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Entering New Markets in Africa: An Interview with African FinTech Company Mukuru

COVID-19 has accelerated digitization around the world. Businesses and schools are rapidly rolling out new systems and moving their work online. Meanwhile, tech companies across the United States and Africa are rushing to meet growing consumer demand. 

Mukuru, a FinTech payments business that specializes in helping people send money home to their families, is one company that not only rose to meet growing demand but also rolled out new product lines in response to the global pandemic. The company reports a more than 100 percent growth over the last year and has forged new partnerships to ensure its customers can continue sending money home to loved ones around the globe.

Mukuru recently used Prosper Africa support to expand its reach in the Malawi market and drive financial inclusion across Southern Africa. Prosper Africa leverages the full suite of U.S. Government trade and investment support services to drive U.S. investment in Africa and help U.S. and African firms do business.

Prosper Africa recently interviewed the CEO of Mukuru, Andy Jury. Mukuru operates in more than 20 countries across Africa, Europe, and Asia. We spoke with Jury about how the company is  responding to COVID-19 and remaining laser-focused on customer trust.  

This interview has been edited for clarity and length.

How is Mukuru boosting financial inclusion for underserved communities?

Jury: We have built a business that is focused on moving money into, within, and out of Africa. We focus on enabling the migrant diaspora and their families to move and use money in a manner that improves their lives. Most of our customers initially engage with us because they have embarked on this journey of great sacrifice—often crossing two or three borders in search of economic opportunity—to then send the vast majority of what they earn home to their families and loved ones. In the informal markets that customers would typically use before becoming acquainted with our services, remittances are unregulated and fraught with inconsistency in terms of communication, pricing, speed, opportunity cost, and access. 

Let’s say you’re a Malawian just arrived in Johannesburg. You’ve got a sense of dislocation and might feel intimidated by the formal financial structures, but you still want to send money home. Typically you’ll go down to the local bus station and choose what you would perceive to be the most trustworthy-looking person to take your money back to Malawi, potentially couriering it in a coffee tin for example. And your money may or may not get to the other side. But even if your loved ones do get the money, there’s friction along the way. You’ve had to take time off work, travel to the bus station, find someone to transport the money. And at the same time, the recipient back in Malawi is doing the same—traveling to a central bus terminus and finding that person. 

What we do is digitally onboard every one of our customers. We have an ambassador agent network that can meet you at home or at work, verify your identity, and, once you’re on the platform, we can treat you as a customer in a range of different ways. While many of the links in our value chain have become digitized (for example 90 percent of orders are self-created by customers on their mobile phones and all communication is digital), the majority of payments still happen in cash currently. So typically to pay for an order you could go to one of our branches or those broad array of partners and deposit cash. The recipient could then immediately collect the cash at their local branch using the digital voucher code that has been SMS’d to them. A process that could previously have taken as long as two weeks is complete in under five minutes. Alternatively you could choose to  send cash to a mobile wallet or transfer mobile money into cash. We’re agnostic on this point as long as we can support the customer on their way and provide them with optionality. The progress towards digitization is certainly accelerating, but we see this as a journey, and we want to walk with our customers along that path.

A customer visits a Mukuru Orange Booth.
A customer visits a Mukuru Orange Booth. Photo: Mukuru

What impact has COVID-19 had on Mukuru?

Jury: The COVID-19 crisis created a very sharp incentive to speed up innovation and bring products to market. We developed new access points and we drove new partnerships and launched new products in an exceptionally productive period during the hard lockdown May-June 2020. For example, we launched Mukuru Groceries through a partnership with a grocery-focused retailer in Zimbabwe. We brought our skillset and expertise in terms of remittances and partnered with the retailer to create grocery packs. That addressed the friction points our customers were experiencing in terms of the availability and affordability of food staples in Zimbabwe at the time. It was an amazing example of innovation with a limited requirement for deep investment in new technology. We took modular “Lego blocks” or capabilities that we already had and began putting them together. Our partner did the same and together we were able to create transformative value for our customers

Another example is our partnership with global remittance businesses such as WorldRemit, an online money transfer business with a large global customer base across North America, the United Kingdom, and beyond. Together we’ve forged a connection that leverages their “first mile”—the front of the funnel in terms of engaging with the sender—and matched it with our infrastructure, reach, and customer service capabilities in key African territories (our “last mile”). This partnership unlocked massive opportunity for our customers and allowed remittances to flow at a time when people really needed them. Leveraging our last mile has also seen us become payout partners for large international aid organizations and NGOs looking to distribute much needed aid across Africa to those impacted by COVID-19 and for ongoing distribution aid cash transfers. 

Furthermore, we now offer the ability for customers to sign up via WhatsApp. You can send your documents to us electronically, and we verify them and onboard you onto the platform. This means you no longer have to wait on one of our agents to come to you. You can sign up from the comfort of your own home using a standard, ubiquitously available technology.  

All in all it has been an “interesting” year and a time of great forward momentum.  Sometimes you get stuck in the “tyranny of the urgent” cycle, and COVID-19 had such an acute sort of impact. We were all asking ourselves, “What’s really important? What do we really need to focus on? What is nice to have versus truly essential?” We had to declutter and really focus on creating value for our customers.

You recently acquired one of your partner’s assets in Malawi. Can you tell us about that transaction and the support you received?

Jury: Zoona was a key pay-out partner of ours in Malawi. Zoona was considering whether they wanted to continue in Malawi or focus on other markets instead. At the same time, we wanted to be in control of our own destiny in core territories for us. Malawi is one country where we see untold opportunities to extend our reach. I think it’s ended up being a win-win scenario where they could sell assets that we can then use to harvest additional opportunities. 

Prosper Africa helped us with market studies and the outputs assisted to focus us on shaping what we wanted to do and how we could confidently conclude the transaction. And we did. We managed to close that transaction and bring the team on board at the height of a very hard COVID-19 lockdown in Southern Africa at the end of April and beginning of May. This support has generated a lot of value from the get-go.

*Prosper Africa provided Mukuru with a market study on product innovation to accelerate financial inclusion in the region. This support was provided via USAID’s Southern Africa and East Africa Regional Missions through implementing partners DAI/INVEST and CrossBoundary Advisory. The U.S. International Development Finance Corporation (DFC) and other development finance institutions are investors in Emerging Capital Partners, Mukuru’s largest shareholder. 

What’s next on the horizon for Mukuru? What are some opportunities you’re thinking about and think other businesses or investors should consider?

Jury: I think there’s an awesome opportunity around the concept of digitization. But I don’t think we – as an industry collective – spend enough time thinking about how you can build a bridge to trust such that we can get a greater proportion of the users of informal financial services / arrangements to adopt our services and the associated benefits. Many of our customers don’t know any other way to send money home except via a bus driver or putting it in a coffee tin and having to invest a lot of  time to get the money home. And while widespread proliferation of mobile phones has given them the means to unlock access to a broad array of financial services, including cross-border money transfers, that doesn’t mean they wake up and say, “Hey presto, this is awesome and I’m going to adopt this going forward.” There’s an education process—a range of hurdles, inertia, perhaps even a lack of trust that we all collectively need to think about. And we see opportunity if we can address these hurdles, but it does require persistent focus and the need to walk in our potential customers shoes in order to understand their challenges and address them.

Customers lined up outside a Mukuru Orange Booth
Mukuru has more than 800 Orange Booths across Africa. Photo: Mukuru.

How have you addressed these hurdles so far? Any lessons learned?

Jury: We have learned via experience and some hard lessons along the way that to build legitimacy you have to find a balance between a high-tech and a high-touch approach: understand a customer and what their catalysts for change are through a high-touch approach, and then marry that with scalable, replicable high-tech processes that allow you to deliver consistency across time and geographies. You need to be able to talk to a potential customer in their lingua franca and empathize with the journey they’ve had. For example, a Congolese person in South Africa has had a very different journey than a Zimbabwean person in South Africa – both physically and mentally.  But if you can indicate that you know and understand the potential journey that a customer has had, show that you can enable them to add a degree of control to their lives, and bridge the hurdles they’ve faced, that’s a massive unlock. 

That trust-building takes time, and it requires a lot of investment. It’s certainly nowhere near as simple as deploying an app to the app store and launching a large complementary advertising campaign. In fact, we are increasing our investments in physical infrastructure and at the same time seeing a benefit in terms of more people trusting us enough to leave their hard-earned money and savings in our digital ecosystem. Almost paradoxically by increasing the promise of instantaneous access, people are comfortable making the transition and eventually no longer need the reliance on physical engagement anymore. And so that’s going to be a very interesting journey to see how we can continue to have the right investment and infrastructure to drive digital adoption. It might seem like those are opposite ends of the same continuum but that’s a formula that has reaped great rewards for us in recent times.

Prosper Africa is a U.S. Government initiative to increase two-way trade and investment between the United States and Africa. The initiative leverages the full suite of U.S. Government trade and investment support services to help U.S. and African businesses and investors connect with new partner, advance opportunities, and close deals.