With a whopping $47 million raised in its series C and a footprint in 18 markets across the continent, Cellulant was clearly positioned to be one of the first unicorns with a $1 billion valuation out of Africa.
However, things fell apart in September 2020 when news hit the media that its Co-founder and Nigeria CEO, Bolaji Akinboro had resigned and over 40 staff members were dismissed with a few accused of sharp practices.
BusinessDay has exclusively gathered through multiple credible sources affiliated to Cellulant on the reasons leading to Akinboro’s resignation and the truth of what really happened in the embattled company.
For two weeks, BusinessDay interviewed persons, received hard evidence and was privy to court documents that have helped shape this story.
BusinessDay is reliably informed that Akinboro has slammed a $10 million lawsuit against Cellulant following his resignation, The court document filed at the National Industrial court and high court for malicious professional libel, breach of due process, evidence tampering and witness suppression.
Cellulant is also facing multiple lawsuits from some of the 40 staff members that were dismissed and some who are planning to sue. Businessday was opportune to interview most of the staff in question and the chorus has been ‘’There was no sharp practice, The compliance unit is looking for whom to blame for its own negligence in performing its duties.”
The founding of Cellulant
Cellulant was founded by the duo of Bolaji Akinboro and Ken Njoroge in 2004. It started as a music business bringing value-added services to customers. The company sold bulk SMS helping banks set up their bank SMS alerts and caller ring back tunes (CRBT).
It wasn’t until 2012 that Cellulant Nigeria pivoted into payment solutions as it saw opportunities in serving the banked and unbanked population and improving the livelihoods of Africans on the continent.
Bolaji Akinboro relocated to Nigeria the same year after managing a new project with the Federal Ministry of Agriculture called the Growth Enhancement Support Program (GES) which was arguably the first time a mobile technology solution would be used for agriculture on a grand scale. Following the success of the program, the board of Cellulant asked Akinboro to become the CEO of the company in Nigeria.
The company had its presence in 11 African markets, including Zambia, Ghana, Zimbabwe, Tanzania, Uganda, Botswana, Mozambique, Malawi, and Liberia. The group headquarters was in Kenya from where Njoroge worked.
Securing the first biggest Series C
Akinboro’s tenure as CEO of the company marked a turning point for the company’s business in Nigeria.
The coming of Akinboro was also a strategic decision by the company in its battle for market share with more established incumbents like Interswitch, Unified Payments, and Remita. Paystack would later be founded in 2015 and Flutterwave in 2016.
In 2018, Cellulant raised $47.5 million Series C funding from TPG’s Rise Fund. In a company filing with the Competition Authority of Kenya (CAK) Cellulant said it sold a 44.4 percent stake at an approximately $105 million valuation.
Cellulant had previously raised its series A and B at approximately $6 million from 3 venture capital funds. The $47 million was the largest funding raised by a fintech in Africa at the time.
With the Series C raise came some changes as well as trouble in paradise.
New money, New bedmates
One of the changes brought about by the new funding was the decision by the board to create a co-CEO structure between Akinboro and Njoroge.
As CEO of the Nigerian business, Akinboro had started to think about diversifying into new opportunities to strengthen the company. Agriculture and retail payments were the best choices as they were seen as the frontiers of the future.
In 2018, shortly after raising the Series C round, Cellulant announced it was scaling Agrikore, a mobile blockchain-based platform that has served more than 10 million farmers across the continent, connecting them to the market and helping them sell their goods to a diverse range of buyers more easily. The company also hired very senior C-level executives from blue-chip companies to support and grow the company into a more mature stage enterprise.
Mastercard foundation backed this ambition by providing an 8-figure grant to Cellulant to support the Young Africa Works (YAW) initiative. This initiative was to use agriculture as a catalyst and engine for meaningful and dignified work creation.
It all goes South
The new Series C investment and a grant from Mastercard put the spotlight on Cellulant Nigeria out of the other subsidiaries, further affirming its place as the strongest arm of the business.
To fully scale Agrikore, Mckinsey, one of the largest consulting firms, was invited to strategically support and guide Cellulant in cleaning up and preparing the platform for world-class operations.
However, according to sources, the C-level executives that were hired were not the right fit for the organization and did not provide the required level of support to Akinboro and Njoroge. Sooner than later, they were being fired or resigned one after the other, leaving behind the chief compliance and risk officer, one Mr. Solomon Abiakalam.
“I can’t work here”
‘’When you see a rat, you don’t burn the house down’’ this is a proverb that explains the issue that arose when the management discovered that funds were moving from different accounts before they move to the wallet owned by a designated customer among other issues that are not strange for companies at Cellulant’s size.
Sources in the company said Bolaji Akinboro spotted the risk issues alongside the Compliance Officer.
On August 24, 2020, the board sat to address the risk escalations in a virtual meeting also attended by the co-founders, and some senior-level staff of Cellulant. Some sources and court documents said the words used in that session were very “uncivil, uncouth, disrespectful, and toxic.”
After the meeting, Akinboro announced he would no longer be the CEO of the company as it was untenable for him to work in an environment where trust is broken and disregard is on rampage.
The ‘’audit’’ and staff cleansing.
As soon as Bolaji stepped down, the company commenced an audit into the risk situation as there was a claim from the compliance unit of a potential $1.6m loss. The audit involved letters to staff, most of which worked closely with Akinboro, saying the company found a suspicious transaction in their accounts and would like to know what the transaction was meant for.
In one of the cases seen in the court documents, the amount in question was N53,000, which had a clear explanation and was corroborated by the finance unit. A staff member told BusinessDay that there was no fair hearing and the staff was suddenly dismissed. Another case was N3m, where a staff member helped a customer to buy a car, this was also flagged and the staff dismissed.
The audit first affected 14 staff that worked with the CEO. Later, the company fired 34 more staff and shut down its Abuja offices which would affect the progress of the company and put a death nail on the Agrikore business.
“We conducted a comprehensive review of all Agrikore’s operations that confirmed significant compliance infrastructure issues which compromised the integrity of the platform,” Cellulant told BusinessDay via email. “Considering these compliance issues, the performance of the platform, and the current market realities, we made the strategic decision in November 2020 to discontinue the Agrikore marketplace business in Nigeria for now.”
Meanwhile, Mastercard is said to have discontinued the program as Akinboro’s resignation became permanent.
When BusinessDay asked Cellulant about this, the response was, “We do not comment on partner matters.”
A letter seen by BusinessDay found that Cellulant has commenced a police investigation and has invited ten of its former employees to Lagos.
A staff member who was invited said he was informed that the company booked an air ticket and hotel accommodation to facilitate their trip. ‘’If I am guilty, why book a ticket for me to come to the police. Isn’t that desperate?’’
Interestingly, while the 34 members of staff were sacked and their severance pay and other benefits paid in full, the company did not extend the same favours to 14 others that were affected.
The company would not comment on the lawsuits and police investigation when BusinessDay contacted them.
“Mr Bolaji is a good man and it’s painful to see him walk away from 20 years of his life. However, I hope other founders in the space are very protective of their companies and the new people they bring in the form of board members or staff. This can make or break the vision. I also hope the CBN looks into Cellulant,” an ex-staff who would not be named said.
Akinboro has gone ahead to launch other ventures including a new Agritech company.
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