Tingg is one of the popular mobile payment platforms in Zambia but few know the back story of how the once music ringtone payment facilitating company that created it, found itself doing business in Zambia let alone becoming one of Africa’s leading Fintech Companies.
Financial Insight Founder, this author, had the rare opportunity to sit down with Gilbert Lungu, who has been with the company’s country office manager since January 2018, to discuss a number of significant issues and to get insights into the makers of Tingg. The following are excerpts of our conversation which was held on Friday 21st October at the Cellulant Zambia Head Offices in Pangea House, Arcades Mall Lusaka.
Where is all begun
“Cellulant has been in existence since 2003, give or take about 19 years. Two gentlemen who happened to be friends, Ken Njoroge (Kenyan) and Bolaji Akinboro (Nigerian) met up in Kenya where at the time Bolaji held a position at one of the development institutions”.
“So, they met up and said it would be nice to set up a business that is run by African people across the footprint of the continent. This would be a business that would be built on pure ethics. A business that would not only be built from the ground up but from the foundation of ethics such as no corruption. This is part of the DNA of the company that still exists even today”.
The “Napkin” Business plan
Successful business ideas can come to you at any moment and this applies to how the founders of Cellulant first coined the idea that would later become one of Africa’s leading Fintechs.
Company folklore has it that there were a number ideas that were sketched out. “The people that were there (at the time) said that they sketched out their business plan on a hotel napkin as that’s where they met”.
“In the early days, they started out with value added services, specifically caller ringtones. That was the ‘in thing’ at the time”. This was a music ringtone revenue-sharing business to help musicians make money when users downloaded their songs. “They would get musicians to compose those ringtones and they would sell them to the mobile network operators. This business ran for about two to three years”.
Its 2006, “What does the future hold for mobile”?
“Around 2006, there was an (introspection) of what mobilewhat could mobile (technology) could do other than making phone calls.” This was the moment when the founders held a periscope into the future and realized that mobile could do so much more. “They realized that the mobile could one day become a bank and therefore they needed to pivot the business towards that in order to prepare for the (inevitable) future”.
“So Cellulant prides itself for being one of the earlier (pioneers) conceptualizing guys around the concept of money sitting on a phone and the ability of customers having access to their money directly from their phone or directly from their bank account (or whereverwhere ever they stored their money)’. This was the turning point for the company.
“They then meet up with someone in one of the large multinational banks and pitched the idea. The gentleman was magnanimous enough to say if (they) could go and develop the software for what they (were pitching), bring it back to (him) and demonstrate that it can work.” With Ken Njoroge’s software development background, it was game on as they went away for a couple of weeks and built the demo of what would later on become Cellulant’s maiden money transfer application.
“They went back to the gentleman and did a demo. He then asked that they try it on a small group”. At the time, they had developed a short code feature that would allow someone to dial it and have access to their bank account. “The demo was a success and the bank agreed to roll out that feature to its customers”.
Following the proof of concept and the ability to attract a main stream bank to their product, the founders spent the years 2006 through to 2007 expanding the business from Kenya to other countries in the region.
Cellulant Rising in Covid Times
When the black swan event of 2020 hit, Cellulant stepped up to actualize many of the ideas it had in order to drive the business forward. “With the passage of time, this world of fintech and technology is about evolving. In our (Cellulant) case, what covid did was that it accelerated some of the things that were (just) concepts”.
For example, “the capability of creating alternative channels or channels that could accept consumer payments from merchants”. In implementing some of those ideas, “Covid accelerated and validated what we were thinking around consumers being comfortable with payment solutions that were not their traditional methods (ways) of doing things”. This was not just limited to paying of pbills but it also extended to consumers’ retailconsumers retail experience when they went into shops.
This promoted an evolution of how merchants were also about to perceive payment solutions. “Merchants suddenly became willing” to adopt the technology. With scientists identifying physical cash transactions as one of the ways in which the COVID 19 virus could spread, adoption of digital merchant solutions that had minimal contact were adopted.
Furthermore, with lockdowns in different jurisdictions limiting people movement despite them having the need to pay for goods and services, digital payment solutions became the next best option for a restricted populace. Merchants eventually responded to the onslaught of public health and safety announcements and regulations through the adoption of innovative payment solutions in order to remain compliant.
From a Cellulant research and development perspective, “the product teams went into overdrive to create very intrinsic and intuitive (payment) experiences that enabled consumers to be able to make payments whilst merchants were able to accept their money”. Trust was built. “It was an acceleration of digitization that has now left the company reallywell positioned to be able to scale because now the strategy (from a Cellulant context) moved from just being very product driven to being very ‘productized’. So we developed a set of products and said these are the products that wewere are going to push across the footprint (continent) where the nuances were similar”.
How Gilbert Sees the Next 5 to 10 Years for the Zambian Business
When asked about the how the business would evolve over the next 5 to 10 years, Gilbert pointed out that positioning would have to be looked at in an African context and where the trends were moving towards. “If you look at world events now, what could that next bubble be? And particular in the African sense and context. If you look at West Africa, they are way ahead of us in terms of e-commerce”. He acknowledged that this was also the case for East Africa as well. However, “if you come to this part of Africa e-commerce has not been the thing. That bubble has not really burst to a point where it is out there and everyone is comfortable with buying stuff online and being confident that they will get their stuff delivered”.
“In the context of Zambia, over the next 2 to 3 years, I think the next big bubble is going to be e-commerce. Therefore, it is very exciting to hear of large investors such as Starlink and so on, who want to create universal access for internet connectivity because that is one of the key ingredients for a successful e-commerce story.”
“People should be able to go online and order their stuff. In order for them to do that, they need the internet but they also need the internet to be cost effective and always available”. This will ultimately drive scale.
Early signs are beginning to show on the rise of e-commerce in Zambia. “I think it will go to the extent of grocery shopping going online. There are initiatives and indications that are already showing that local entrepreneurs are looking at venturing into those areas”.
Youth in Tech Trend Must Not be Ignored
The “tech education” levels of the young population is another trend that Gilbert sees that will influence e-commerce. With a workforce whose average age is around 26 years old, this is a trend that Gilbert passionately believes should not be ignored.
“We are now getting a very ‘schooled’ population in terms of technology. Some of the young people we (Cellulant) have interacted with as a result of our business, have brilliant ideas. They are writing code that once upon a time was inconceivable”.
This new generation is unconventional in self-presentation and way of life. “Those guys are there. For the most part, they don’t look like your typical worker, they don’t tick the box” of conventional and are “clad in denim jeans”.
“They want freedom more than anything else. The freedom to express themselves, to think, to create”.
This trend will see a shift in the work-life culture with the advent of new ways of working inspired by the youth. “I think the ‘Gig Economy’ is going to become a big thing. Guys will not necessary want to be enlisted onto a payroll, but they want the freedom to be able to say — What is your problem — this is how I think I can solve – then they will come and solve the problem for you and then shoot you an invoice – and off they go to the next Gig”.
“The next generation that is going to be the Gig Economy sort of workers, that in the Zambian context as well as the African one, is a definitely a trend to watch. What that will do naturally is that it will create other kinds of jobs through the – I will do it myself philosophy”.
Cellulant boosts of a multicultural Pan African team
Furthermore, with recently policy announcements by the New Dawn Government in Zambia where technology has been identified as a key enabler that will unlock development in all key sectors, it will present an opportunity to the Gig Economy workers to ply their skillsets.
Sectors that were left behind in terms of technology now have a new hope. “What that will do is that is that particular sectors that may not have embraced technology will be compelled to do so because the world will force them to embrace it”.
Start-Bill Optimism
With the establishment and operationalization of the Ministry of Technology mandate, there is much optimism in the technology sector for new small businesses.
“One of the things that has been a very clear-cut pronouncement which will be going on the floor of parliament is the discussion around the Start-up Bill. The capability for Government to create a set of guiding principles around what start-ups should look like especially in the Gig Economy”.
“Many of the one-man-employee companies will evolve and become the businesses; the start-ups of Zambia. If you look at what has built many economies across the globe is the SME sector. It’s the small guys who start as one or two individuals and then later on become the large corporations.”
The start-up bill will help small companies in two areas: innovation and capital raising. “It is hoped that there will be some kind of capital that will enable individuals to setindividuals set up small technology businesses among others. What this will do is that it will drive innovation.”
However, innovation without financing to enable scale will also need to be addressed. “Innovation without some kind of financing to take the (ideas) to the next level won’t do anything for anybody. The thinking in the Government context is focused on how to create a pool of funds from which young entrepreneurs can draw from with which they can innovate with in order to create the next big idea that will create value for the country.”
Cellulant Company Performance Over the Last Two Years
“If you look at the last two years, they have spoken into Covid, we (Cellulant Zambia) have been growing year-on-year between 30 and 40 percent. The business has grown substantially for the simple reason that our strategy shifted from a project type approach to a product focused approach.”
“Once the strategy was amended, the market became open and willing to adopt some of the products that we were pushing out to consumers. I see this trend continuing. I see a situation where we will move on a path that will see us grow from 40 to 60 percent (on a year-on-year growth basis), in my opinion, for the next 5 years”.
“This is what delivers value to shareholders. Once value is delivered, this is what gives impetus to shareholders to invest more in the business so that the business can grow further.”
A large part of the company’s operating costs is around people management. “With the sort of growth we have experienced, (in fintech) our biggest asset is people. It is the people that write the software. Our software then becomes our intellectual property (IP) that we can go out and seek investors to put money in the business.”
In terms of the headcount of the company, “we have around 45 permanent employees and about 60 temporary employees who are currently the ones going out into the market and driving consumer uptake for the products we are rolling out to merchants”.
“We see the trend (of employment) continuing to rise over the next 2 years. In my opinion, the the 45 could become 100 over the next 2 to 3 years and the 50 could become 100 or 150 over the same period”.
The importance of investing in people
“Investment in our employees is extremely critical. We have made significant investment, across the group, to expose our young people to development programs such as management acceleration, and technical programs”.
“One of the things we as a company have a strong conviction on is that if we developed the guy who walks in as a computer scientist into a leader, and empower them with the tools, knowledge and skills that they require to drive leadership, ultimately over a sustained period of time, we will create many more Cellulants either in the context of Zambia and beyond “.
“The appetite for Cellulant has always been that if we are present in many of the major economies across Africa, we would then be able to create a large pan African business.”
Furthermore, Cellulant is currently developing andevelopment internal policy document that will formalize the internal staff development programs. “We are at the stage where we are developing some kind of policy document so that we can support people so that they can up their skills in terms of education.”