Agosta Liko, CEO of PesaPal, relocated to Kenya from the US to start Verviant, a software development company in Nairobi. Three years later, the team at Verviant launched PesaPal with a vision of enabling Kenyans to make online payments.
PesaPal is making great strides in bridging the mobile and electronic payment divide in Kenya, and is set to expand to more African countries next year. Mark Kaigwa sat down with the CEO to discuss his perspective on doing business in Kenya, the African condition, and on how PesaPal was able to gain traction with ordinary people.
MK: How would you describe PesaPal at present, and where do you see the company heading in the future?
AL: In short, PesaPal is electronic payments; payments for the African condition. Doing things and answering problems that wouldn’t make sense if my co-founders weren’t African. It may make no sense to others but it applies for Africa.
“Social Cash” is a part of the African condition and culture. Social cash is how you raise money for weddings, funeral committees or harambee (a type of Kenyan fundraising meeting between family, friends and well-wishers.) When these people get together, they bring with them cash, cheques, mobile payments, bank transfers, etc. If you can have all that maintained and tracked from one account you’ve solved a problem. And it’s good for bookkeeping and for their affairs.
To the rest of the world Africa is a place of “micropayments” but to us it’s a lot of money. They talk about $2 a day and conclude “that’s not a lot of money”. It’s easy to come at it from a World Bank statistical perspective and come to conclusions, but I know people in my rural village who live better than some $30,000-a-year Westerners in Raleigh, North Carolina (where I lived and worked.) Of course Ksh.300 ($3.75) isn’t a lot by international standards, but it’s a kilo of beef where I’m from and that’s something.
MK: There have been many theories to describe the secret of M-Pesa’s success and uptake, what’s your opinion of why it’s gained such traction in Kenya?
AL: I don’t think there’s a “secret.” They built with a specific problem in mind and it’s a solution which was executed well. And M-Pesa came first. It’s a fast-moving product and they have the biggest reach in this country. Go figure.
MK: What role does SchoolPay, the school fees payment extension of PesaPal, play in PesaPal’s overall strategy?
AL: PesaPal’s core API is about payments. [In Africa] if you just release an API, 2-3 months down the line there’ll be nothing done. Before the API becomes useful, people have to be familiar with the service. With PesaPal, instead of waiting for it to keep growing we took the approach of let’s sell plug-ins, corporate integrations, and solve problems we could fix immediately.
We picked school fees. There are over 30 000 schools in Kenya. When it comes to paying fees, in Kenya they are paid by banker’s cheques. What this means is that the parents are charged – Ksh.200 ($2.50) for the transaction. And the schools are charged Ksh.100 ($1.25) for every banker’s cheque they receive. We saw that schools could save between Ksh.50,000 – 170,000 ($625 – $2,125) a year on average. I say, fix a problem. I can’t say I’m a firm believer in the “build it and they will come” approach.
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