Cape Town-based Zoona is a money transfer company that has established over 1,500 outlets across Zambia and Malawi through a network of local entrepreneurs who operate their own kiosks. It has processed over US$1bn since its launch in 2009.
Money transfers in many African countries can be costly and difficult. A large number of people remain unbanked, and their only option is to send cash via postal services.
Zoona allows a secure and accessible alternative to those looking to quickly send money anywhere in a country. Customers simply go to a Zoona outlet, show their national ID card and provide the cash they want to send, along with details of who they are sending it to. The recipient receives a message notifying them of the incoming amount – which they can collect at their nearest Zoona agent. Senders pay a transaction fee of between 2% and 8%.
Agents earn a commission on each transaction, and Zoona provides them with the kiosk and working capital. According to Mike Quinn, Zoona’s CEO, one of its most successful agents in Zambia has grown to manage 25 outlets with 30 employees, and is earning over $10,000 a month.
Mozambique and DRC next
Zoona has recently raised $15m in second-round financing, which it plans to use to grow its footprint to 10 markets by 2020. It is currently expanding to Mozambique, and Quinn says he is also looking at the Democratic Republic of Congo, as well as West African countries.
Over the last decade mobile money services have seen a rapid uptake in some African markets as an increasing number of players enter the space. The most successful case has been Safaricom’s M-Pesa in East Africa which transacts billions of dollars a year.
“M-Pesa is dominant in Kenya, and so we are not currently looking at [expanding to] East Africa, which is where the penetration of mobile money in financial service is much greater,” explains Quinn.
“We are looking at frontier markets where there is a huge need for people who are unbanked to move cash around to save, keep their money safe, access financial services and credit, and where there is really a nascent opportunity.”
Lelemba Phiri, Zoona’s chief marketing officer, says the regulatory environment also plays a part in expansion decisions.
“As a financial services provider we are regulated by the central bank in all of our markets. And while there is willingness from the central bank to increase financial inclusion there is also some nervousness around mobile financial services because they are fairly new in a lot of our markets,” she adds.
“One of the key factors that we look at is how friendly the regulators are and how open they are to new financial services. The wonderful thing is that now its gaining more momentum, there is so much more openness to discussing new products and to really engage and cross-share cases from different regulators in order to get them comfortable.
“But it’s still a challenge because its complex and its different in each of market. You can’t just take the copy-and-paste approach.”