“There seems to be a lot of people making apps, but very few people making African platforms. And we see a big enough opportunity here to invest in making an African platform.”
This is according to Vahid Monadjem, the CEO and co-founder of Nomanini, a South African based startup that has developed a prepaid airtime vending platform, specifically designed for the African context.
“There is a US$60 billion airtime market, and that’s just airtime in Africa alone,” explained Monadjem. “I think, by some estimates, by 2015 there is going to be $85 billion of prepaid airtime floating about. So it’s a massive opportunity and I think this [idea of] hacking technology from elsewhere and bringing it in just often makes too many compromises. This is a big enough market to justify its own platform.”
Nomanini’s mobile prepaid airtime machine is in the form of a light orange box that looks like a combination between a portable credit card machine and a handheld parking meter. Its aim is to improve on (and even replace) the scratch card as a method of buying prepaid airtime in Africa.
“I think the scratch card has really opened up the possibility to serve deeper and deeper into underserved markets… I don’t think the mobile revolution in Africa would have happened without the scratch card… That was the best method available and that was kind of the benchmark we were trying to improve against.”
“There is a potential client that we are in discussions with in Nigeria that trades literally 100 million of these little scratch cards,” continued Monadjem. “And they don’t come cheap [to manufacture and distribute].”
He added that by using Nomanini’s device, informal entrepreneurs can sell airtime more efficiently, and cost effectively to their customers, allowing wider access to prepaid services.
Each device serves as a mini-business that empowers individuals to make a living or expand their existing micro-enterprise income. Nomanini makes its profit by taking a small portion of the transaction amount margin and through the sale of each device (although these costs are often subsidised as Nomanini introduces them to the market).
Nomanini has also recently partnered with BambaKenya, a startup looking to lead in the distribution of prepaid airtime for the unbanked and underbanked markets in Kenya. According to the Communications Commission of Kenya, the East African country has 30.7 million mobile subscribers, a penetration of 78%.
Serving the informal market
Monadjem described the opportunity in targeting the informal market as massive. “This is the mind blowing thing for me. This is one of the facts that kind of perked my ears up three or four years ago.”
He explained that Nomanini’s device can be worn around the neck by street hawkers and offer simpler and quicker transactions for informal shop owners.
“Even in South Africa, more people prefer to shop at informal trade outlets than the formal trade… I seem to recall there being about one to one and a half million informal market traders – street hawkers, spaza [informal] shop owners or people that work at spaza shops and shebeens – and that’s again a massive sector that for the most part is quite underserved,” he expressed. “And this is in South Africa, again the most formalised of the economies. In the rest of Africa, it’s just that much bigger.”
In addition, the company has also seen the potential in providing their mobile terminals to the minibus taxi market in South Africa.
“I was reading statistics about the commuter trade, and the minibus taxis in South Africa are a huge sector. By most estimates there are about 200,000 minibus taxis in South Africa, and they touch I think about 20 million commuters every week. So effectively [almost] the entire economically active population that does not have a car, uses minibus taxis,” highlighted Monadjem. “So I think that was just the one huge insight.”
Nomanini has also entered into discussions with a company in Zambia that places advertising in minibus taxis, and are looking to add Nomanini’s prepaid airtime devices to their business.
The company is also talking to a potential partner in Tanzania.
Advice to startups
Monadjem, who was previously Mckinsey & Company’s global fellow for emerging market product development, said entrepreneurs should look at their ideas through three lenses. Firstly, it should be something they are passionate about. Secondly, they should ask if their business concept is scalable and if they are solving a big problem.
“And for me, I think I was blown away both by the size of the prepaid airtime market, and kind of what was going on with electricity becoming prepaid and water now becoming prepaid,” he added.
Thirdly, entrepreneurs should focus on ideas that are not easy to replicate. “Because if it’s easy… someone would have done it already,” Monadjem said. “And we didn’t want it to be easy, we wanted something that was going to be hard and complicated and have a journey to it… it’s a good question to ask yourself, why hasn’t this been done before?”
When it comes to forming business partnerships, the best advice he can give an entrepreneur is to listen to the needs of the partner. “I think a lot of people are often too busy selling their solution or have already made an assumption about where someone is coming from and what someone needs, and often don’t even bother to listen. I think so far our approach has always been to approach partnerships with the humility of being able to listen. Whether that’s a street hawker, or a spaza shop owner… those were our first partners and we were listening very carefully to what they needed.”
Monadjem added that one of his strengths is that he is good at being wrong in the sense that he can let go of assumptions, which is vital when talking to potential partners. “It means being able to listen to people and being able to say, ‘that’s not the [assumption] I came here with, okay I had the wrong idea, let’s work with what you have brought to the table’.”
“Prepare to be wrong and be good at being wrong,” he advised.