By Andile Masuku
Eight years ago, a Kenyan blockchain technology payments platform called BitPesa was emerging as one of East Africa’s fintech poster children.
Bitcoin meets M-Pesa
Strategically named to leverage the biggest hype narratives of the time - Bitcoin and M-Pesa – BitPesa claimed to be the first to trade digital currencies using mobile money and the first to create a direct market between digital currencies and African currencies.
The year 2017 was significant for both Bitcoin and BitPesa. Bitcoin’s price started relatively low at just under $1 000 (R18 371) in January, but climbed dramatically to nearly $20 000 by mid-December. That year also saw the Chicago Mercantile Exchange launch Bitcoin futures contracts, validating blockchain technology and legitimising Bitcoin as an asset class.
In February 2017, following the successful close of their $2.5 million Series A, BitPesa announced the acquisition of the Spanish remittance company TransferZero. During an insight-rich African Tech Roundup podcast conversation taped in June 2017, Charlene Chen, then BitPesa’s chief operating officer, expressed excitement about distributed ledger technology’s potential for both financial and non-financial applications.
She highlighted the potential for significant cost reductions in peer-to-peer and B2B payments and indicated that BitPesa was keenly exploring other financial services, including offering business credit.
Pivot time
In 2019, BitPesa rebranded to AZA Group and secured $15m in debt financing from the Development Bank of Southern Africa. Today, known as AZA Finance, the “global payments and forex (FX) fintech” firm “empowers companies to move money, exchange currencies, make payments and settle easily across all major African and G20 currencies”.
AZA Finance has since decided to double down on a B2B business strategy to consolidate its place in the market as the African digital payments scramble intensifies. It’s a race dominated by aggressive mobile telco and financial services incumbents, with cameos by notable players like AZA Finance, savvy scale-ups such as Onafriq, and ambitious upstarts like Nala, among dozens of others.
Meanwhile, Bitcoin is currently in “show dem” mode – coming out bigger and brighter from the dusting it took during the blizzards of the crypto winter.
Meet Elizabeth Rosiello
It does seem like a great time for Elizabeth Rossiello, AZA Finance founder and CEO to hijack my column and share reflections on her entrepreneurial journey. Fun fact: Rossiello was previously co-chair of the World Economic Forum’s Council on Blockchain and is a member of the Centre for the Fourth Industrial Revolution’s Global Advisory Board.
Rossiello’s insights. In her words:
After almost 11 years of building an African fintech, there are still just a few market entrants who have scaled. This is not an easy geography or sector to build in but those who can create the teams, processes, and expertise to grow are at a serious advantage. Along the way, many told us that we would not have the stamina to survive the learning curve or the market cycles. Not only did the company survive, but we improved with each lesson and turned it into an opportunity.
The banks operating in the market have not changed much, and the global perception of the continent is still distorted. However, the companies that have made it this far have gained an incredible competitive advantage. The road to success is indeed lonely, but that just means you will be able to capture the market alone at the end of the road.
When you are building alone without much competition, it is essential to have a data-driven approach. Planning for multiple scenarios, testing each one, measuring success quantitatively, and turning data into information is the compass you need to succeed when you are way out ahead of the pack.
That’s the first lesson on building when no one believes in you: look at the facts, not at what other people think are the facts. Use case studies and field research, not fear or perception. People in VC offices and banks will state things as gospel that you know are not true. These are just old misconceptions, built on decades of financial colonialism.
We started AZA Finance in Nairobi in 2013. What was true then, as much as it remains true now is that the rest of the world doesn’t see Africa the way it should… Trillion-dollar economic potential, a growing population that is tech-savvy and increasingly connected, exploding industries in import, export, trade, agriculture, technology – the list goes on.
But what Western investors and banks see is: volatility, risk, disparate regulatory regimes, unclear rules of the game, “developing countries”. In other words, they’d rather back a Scandinavian neobank with a third of the customers than an African fintech with a continental footprint. African market capture still seems too scary for many investors.
I always laugh when seasoned financial services professionals sternly say that trading African FX is too risky because of the volatility. Fortunes upon fortunes have been made around the world – in New York, London, Zurich, Chicago – on trading volatility. Why is African volatility scarier? For so many, volatility in Africa holds the perception of loss. Fortunes have also been made across Africa by corporate leaders who have gone deep into markets and been comfortable being the “first” to build. Diversification, hedging, and scenario planning are the partners to volatility and have accompanied these frontier leaders to success.
If I had listened to the misconceptions rather than trusting our own experience in the market, we would not have succeeded. I did try to campaign global investors and tell them about what we saw and knew from the market. We were met with lukewarm success. The typical path for a fintech is to build a little bit, raise some money, build some more, raise more money, and then get bought (or go under). But to make it to 10 years in an under-funded geography, you have to build while making money and raising money. We have had to find our own data and validate our own assumptions to stay on the right track.
There have been so many trials and tribulations running this business. In the early days, we had a telco terminate our contract because they were worried we were competitive (we weren’t – we were making them money, but fintech was misunderstood in 2014).
We considered closing the business for about the time it takes to drink a coffee, but we knew there was product-market fit from our data and worked until we found another path through. That year, we went into four other markets and started laying our own fintech infrastructure brick by brick.
From day one, we accepted the complexity of the task at hand and said that it would be our long-term business model. We went from infrastructure to trading, then started opening up in markets and obtaining licences across Africa and Europe. I mentioned earlier we’d moved $9 billion in revenue – that’s for more than 1.5 million customers in 183 countries. Some of those customers are now the largest remittance, payment, FMCG, banking, and fintechs globally.
When it comes down to it, if you build something great and truly unique, even those who may have started out as competitors will eventually come asking to use it. Today, AZA Finance is more than 10-years old, with nine offices across Africa and Europe, continuing to build and grow globally – offering businesses around the world a variety of African, G20 and emerging markets currencies.
AZA wouldn’t be what it is today if I had given up at the first hurdle. Instead, we continued to hold our heads high, ignore the noise, and focus on the work. If you are a founder and facing your first or 40th challenge, just don’t give up. The winner is the one who shows up in the morning and works until they find a way through. Keep building, pay attention to the facts, and believe in your vision –from there you’ll be unstoppable.
Andile Masuku is co-founder and executive producer at African Tech Roundup. Connect and engage with Andile on X (@MasukuAndile) and via LinkedIn.
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