Kenyan-based Chris Gathingu saw an opportunity while at university six years ago and grabbed it. Gathingu, now 30 years old, founded Tangazo Letu Ltd to help a local water company automate its processes and has since expanded his business to serve more than 30 local financial institutions. He told How we made it in Africa’s Dinfin Mulupi why African companies ought to automate their businesses, how other technology startups can grow and his plans for the future.
How did you start Tangazo Letu?
While I was pursuing a degree in computer science at the Jomo Kenyatta University of Agriculture and Technology (JKUAT) in Kenya, I saw an opportunity in automation of businesses. I saw a utility business which had to disconnect most of its clients because of overdue payments. The problem was that the company used snail mail to communicate with its customers about overdue water bills and therefore the communication process was inefficient. This inspired me to work on ways to close the gaps and enhance efficiency in businesses by automating their processes. I developed a system for the utility company and later founded Tangazo Letu to fill gaps among other businesses in other sectors.
We started with US$1,200 as capital six years ago. The business was not driven by money but rather the vision. We have since developed products such as SpotCash, which has revolutionised the way savings and credit co-operatives (SACCOs) do their business by enabling members to withdraw, check balances, make bill payments and deposit their money from and to their savings account via their mobile phones. The solution has been adopted by 30 local financial institutions. We are also the only local M-Pesa development partner for Safaricom. We tune M-Pesa to particular sections and integrate it with other systems to fill other gaps.
Very few SMEs are adopting technology because of the prohibitive costs. How can these be addressed?
Technology comes at a cost. This cost can however be reduced significantly by establishing platforms where various SMEs can collaborate and consume services from a central point and then share the cost incurred running that service. We have achieved this with SpotCash where costs are shared among the SACCOs using the service. Like-minded businesses should take advantage of such shared platforms. The cost can also be spread over a long period of time by having SMEs pay, for instance, per month or on subscription. This should empower SMEs to adopt technology solutions that would otherwise be very unaffordable if paid for in one instalment.
Kenya has lots of technology startups. How do they get to the next level?
Entrepreneurs need to keep their eyes on the ball. A lot of entrepreneurs are losing focus and directing their energies towards getting funding from venture capitalists. A business needs to grow step by step. You can’t have something blow up to a national system overnight unless you want it to blow out just as fast. Money is good when it is in the right proportion; when it becomes more than you need, it could work against you. In our case we had just enough money for every step in our journey. A common trend right now is that of developers seeking money, then later working on how to spend the said amount. That trend lacks vision and is driven by money. You need to be guided by your business plan. Cost comes last. You have to decide to either grow one step at a time or be tied to the hip to a VC for your entire lifetime.
Describe the challenges you face.
Save for mobile phones, Kenya has very low penetration of technology. A lot of organisations use manual processes and lack a centralised system of information. Larger organisations are quick to adopt technology but smaller businesses are slow because it is not a key priority to them. Most small businesses view technology as a cost incurring venture, which they only take up after dealing with more important issues like acquiring customers. Our biggest challenge is educating such SMEs on the cost saving benefits of technology.
What advice do you have for other entrepreneurs?
Doing business is not easy. You must be prepared to find squirrels running around along the way. You need to stay focused on the antelope and not get distracted by the squirrels. People go into business with a lot of optimism expecting to get clients immediately, but that is not the reality. You have to be hardworking, consistent and focused. You also have to be very patient.
Tell us about your future plans.
We have set a good foothold in Kenya and we think this is a safe basket. We are trying to see what other gaps exist among the various organisations which have taken up our services. We have served the SACCO market efficiently and we are now looking to work with more microfinance institutions and banks. We are also looking to expand regionally.