This article is a slightly edited excerpt of an African Hidden Champions case study, titled MFS Africa: Making borders matter less. African Hidden Champions is an initiative by Africa Foresight Group, DEG and the African Development Bank Group.
The story of how MFS Africa built a digital payment network that connects African countries to each and to the world.
When it comes to the movement of money in Africa, there are three streams, namely: remittances from Africans outside into the continent; intra-African payments; and payments within the individual countries.
Sub-Saharan Africa remains the most expensive region to send money to, with an average fee of 8.2% for sending $200 in the fourth quarter of 2020. Cross-border payments between African countries often face significant interoperability issues and friction. Furthermore, unreliable payment methods combined with complex regulatory challenges can make both sending and receiving money between African nations cumbersome.
To address, these issues MFS Africa is building and operating a digital payment network that connects all African countries to each other and to the world.
The origin story
The seeds of MFS Africa were planted in 1995 on the day Dare Okoudjou left Porto-Novo, Benin, where he was born and raised, to study in Casablanca, Morocco, before moving on to Télécom Paris, where he completed a master’s in electrical engineering in telecommunications.
He went on to work in Morocco, France, the United States and South Africa in the telecom and mobile payments space, including a three-year stint as, first, senior manager of business strategy, and then head of MTN Mobile Money International Development, where he developed MTN’s mobile payment strategy across Africa and the Middle East.
Okoudjou’s professional focus would turn to Africans who depart the continent’s shores to find work across the world, leaving their families and building a professional life far away from home. This meant regularly sending money home.
First-hand experience of the difficulties in sending money, coupled with insights into possible technology-based solutions, prompted Okoudjou to establish the pan-African fintech company, MFS Africa, in 2009, with an initial focus on facilitating the ease of sending and receiving remittances.
In the beginning, there were several pivots as MFS Africa developed what could be called its “real” (and current) model, around 2015.
MFS Africa is now Africa’s largest digital payments hub that exists to connect not only Africans to each other and the world, but also the world to Africa. The payment company does this by easing payment barriers and facilitating transactions securely and affordably.
MFS Africa is a VISA Principal Issuing Member, allowing MFS Africa to issue cards, acquire members, and provide authorisation services. It also serves as a network of networks, connecting various stores of value, such as mobile money wallets, bank accounts, cash and debit cards to each other digitally so that companies and people can send and receive money in a manner that is not expensive, risky and difficult.
Managing growth
Scaling up
MFS Africa is diverse, both in terms of its team – with more than 30 countries represented – and over 40 languages spoken, and its presence in multiple countries, including South Africa, Ghana, Uganda, the DRC, Kenya, Côte d’Ivoire, Nigeria, the United States, China, Rwanda, Tanzania, Mauritius, Cameroon and the United Kingdom. Its staff complement, which currently sits at over 600 people, has doubled year-on-year for the last three years.
With the business expanding rapidly, particularly over the last five years, there’s been a clear push to move away from a start-up mindset. Considerable effort has been invested in re-evaluating how teams view the business, reorganising structures and operations, implementing systems and processes, setting distinct targets, and gauging performance.
The organisation contends that the quality of work delivered hinges on how effectively MFS Africa provides its staff with the necessary skills, environment, and tools. This encompasses traditional human resource practices like recruitment, onboarding, performance management, promotion, and offboarding, but also extends to information flow and knowledge management. Notably, the internal IT help desk is part of People Operations.
Rebranding and revitalising corporate culture
In 2021, MFS Africa underwent a substantial rebranding, encompassing both its visual identity and business values. This inclusive process engaged every level of the organisation. Anchored by the vision to “make borders matter less,” the company’s fundamental values are: Simplify, Care, and (Be) Revolutionary. With the company’s swift expansion, MFS Africa ensures its culture remains central through continuous, deliberate discussions grounded in these values. It’s about team members maintaining accountability for themselves and their peers.
An internal group of peer-nominated ‘culture ambassadors’, making up about 10% of the team, is charged with fostering regular interactions throughout the business. Their role is to keep the corporate culture and identity at the forefront, while also respecting the subcultures present in different countries. It’s crucial to harness the diverse viewpoints these subcultures offer without compromising the overarching MFS Africa culture. The leadership team actively participates in policy discussions prior to their rollout, as well as in ambassador and culture workshops, ensuring buy-in from the teams throughout the organisation. Alignment to mission and values is a criterion used to set targets and measure performance across the business, at micro and macro levels.
Integrating acquisitions
MFS Africa has acquired a number of businesses, to either add to its product base or to gain a foothold in specific markets. Absorbing new teams into a strong culture has not always been easy and the company’s Integration Project Office is in the process of developing the MFS Africa Playbook for Acquisitions to address this challenge. One of the ways of doing this is by mixing the teams, both ways.
Key acquisitions include:
Beyonic
Launched in Uganda in 2012 as a cloud-based enterprise payment solution for small businesses to pay and collect money, Beyonic expanded operations to Kenya and Tanzania. In 2020, it was acquired by MFS Africa. For MFS Africa, this acquisition added a new set of portals, collection features, and functionality, particularly beneficial for entrepreneurs.
The integration of the Beyonic team into MFS Africa was smooth. Beyonic’s founder, Luke Kyohere, and CEO, Carina Rumberger, joined MFS Africa, taking on roles as the chief product officer and chief people officer, respectively. Both were pivotal in the rebranding exercise. (Read more: Building and selling an African fintech company – The story of Luke Kyohere and Beyonic)
Capricorn Digital
In Nigeria, mobile money has a smaller footprint. Instead, digital payments predominantly involve agents – such as mom-and-pop stores and kiosks – that offer services like deposits, withdrawals, electronic airtime, utility bill payments, and money transfers. In 2021, MFS Africa acquired Capricorn Digital, a company offering a suite of products for this agent network. These products include a point-of-sale device named BaxiMpos; the BaxiPay online payment platform; and BaxiRims, a retail inventory management system.
This acquisition solidified MFS Africa’s position in the Nigerian market and facilitates connections between agents and mobile money providers continent-wide. It also introduces an additional channel for diaspora remittances into Nigeria. As MFS Africa integrates Capricorn Digital, the transition benefits from a shared alignment in values between the two entities.
Global Technology Partners (GTP)
Based in Oklahoma in the United States, GTP is Africa’s leading prepaid card processor, enabling over 80 banks in over 30 African countries to provide, amongst others, travel cards, virtual cards, e-commerce cards and payroll programmes.
With the 2022 acquisition of GTP, MFS Africa not only strengthened its foothold in North America but is also offering its customers the capability to link their card details with mobile money wallets. This integration simplifies online transactions and bridges the gap between mobile money and traditional card ecosystems like Visa and Mastercard.
Integrating GTP into MFS Africa presents unique challenges. Despite GTP’s stature as the top prepaid solution for Africa, a significant portion of its staff is US-based, many of whom have never set foot in Africa.
To navigate this, MFS Africa welcomed a new CEO, Christian Bwakira. While Bwakira boasts extensive African experience, he has also spent a significant part of his career in the US, offering a balanced perspective essential for ‘Africanising’ the business to some extent.
Additionally, earlier this year, the firm onboarded an African payments expert, Olaseni Alabede, as the new CTO. He joined MFS Africa from Mastercard, where he ran their buy-now, pay-later products. It has not been without its challenges and MFS Africa continues to be agile and deliberate about ensuring that all the businesses under it, especially GTP, operate guided by the same values and mission. While there can be different subcultures, the basics of the culture need to be the same and rooted in an African perspective, as opposed to from an outside-in lens.
Competition
The breadth of MFS Africa’s offerings ensures that no direct competitors exist for the business. Instead, some of its products and services overlap with those of other companies. It competes with Thunes from Singapore in the remittances and disbursement segment, Flutterwave in the enterprise segment, Paymentology in the card segment, and, in the Nigerian agent network space, OPay and PalmPay.
MFS Africa partners with local telecommunication companies, banks, and other organisations. These partnerships influence its choice of product offerings in different regions. For instance, while MFS Africa has a product that helps small and medium businesses better organise their business-related digital transaction flows, Safaricom has a sophisticated offering that does the same in Kenya specifically. Because of its close relationship with Safaricom, MFS Africa doesn’t promote its own offering in Kenya. Instead, it targets other markets.
Challenges and opportunities
With the growth of the business, particularly in the last five years, the key challenges that MFS Africa faces today are:
Focus
With so many opportunities available to the business, the challenge is which opportunities to focus on and which ones to discard.
Scaling up
Maintaining and scaling the company culture at the same pace as organisational growth is challenging, especially with the increase in staff from recruitment and acquisitions.
Visibility
Transitioning from being a small fish in a big pond to a prominent player brings with it increased attention from both competitors and regulators. Initially, Africa’s fintech sector was nascent, with minimal regulations. But as the ecosystem evolved, regulators began to understand the innovations and problem-solving methods, leading to the gradual introduction of more rules.
For example, in Nigeria, where, in some quarters, fintech is seen as a menace, there is the risk of regulations that hamper certain transactions. Within the Economic Community of West African States (ECOWAS), some countries, including Nigeria, have prohibited cryptocurrency transactions.
MFS Africa’s strategy has always been to engage directly with regulators. This involves treading the fine line between innovationand not rocking the boat much, while providing regulators with the expertise and insights from an African perspective.
Global economy
MFS Africa is directly impacted by the state of the economy. The risk of a looming recession has resulted in lower purchasing power, which means that people have less money to send.
While these challenges may seem daunting, MFS Africa continues to find that the demand for what it provides surpasses its current supply. The need for increased interoperability persists, whether in remittances, among mobile money providers, or between enterprises and their customers.
