub-Saharan Africa’s 1 billion people don’t have a bank account, according to World Bank data, and mobile-based finance platforms have presented the best use cases to shift that across the region.
Interswitch has established itself as a leader in Africa’s digital finance race. But it’s hard to envision how it can maintain or extend that role without an active venture arm that invests in and acquires innovative, young fintech startups.
For now, the company is focusing on its expansion as it plans to maintain focus on Africa for the time being. “There are enough opportunities for Interswitch on the continent. We’d like to be in as many African countries as possible…and position Interswitch as the (financial) gateway to the continent,” he said. Elegbe explained the company would continue to work through alliances with major financial services firms to open up global financial access for its African client base. In August 2019, Interswitch launched a partnership that allows its Verve cardholders to make payments on Discover’s global network.
“Nigeria has a very large population and a very large market. We have lots of challenges that need to be solved, but it makes sense to me that lots of money is finding its way to Nigeria because the opportunity is there,” he said. Elegbe’s advice to tech investors considering the country, “Don’t take a short-termist view. There are good people on the ground doing fantastic work — honest people who want to make impact. You need to seek those people out.”
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
At a time when startups and businesses across Africa are considering laying off their staff strength, Nigerian leading financial technology company, Interswitch together with its workers have raised N305 million ($782k) towards the organisation’s COVID-19 response effort. Employees of the organisation contributed a total of N75 million and the company augmented their efforts with the sum of N230 million.
Group Chief Executive Officer at Interswitch, Mr. Mitchell Elegbe
Here Is All You Need To Know
Announcing the fund and how it will be deployed, the Founder and Group Chief Executive Officer at Interswitch, Mr. Mitchell Elegbe, said the fund from Interswitch Group and its employees would be deployed to support the setting up and equipping of isolation centres, purchase of COVID-19 Test kits, provision of Personal Protective Equipment (PPE) and related support to frontline heath workers, as well as the operation of foodbanks to cater to under-privileged communities in Lagos.
According to Elegbe, Interswitch’s Verve Brand sealed a partnership with the Lagos State Feeding Programme to provide raw food items for poor and vulnerable communities in Lagos.
Through its healthcare subsidiary, eClat Healthcare, Interwitch is also building a user-friendly, locally-nuanced software application for members of the public as a first-line intervention for the assessment of risk and pre-disposition to the novel Coronavirus infection.
The software platform analyses users’ information provided from answers to a series of questions around risk factors, recent exposure, observed symptoms, health and travel history.
The initiative essentially serves to provide guided and up-to-date information on COVID-19, reduce panic, lower gross footfall to medical facilities, being a first-line checkpoint and ultimately reduce risk of exposure to health workers on the frontlines of fighting the pandemic.
Designed with an interactive interface, the solution facilitates further virtual consultation for infected persons, meaning infected persons can stay in their homes and access consultation as to whether their symptoms give cause for alarm or not.
The eClat Health-tech solution supporting State Governments’ response to COVID-19 has already been implemented in 20 states across the country. It is currently in use in Lagos State’s Eti-Osa Isolation centre, and in Edo, Ogun and Oyo States.
Interswitch doesn’t seem to be stopping anytime soon. The Nigerian fintech startup that just reached a unicorn status has further listed N23billion Bond. The Callable Senior Unsecured Bond, with a tenor of seven years, at a fixed rate of 15 percent, is part of a N30 billion Debt Issuance Programme issued through a Special Purpose Vehicle — Interswitch Africa One Plc.
going,”Group Managing Director/Founder Interswitch Limited, Mr. Mitchell Elegbe please
“We are delighted with the outcome of our capital raising efforts. We have evolved over the past 17 years into a technology unicorn focused on providing digital solutions to customers in Nigeria and across Africa. We, therefore, see this listing as a first step in a new phase of our journey and we are determined to keep going,”Group Managing Director/Founder Interswitch Limited, Mr. Mitchell Elegbe said.
Here Is All You Need To Know
The Interswitch Series 1 Bond Issue priced at 15percent was 2.6 times subscribed. The 7-year Bonds, embedding a call option that can only be exercised from the second year, are payable in full at maturity. Investor participation was restricted to qualified institutional investors as defined by the SEC in Nigeria, with a proposed Bonds allocation of 64percent to pension fund managers, 7percent to asset managers and 22percent to commercial banks pending SEC approval.
The strong level of over subscription demonstrated investor confidence in the Interswitch brand, business model and long-term strategy, supported by strong domestic ratings from both Agusto & Co. Limited (Agusto) and Moody’s Investor Service (Moody’s).
The Issuer was assigned “Aa3” national scale programme rating (stable) by Moody’s and “Aa” (stable) national scale rating by Agusto, on the back of positive secular industry shifts, a strong market position and a good liquidity profile. The Sponsor was also assigned “Aa” (stable) rating by Agusto.
‘‘We are pleased to be a partner to Interswitch Limited in its quest to expand its footprints by raising fresh capital. We see a win for Interswitch as a win for Nigeria. As a sustainable Exchange and a premiere listing destination, we are committed to supporting our issuers with tailored financing options that will place them in a vantage position to compete in the regional and global markets,” Oscar Onyeama, CEO of the Nigerian Stock Exchange stated.
FBNQuest Merchant Bank and Stanbic IBTC Capital acted as Lead Financial Advisors/Issuing Houses and ABSA Capital Markets Nigeria, FCMB Capital Markets, Quantum Zenith Capital & Investments and Rand Merchant Bank Nigeria, as Joint Issuing Houses.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer.
He could be contacted at udohrapulu@gmail.com
Once Visa, the global payment giant , concludes its plan to pour over $200 million, representing about 20% ownership stake, Nigerian tech startup Interswitch would then be valued at as much as $1.5 billion, making it Africa’s second unicorn after Jumia. This would mark a watershed for the fintech startup that started its journey in 2002, even as it plans to list on London Stock Exchanges in its first ever IPO.
Here Is All You Need To Know
According to UK’s Sky News’ reports, Global payments giant Visa is paying $200 million for 20% stake in Interswitch, Nigeria’s largest electronic payments company.
With this investment, Interswitch would achieve a billion-dollar valuation 17-years after it was founded.
While Visa’s stake purchase would confirm Interswitch’s unicorn status, the company was reportedly set to be valued at as much as $1.5 billionahead of a planned IPO next year. The company’s previous plans for a 2016 IPO were scrapped amid a recession in Nigeria.
Interswitch would not be the first Africa-focused tech company to achieve the billion-dollar so-called unicorn status.
This investment into Interswitch from Visa is the latest in a string of moves by global payments companies backing African fintech companies and seeking high-growth bets in emerging markets.
The fundamental importance of the services that fintech companies provide — from powering payments, facilitating savings and ensuring financial inclusion for the unbanked to tackling access to credit for small businesses and individuals — underlines why the sector holds long-term appeal for investors.
By most metrics, Interswitch represents significant value proposition given its established strength as an early-day and major player in financial technology with operations in over 20 African countries.
African fintech startups backed by global payments giants include Paystack Visa, Stripe (Aug. 2018)Flutterwave Mastercard (Oct. 2018)TalaPayPal (Oct. 2018)BranchVisa (April 2019)InterswitchVisa (Nov. 2019)
Interswitch facilitates the exchange of value between service providers by providing a secure shared payment infrastructure and integrated message broker solutions for financial transactions, eCommerce, telecommunications value-added services, eBilling, payment collections, and disbursements. The company developed and administers Verve, the leading card scheme in Nigeria.
The displayed data on popular payment methods in stores, restaurants and other points of sale shows results of the Statista Global Consumer Survey conducted in Nigeria in 2017.
The Verve card, which is currently issued by banks in Nigeria, is the first and only chip and PIN card accepted across multiple payment channels including ATMs, Point of Sale (PoS) terminals, online, mobile and at banks, and enjoys the largest range of value-added services.
The company has been at the forefront of the development and growth of the e-payment sector in Nigeria, which is evidenced by its unique position of being the only switching and processing company connected to all banks in the country as well as to over 10,000 ATMs and 11,000 PoS terminals.
Aside from this, the company is the leading processor for MasterCard and the market leader in merchant acquiring/PoS, a segment that is still emerging and has the potential for tremendous growth in Nigeria.
Source: Central Bank of NigeriaThe completion of the switchover from magnetic strip cards to chip and PIN cards in 2010, is expected to further accelerate growth and usage of e-payments across the country. Nigeria is the first country in Africa to have completed this migration and is one of the few countries in the world to have completed the migration under a year.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world
This could be a major victory of 2019 for Nigerian startups. For the second time in two years, Interswitch is signaling it is now ready to open its share portfolio up for public subscription. The unicorn startup is riding on the wings of the recent relatively successful listing by MTN Nigeria and Airtel Africa. This is seventeen years down the line for the digital payment solution.
Here Is What You Need To Know And How To Get Ready For Interswitch’s Shares
This could be a reality this time. Interswitch has already hired JPMorgan, Citigroup, Standard Bank for the share sale.
This listing could value Helios’s Interswitch at up to $1.5 billion
The listing would happen on the Nigerian Stock Exchange at the same time it is happening on the London Stock Exchange.
JPMorgan Chase & Co., Citigroup Inc., and Standard Bank Group Ltd. are among the firms working on an initial public offering, which may value the financial technology company at $1.3 billion to $1.5 billion, according to reliable sources.
Interswitch had earlier shelved its plans to list in 2016 after the price of crude oil fell dramatically, causing a contraction in Nigeria’s economy.
This Listing Is Drawing An Unclear Path For Africa’s Digital Startups
Just recall Fawry, the Egyptian startup poking at IPO. The startup was acquired by Helios Investment Partners halfway into its journey. Interswitch, originally founded by Mitchell Elegbe also sealed the same fate in 2011 when Helios Investment Partners, a private equity firm dedicated to making growth investments across Africa bit two-third hard into the startup and subsequently acquired a majority stake in the payment startup. Since then, Helios Investment has become Interswitch’s largest shareholder.
This would, of course, leave a big question on the longevity of African-led startups, and whether the popular exit strategy most startups in Africa are resorting is not acquisition. Helios is among several private funds that specialize in investing in African assets as the economic recovery taking place across the continent bolsters investor sentiment and infrastructure plans.
A Look At Interswitch
Interswitch facilitates the exchange of value between service providers by providing a secure shared payment infrastructure and integrated message broker solutions for financial transactions, eCommerce, telecommunications value-added services, eBilling, payment collections, and disbursements. The company developed and administers Verve, the leading card scheme in Nigeria.
The displayed data on popular payment methods in stores, restaurants and other points of sale shows results of the Statista Global Consumer Survey conducted in Nigeria in 2017.
The Verve card, which is currently issued by banks in Nigeria, is the first and only chip and PIN card accepted across multiple payment channels including ATMs, Point of Sale (PoS) terminals, online, mobile and at banks, and enjoys the largest range of value-added services.
The company has been at the forefront of the development and growth of the e-payment sector in Nigeria, which is evidenced by its unique position of being the only switching and processing company connected to all banks in the country as well as to over 10,000 ATMs and 11,000 PoS terminals.
Aside from this, the company is the leading processor for MasterCard and the market leader in merchant acquiring/PoS, a segment that is still emerging and has the potential for tremendous growth in Nigeria.
The completion of the switchover from magnetic strip cards to chip and PIN cards in 2010, is expected to further accelerate growth and usage of e-payments across the country. Nigeria is the first country in Africa to have completed this migration and is one of the few countries in the world to have completed the migration under a year.
Interswitch’s dual listing in the U.K. and Nigeria is merely repeating what Airtel Africa Plc, the wireless carrier and a subsidiary of Indian parent Bharti Airtel Ltd did recently by simultaneously listing on the London and Nigerian Stock Exchange.
Recall that Jumia Technologies AG, dubbed the Amazon of Africa, listed in New York earlier this year, while Dubai-based payments firm Network International Holdings Plc went public in London. All of these recent events may not be unconnected with the recent invitation by the London Stock Exchange to investors around the world, particularly in Africa to come to invest in the Exchange.
Officials from the London Stock Exchange recently completed a roadshow in a bid to boost the LSE’s 115 African listings. The exchange is banking on partnerships with African exchanges, including those in Nigeria and Kenya, for dual listings, according to Director of Emerging Markets and International Markets Ibukun Adebayo.
“If a company has an international strategic growth plan, then the LSE is a perfect vehicle for the company to come and list,” Adebayo said Tuesday in an interview in Nairobi. “If the company is purely domestic and it needs to raise money in the domestic market and increase the number of investors available to it, then the LSE can help work with local partners.”
Firms already included in the LSE’s listing of Companies to Inspire Africa, which the exchange describes as the continent’s “most inspirational and dynamic private, high-growth companies are:
South Africa: Ad Dynamo International, Coega Dairy, Compuscan
Nigeria: Afriland Properties, Alpha Mead Group, ARM Life
Ivory Coast: Azalai Hotel Abidjan, Cipharm SA, Clinique Procréa, Agriex Côte d’Ivoire
Angola: Aldeia Nova, Angola Energy Greentech, Kora Angola, WEZA
Egypt: Cairo Three A, Carbon Holdings, Eagle Chemical Group, Sambo Metals
Morocco: 10 Rajeb, Bricoma, Damandis Maroc, Ama Detergent, Medafrica Systems
There are 360 companies from 32 different countries across the continent, boasting an impressive average compound annual growth rate of 46 percent, up from 16 percent last year, according to Global Finance.
It says on average, each firm employs over 350 people, with an average compound annual employee growth rate of 25 percent.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
The day is a regular one, and the sun is burning hard. People are staggering back to city bus terminals in a desperate hope of finding their way home after a long day at work. The place is, of course, Lagos Nigeria, and the usual jarring animosity and aggressiveness still hang on the faces of these people. They are not ready to wait; dragging, pulling and pushing are the next lines of action. With a population of over 17 million and the searing thought of queuing up to face traffic, the earlier they board the buses, the better.
In fact, according to a report by the National Association of City Transportation Officials, a coalition of the Department of Transportation in the U.S, up to a third of the time of cash-based transit buses was spent in “dwell time” delays just because customers have to pay for their fares in cash before movement can begin.
Interswitch, a digital payment solution in Nigeria has studied and understood this story perfectly, and is now on the move to revolutionize the Nigerian transport system for good.
Here Is The Deal:
Interswitch Group has worked out a technology that lessens the time Nigerians spend on long queues waiting for buses.
The company has launched three products — the BeCard, the BeVal, and the BeReader — exclusively for the Nigerian market, which are expected to save Nigerian public transport users the stress of the Nigerian public transport system and increase their life expectancy by a percent.
While the BeCard is your regularly shaped card — like any bank card or the Oyster card in London, the BeVal is the device which is installed on the buses where the passenger can tap on — just like on the London buses. The BeReader is the mother system that makes the BeCard and the BeVal work.
But Interswitch is way smarter here: the company has taken the erratic power and internet availability in Nigeria into consideration. That is why none of the three products would be needing any of the above. The BeReader would be solar-powered and will not require network connection all the time to function.
Innovation and The First Timer Strategies
“Interswitch believes that the transport system in Nigeria, Africa’s largest consumer market, is ready for innovation,’’ said Akeem Lawal, divisional CEO for payment processing at Interswitch. ‘‘This partnership is a key and timely milestone in our industry vertical markets’ focus. It is highly compatible with our vision for Interswitch Transport Solutions (Smartmove) which is essentially to progressively facilitate a multi-modal and multi-operator transportation system underpinned by best-in-class technology.”
Interswitch understands the game perfectly: nobody really cares much about the transport system in Nigeria, apart from the government and a few local players who have got used to the straight-minded approach of deploying as many buses as possible to run through some designated routes. Passengers simply have to queue up and purchase tickets if they are interested in traveling through those routes. Now, Interswitch sees a gap here. A recent Visa’s Cashless Cities study shows that digital payment on buses takes 2.6 seconds (on average) across a cross-section of global cities varying by digital maturity. Using cash takes 4.2 seconds, according to the report, and it would be much higher if it does not involve something similar to Bangkok’s system of hiring conductors to collect cash fares when passengers board — which is pretty much what is practiced in most parts of Africa.
The strategy is also in the numbers: Figures released by Nigeria’s National Bureau of Statistics in 2018 revealed that there are 11,653,871 million vehicles in Nigeria. 6,768,756, representing about 58.08 per cent are commercial vehicles while 4,739,939 (40.67 per cent) are private vehicles. Nigeria’s population has recently been projected by the United Nations to have reached a staggering 200 million. The implication of this is that 6.7 million commercial vehicles cannot serve a population of 200 million or more. Out of the 6.7 million commercial cars in Nigeria, only about 200,000 commercial vehicles are on the roads in Lagos alone, with a population of more than 17 million people. Even playing the devil’s advocate with the 5 million total number of cars in Lagos, whether private or commercial ( with the national average pegged at 11 vehicles per kilometer and the daily average of 227 vehicles per every kilometer of road in Lagos), there is still not a sufficient number of commercial vehicles to match the heaving population of commuters.
Interswitch Group knows this and is not afraid to seal the deal of over USD 73,129,560. Charging a service fee of NGN50 (approx. $0.14) per usage assumedly on 12 million daily transport users in Lagos alone over 300 days (65 days off, for irregularity in the frequency of commute) would be a whopping NGN180 billion annual revenue (approx. $500 million), almost seven times the value of the deal sealed by Interswitch.
According to Akeem Lawal, Divisional Chief Executive Officer, Interswitch:
“We have taken all of those technology pieces, and we have put it on the infrastructure Interswitch has built over the last 17 years. We combine the payment technology with those unique technologies that we have done in partnership with a UK company, and we create a solution that will work on Danfo buses, blue buses, in ferries and in trains. It will be all across the country. We will start our proof of concept with some of our selected partners in Lagos and Abuja, and we will extend to the rest of the country when we are done.”
Being the sole operator and the first timer here means Interswitch is going to have a field day counting its blessings.
Interswitch Is Also Relying On The Policy Strategies of the Nigerian Government To Give The Project A Pivot
Nigeria, through its Central Bank, has placed so much emphasis on a cashless economy in recent times. Interswitch is relying on this strategy to pivot this project.
It is A Win-Win Deal For Both The Government and Industry Operators
Lessons and Experience From Across Africa
According to the Visa’s Cashless Cities study, cashless transportation, as envisaged by Interwitch, could bring more, more money for cities and governments. The study shows that transit agencies — including government-owned transit companies and privately owned transport companies — spend an average 14.5 cent of every physical dollar collected. A whopping 10.3 cents from that amount is saved when the digital transport payment system as envisaged by Interswitch is used. This is because only 4.2 cents is spent for every digital dollar, taking into account such constraints as fare invasion, police corruption and pilfering among others.
Rwanda Is A Good Case In Point
When Rwanda had not awarded a cashless transit payment system design contract to AC Group, an indigenous tech startup or deplored the Smart Kigali Initiative, made up of three major bus firms — which partnered to transition to the cashless Tap & Go bus fare system designed by the AC Group — Rwanda was losing up to 40 percent in revenue due to the hurdles presented by paying for fares with cash. Since the launch of the cashless system, buyable cards led to a revenue increase of more than 30 percent and a speedup in daily commutes in Kigali. There are currently more than a million users of Tap & Go in Rwanda, and 100,000 in Cameron, where the AC Group has expanded to.
Kenya
The matatu transport system in Kenya meant that transport operators in Kenya would suddenly jack up prices as they liked. In a bid to eliminate this corruption and inefficiency, the Kenyan government adopted the contactless transport system (although it was operated by private individuals) by launching a program in 2013 which mandated all matatus in Nairobi to go cashless. 70 percent of the Nairobi’s 4 million residents subscribed to the deal and got themselves contactless cards.
Bottom Line:
While many others are waiting (and calculating the risk perhaps) or simply comfortable with the status quo, Interswitch is leading the revolution and is going to take jobs away from so many people. It is also going to cut a large, gaping hole in the ways things have always been done in the Nigerian transport sector. The next beneficiaries would be those who are fast enough to understand this deal and how they can be part of its value chain.
Charles Rapulu Udoh
Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.
