Mubarak Sumalia, CEO of Bezo Money, had little trouble understanding what his potential clients required and why: “I grew up in an Accra slum and I understand why people have stuck at the same level economically, and I think there’s something really wrong about this.”

In order to enter the annual MEST programme entry competition, he went to meet his Mother to learn more about the credit clubs known collectively as Susu collectors: “The model piqued my interest. She used it to pay for my school tuition. Why aren’t banks doing this, I wondered? It allowed people to bank on themselves. I assumed it required technology to do this well.”

The Susu collector is a financial middleman who provides an informal mechanism for people to save and retrieve their money for a nominal charge. They can run credit unions in this manner, giving members access to larger credit quantities to pay for larger payments they must make. These collectors exist because banks do not offer financial goods to poorer citizens and the informal sector has a low level of financial literacy.

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But what appeared to be an ideal opportunity for a fintech start-up was not as it appeared: “They refused to use our technology because they were content with what they were doing. As a result, we realised that we needed to build depending on necessity.” On this premise, they proceeded to concentrate on the main issue. They desired credit and a credit history: “Nobody knew their credit track record, and they desired to be able to show that they had a track record.”

“MEST gave us US$100,000 to figure it out but we got hit by the arrival of Covid. We did a crowdfunding campaign to support these women. We also went to Lagos and it is really big there. The idea was to build a digital bank for the informal sector. We raised US$200,000 and idea was to go wide.”

It did not go as planned, as do all the best set plans. To reach people in the informal sector, the service was initially provided via USSD, which worked on basic phones. It has a collaboration with Vodafone Ghana to provide an unbanked personal savings platform. It has so far onboarded 100,000 consumers and is waiting for capacity to improve before taking on more business next year. When 200,000 people attempted to join, it crashed. Currently, it conducts around $80,000 in financial transactions every month.

When it began to raise its market profile, it discovered that many young people were reaching out to them, asking why there wasn’t an app. Bezo Money first stated that the service was intended for their parents, but eventually reacted to this demand: “We constructed a web app that could connect our service to mobile money wallets.”

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It takes a different approach to these two markets. The elderly, who are less financially and digitally competent, want to be able to obtain credit based on their savings history. They are being targeted via USSD on basic phones, and Bezo Money has teamed with community leaders to explain the situation. Assistance to them is significantly more centred on on-the-ground sales personnel and face-to-face offline service.

Susu collectors occasionally disappear with all the money, thus credibility is essential. It’s considerably easier for younger users: “They just understand it.” The ratio of older to younger users is roughly 70%/30% in favour of the latter.

Cash in/cash out, PCP transfers, savings, and loans are examples of current services. It has begun to address concerns such as renting. Some landlords require a 24-month ret in advance. Bezo Money advances the funds, and the customer repays them monthly. They can also provide credit advances for large items such as televisions or refrigerators. Bezo Money invests the funds that it receives in bonds and Treasury bills. It hopes to be able to provide insurance in the future.

So, has it achieved its goal of becoming a digital bank? “We don’t refer to ourselves as such. We obtained a TFO microfinance licence and advanced to Tier 2 to be able to do more. There are 150,000 mobile money agents between Vodafone and MTN, and we hope to become a branchless bank for places like villages in the future.” This is a 3–5 year goal with the goal of expanding to Francophone African countries: “Anglophone countries are saturated with Nigerian companies offering these services.”

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Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert. 
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard