Over the last year, the Covid-19 pandemic has fueled a shift towards digital banking and mobile money. In Africa, this change in habits has international investors eyeing the lucrative opportunity to bring the unbanked online.
These digital platforms could help expand financial inclusion on the continent, where more than half of people over the age of 15 in sub-Saharan Africa lacked access to a bank or mobile money account as of 2017 according to the World Bank.
According to a recent report from consulting firm McKinsey & Company, funding for Nigerian fintech companies between 2014 and 2019 topped $600 million. In 2019, outside investment in Nigerian fintech startups accounted for a quarter of all funding for tech startups across Africa.
One of the largest deals took place last October, when US-based digital payment powerhouse Stripe acquired Nigeria’s Paystack, reportedly for over $200 million. Founded in Lagos in 2015, Paystack says it now has more than 60,000 clients, including corporations like Domino’s Pizza and telecom giant MTN.
CNN’s Eleni Giokos caught up with Shola Akinlade, Paystack’s co-founder and CEO, to talk about the company’s transformation from a Nigerian startup vying for attention in Silicon Valley to a payment giant with goals of expanding across Africa.
The following interview was edited and condensed for clarity.
Eleni Giokos: You process over 50% of all online payments in Nigeria. Did you think it was going to get this big when you started?
Shola Akinlade: We started Paystack from a personal pain. I’ve been seeing how things work elsewhere … and I thought, ‘Why can’t we have good things here?’ I think that was where it came from and, personally, just wanting things to be easier. I wasn’t thinking, ‘Oh, this is going to be big at all.’ But I got into Y Combinator [which provides seed funding for startups] in Silicon Valley.
And when I went to San Francisco, we saw people building amazing things. People were building shirts that never get dirty or a bra that detects breast cancer. I was initially intimidated when they said, ‘What are you guys working on? … How many people are in Africa?’ I was like, ‘One billion.’ That was the moment I realized that this is going to be very big. If you figure out how to move money and commerce around, it’s going to change lives, it’s going to change the continent.Nigerian startup Flutterwave secures $170 million in capital injections from investors, now valued at over $1 billion
EG: You can formalize the informal sector because it plays such a huge part of the economy. Is that the dream?
SA: I think that’s the interesting thing about Paystack. Our first set of customers are people that are building the future of the continent. I think Paystack builds a platform and we want people to build more on top of it. One of my customers is a company called BuyPower, making it easy for people to buy electricity digitally. We started with them four years ago and what we’ve seen is that the way people get included in the financial digital landscape is by real-world cases.
So, think about when your electricity goes off on a Friday night. You have two options: you can buy it digitally or you can wait until Monday and go walk somewhere. So there’s a wide range of customers that Paystack is powering. If you look at the Google Play store probably the top 10 finance apps are all powered by Paystack.
EG: Do you have to be a business to use this?
SA: Yes, we work with businesses. If you paid a business, you probably might have interacted with Paystack without even knowing. We empower the merchants, and the merchants will bring their customers. We invited our customers and said, ‘What features should we build?’ And everyone said … ‘We want you to let customers know that paying online is safe; paying online works.’ One of the things we know at Paystack is if someone has a problem paying online with a merchant, that is someone that will never pay online again — so we take that very seriously. We make sure that refunds get delivered instantly (and) disputes are resolved.
EG: We’ve seen the pandemic accelerating digitization. How has that influenced the way your customers are engaging with you in terms of your business’ growth?
SA: Now we’re doing probably more than five times more sign-ups than we were doing in March (of 2020). A lot of people are coming online, and I think this pandemic was a real reminder that African businesses are undertooled and underserved. It was easier for businesses elsewhere to react with access to the right tools and just move online.YouTube’s Alex Okosi sees ‘tremendous’ opportunity in Africa’s creative market
EG: Do you want to scale this globally? I know that you’re first looking at the continent. How big do you want to get?
SA: Paystack is one of those companies where the size of the opportunity is just so big. Today we’re in just three countries. Africa has over 50 countries. So we need to scale rapidly across the continent. I think there’s a lot that’s going to happen in the continent and Paystack will build that infrastructure that allows us to scale across the continent.
EG: We keep saying that we can leapfrog legacy requirements and industrialization in a way, and just fast forward to AI and the digital world. Is that really possible? How do you see this playing out as someone who is a pioneer within the space of the digital world for the continent?
SA: I think the way ecosystems are built is everybody doing their part. I’ll do my part, the person building the roads, she’ll do her part. So I think it’s not a zero-sum game. We will play our part on the technology side, but we need the roads, we need things with good governance. We need more things in different directions. We need people to help us tell our stories. It’s hard to build and do all this yourself. So I think the ecosystem needs a lot of different parts working together and everyone doing their part.