Flutterwave aims to power a new wave of prosperity across Africa. By building payment solutions for banks and businesses, Flutterwave makes it possible to process digital payments seamlessly and securely. African countries are not well represented in the global economy, says Iyin Aboyeji, Flutterwave’s co-founder and managing director, because the huge array of mobile wallets used for payments aren’t interconnected — which means cash continues to reign. Flutterwave hopes to pave the much-needed way for Africa’s economic future. Plaid’s Chelsea Allison chatted with Aboyeji about the current state of Africa’s payments infrastructure, the optimistic future of the continent’s workforce, and how a B2B solution aims to tie everything together. This interview has been edited for clarity and brevity.
CA: Tell me a little bit about the inspiration for the company and what you’re working on right now.
IA: When you look at the creative fintech landscape and you think about how connected the world is today, especially in the digital economy, what you learn is that Africa isn’t as well-represented as it should be. We’re essentially excluded from the digital economy. It’s still very expensive for Africans who live in the U.S., for example, or in Europe, to send money back home. A lot of the banks are not as connected to the global financial system. And popular sites and popular mass consumer products generally don’t launch in Africa, or don’t accept customers in Africa, or don’t allow payment from Africa.
Then on the other hand, the global card networks, which we know very well and are very much a representation of global connectedness, have very low penetration in Africa. Visa and Mastercard collectively have perhaps 1-percent penetration across Africa. And that’s worrying because in an increasingly connected world, excluding a major and growing piece of the entire global economy just isn’t a wise decision. Africa is going to produce more than half of the world’s global workforce in 2050, so it’s super important that Africa is included in the global economy.
For us at Flutterwave, we want to change the way the world does business with Africa by building an infrastructure that not only drives growth for African financial institutions, but more importantly enables Africans to pay with whatever payment method they’re comfortable with, via any channel they’re comfortable with, anywhere they are in the world.
CA: So the thesis is essentially that the payment infrastructure is the key to unlocking progress and making Africa a part of this global economy. And the lack of resources from broader payment infrastructure has been a huge part of the trouble with allowing interconnectedness.
IA: Yeah, it’s a big part of it. Over the last 20 years since we kicked off, there’s been a digital payment revolution across Africa. What you find is that there have been a lot of efforts, and they’re very popular efforts, like mPesa. Almost every country has its own kind or range of digital payment methods.
But it’s become an extra headache, because the system is so fragmented. Only 4 percent of African merchants are accepting digital payments today because they don’t have the resources — especially technical resources — to integrate every new payment method. I was reading a report about 290 different payment wallets in Kenya.
IA: Yeah. So what essentially has happened is that cash becomes the infrastructure. Because the only way you can actually fungibly exchange value across different infrastructure types is cash, right? The bank accepts cash, wallets accept cash by agents, cards accept cash, so you use cash.
But then the problem is it never actually gets a deep infrastructure. And as a result, the merchant defaults to whatever the easiest mode of payment is, which is also cash. And because of that, even while adoption is growing nominally, you don’t really have the kind of adoption that you have in places like India where this infrastructure has been built.
So that’s what we’re trying to do; we’re trying to actually build that underlying infrastructure across Africa to enable broader adoption of electronic payments.
CA: So when you surveyed the landscape and saw this fragmentation, how did you decide on how exactly you would approach that problem and how exactly you would build the underlying infrastructure? And why focus on the B2B side of things versus more of a consumer-oriented solution?
IA: So before this, I started another pretty large business called Andela. Andela is the largest engineering organization in Africa, with over 600 engineers under one roof, and focused mostly on finding talented young people who want to be software engineers, providing them with training and resources to hit that goal, and then finding them jobs via our network. But every time we entered a new country, we had to incorporate a new entity just to be able to pay our staff, because there was no way to do it. That was kind of my first touchpoint.
My second touchpoint was when I realized the problem was a very big one, because I saw that an African business couldn’t even pay for international talent services in its own backyard.
And then to make things even more interesting, we started talking to a few banks, which started telling us that the ability to accept payment – whether local or international, or mobile or bank account or card – is a big problem for merchants that bank. So that’s when it really came home for us, the importance of building this infrastructure to connect everything. And more specifically, I think that when we’re building these solutions, the most important thing for us is to be able to achieve scale quickly.
CA: As you’ve actually gotten Flutterwave off the ground, what’s been the most surprising challenge for you?
IA: In a positive way I’m really surprised at how aggressive financial institutions here are about fintech and information base. I’ve sat down with a lot of bank CEOs, and they almost sound like disruptors. The kind of things they talk about, you’re like, where am I? Is this Silicon Valley or the office of the CEO of an African Bank?
So it’s very interesting to see that and to see how fintech is going to change the space. I mean they don’t always have the right answers about what that change is going to look like, but their eyes are on the ball and they’re willing to make the changes necessary to be a part of it. And I think that’s very inspiring to see in Nigeria, of all places, and across Africa. I think the banks really, really deeply understand that change is afoot and that they need to be supporting the change or finding other, more realistic ways to bring about the changes.
CA: Well, speaking of change, I’m curious what your predictions are for what this change will amount to, and what the future of commerce, the future of payments and the like, will be in Africa as it connects to the rest of the global ecosystem.
IA: I actually think the future is that it leapfrogs it.
One of the beauties of the African fintech or payments or commerce ecosystem is that you have kind of three convergent factors coming together at once.
One factor is that there’s just more data being created by mobile phones, which everybody has access to. There was a very interesting data point shown by a very popular blogger about how it seems like if you factor in the adult population of a number of African countries, there is probably 100-percent penetration when it comes to mobile phones and Internet. I have more data about Africans living in this period than any other previous civilization has had in history — right? — because of the mobile phone.
And how that plays out is going to be really interesting, especially in the payment space, especially when you think about the funding of things like infrastructure, or you think about identity, things that the U.S. had to invest hundreds of millions of dollars to create. We may not have to invest anything. So that’s an interesting trend to watch.
The second interesting trend to watch is population growth, especially the youth population. The fact that more than half of the world’s workforce will be coming from Africa over the next 30 years is something that should give pause to everybody. And there are only two possibilities, in reality. One is that they have a negative impact on the world because this workforce is not productively engaged, and they become the source of future attacks on cyber or physical infrastructure. And then the other possibility is that they’re positively engaged, and then we have this man-machine symbiosis, you know what I mean? And they become the majority of the “man” in the man-machine symbiosis. But they’re going to definitely have to work for, or work with, people around the world. The labour model will have to change from being one that has geographically encumbered them to one that is completely global and borderless from day one. Then, in that arrangement, they’re going to need to receive their payment digitally, because there is no employer who is flying to Nigeria to give them cash. And that completely changes the ecosystem when it comes to digital payments in Africa. It means we’re going to go digital much faster than everybody else did.
And the third thing is that Africa comes to the table as one big and diverse continent. There is a big movement around pan-Africa that’s emerging through culture and music and art, and we’ve never had this kind of renaissance before since independence. More and more, Africans are seeing themselves as one cultural-economic unit rather than a collection of 54 states. And as that starts to become stronger and stronger — and that’s one of the things we’re pushing with our business — the infrastructure that powers a pan-African commerce enables Africans to trade with each other and then with the entire world.
What happens to global commerce when Africa and its diaspora comes as 1.2 billion people, all of a sudden, on the world stage? Meanwhile, people might only have seen Nigeria, or seen Côte d’Ivoire, or seen Congo on the map, right? It changes the equation a little bit and changes a number of things for the way the world sees Africa and the way the world does business with Africa.