Nigeria has a cash problem.
I mean, it's the richest country in Africa
with a nominal GDP of over $400 billion.
But when it comes to making transactions,
most locals pay with cash.
In fact, only about 35% of Nigerians
even have a bank account.
And with a population of over 200 million people,
that's a lot of paper floating around.
And excess cash can lead to increased crime, corruption,
and a difficulty for some Nigerians to accrue credit
and obtain loans.
So a tech entrepreneur named Tayo Oviosu
came up with an idea to change the way Nigerians
think about money, which quickly set him on a path
to becoming one of the country's biggest rising stars
of FinTech.
I was born in Lagos, Nigeria in West Africa.
Growing up here, you know, really was fantastic for me.
I learned a lot in terms of just grit
and learning to handle a variety of issues
that you face every day
where not all the infrastructure work smoothly.
I was raised by a single parent.
My mom raised five kids, and I was the last of five boys.
I got to see firsthand at a very young age
how she was putting in so much to make ends meet
for all of us and the sacrifices that she was making.
Inspired by his mother's work ethic
and emphasis on education,
Oviosu moved to the United States for his undergrad degree
at the age of 16.
He majored in electrical engineering at USC
and later received a master's
at Stanford's Graduate School of Business.
While I was at Stanford,
one of the things that really we got to question on
is, you know, what really matters to you, right? And why.
What is it that you really wanna do?
I narrowed it down to I wanted to help bring ideas to life,
first and foremost, on the African continent,
but just generally speaking.
After working for a few tech companies
in America, Oviosu headed back to Lagos
on a search to find an idea he could bring to life.
And it didn't take long before he found one.
So if you look at emerging markets,
about 95% of transactions are done in cash.
And this is very unsafe.
Merchants who are selling have to create a variety
of processes within their stores to prevent pilferage
from their staff.
When you're traveling with a lot of cash,
you can face theft.
And then for the economy,
it cost somewhere between five to 7% of GDP
to clean, process all of that cash.
In Nigeria, and in really most emerging markets,
the reason why cash is still king
is, first and foremost, poor banking infrastructure.
So while Nigeria has 23 banks,
they only combine to have about 5,000 bank branches.
So they don't have the reach to the mass market.
So it's not that people don't save,
they just do so through very informal means.
If you go to someone who is selling in the market,
they are saving at what's called a savings collector.
So the savings collector
is someone who basically allows you to save money
on a daily basis with them
and sometimes you don't even get any interest on your money.
Well, people do this and people save also underneath
the mattress in the house or different pop places
they put money.
And so, for me, looking at that, I was like,
"Wow! This is a huge problem."
There's gotta be a better way to pay
than me having to pay in cash.
But Oviosu soon noticed something else.
I have a phone, and I have a phone signal.
And in fact I have multiple phones, right?
Because most Nigerians carry two to three phones.
And if I don't have a phone signal in one network,
I have a phone sitting on another network.
So why can't I pay with my phone?
And that's really what got me going, right?
And then I soon quickly realized
that the problem I had was actually worse for most people.
I was banking with two banks,
but most people were not even banked at all.
So 61% of Nigerians are not banked.
So I was like, "Wow, this problem is huge."
So Oviosu formed a startup called Paga,
which would allow Nigerians to make transactions
with their phones among other services.
But one of the challenges was to convince
a cash-dependent customer that paying with Paga
was legitimate.
It was very clear to me that for us to reach
the mass market we had to build a network
of what we call agents.
These are mom and pops, pharmacies, grocery stores,
people in the local community that are trusted.
The agents provided consumers locations
where Paga was supported while offering the agents
a commission on transactions.
So we had to, door to door,
build out this distribution network,
and we now have 26,000 agents.
We have 16 million users on our platform.
Last year, we did about $2 billion
in transaction values processed on our platform.
And Paga services have evolved quite a bit
since it started in 2009.
With Paga, you can send money to anyone in Nigeria
using their mobile phone number,
you can pay any utility bill,
you can send money to any bank in Nigeria,
instant, real-time credit in the bank account,
you can withdraw money from any bank.
We've actually leapfrogged some of the things
that are not available in the West.
Now, there have been other successful mobile
payment services on the African continent,
like M-Pesa, a Kenyan company with a footprint
in parts of East Africa and the Middle East.
But Oviosu sees Paga as a platform
with potential beyond other mobile payment services.
Today already, we allow you to trade and buy stock
on our platform and you could invest in treasury bills
and mutual funds, things like that, right?
And all of that is from a third-party provider,
who is leveraging the open APIs that we have built.
And so for us, it's great,
because we don't wanna become an asset manager.
But we are happy to partner with asset managers
to offer their services on our platform.
While Paga will continue investing
in local markets, they're planning to expand beyond Nigeria.
Mexico is our next market,
and it's actually amazingly similar to Nigeria.
I feel like the Mexican people are just Nigerians.
It's like we're just very, very similar, family-oriented,
the savings collector, like I described before,
and they use cash.
Same way, this is the 15th largest economy in the world,
but 90% of Mexicans don't even save
at a formal financial institution.
We're also launching in Ethiopia,
where we actually already have a team of about 60 people.
That's a longer runway game;
we're playing the long game there.
Ethiopia is the second largest, by population, country
in Africa.
So we are making real good headway
in terms of solving the problem for payments
and access to financial services to the mass market.