Niyi Toluwalope is the chief executive officer of eTranzact Plc, a firm responsible for many innovative e-payment solutions in Nigeria. In this interview with TELIAT SULE, he appraises Nigeria’s electronic payment industry, the contribution of his firm to the industry and the factors driving growth in e-payment adoption in Nigeria. Excerpts.
Kindly tell us more about the operations of eTranzact as a premier e-payment company in Nigeria
eTranzact International Plc is not necessarily a payment company even though we facilitate payments and collections across various sectors, products, and various industries. It is a super financial technology institution and was the first fintech institution in Nigeria established in 2003. We have built solutions that have become the fulcrum and the pillars of a lot of the transaction processing initiatives that we are experiencing in the country today.
We are Nigeria’s first switching and transaction processing institution, and also licensed by the Central Bank of Nigeria (CBN) to do that. Our key infrastructure is our switch platform, which is home-grown, and built by Nigerians, has connected over 600 financial institutions, to help banks, governments, merchants, and other financial technology institutions to facilitate and consummate payments from one account to another.
The second critical thing we do is financial inclusion strategy. eTranzact is also licensed by the CBN as a mobile money operator with a super agency capability. We are part of the government and CBN’s Shared Agent Network Expansion Infrastructure Service (SANEF) where we are equipping and providing 500,000 agents collectively with other super agents as identified. At the moment, we have over 30,000 agents spread across the country facilitating financial inclusion transactions.
In addition, we have enterprise solutions and retail payment solutions platforms. The former facilitates transaction processing for institutions, governments’ agencies, donor agencies, international donor agencies like the United Nations, UNICEF, World Health Organization, World Food programme and the latter facilitates donor payments to various rural and less privileged people in various locations across the country. On our retail infrastructure and capability side, we have built over time various products that allow SMEs, shops, companies, institutions, the younger entrepreneurs in Nigeria, the up and coming vibrant entrepreneurs in Nigeria, we have built a platform that allows them to showcase their products and solutions to the industry and to the general Nigerian community and we have also given them the capability to sell and receive payment for all these various solutions and products and inventories they have.
In 2021, we processed over N39 trillion worth of transactions on the platform which represents over three billion individual transactions on the platform, and likely to do N53 trillion this year.
What is your assessment of infrastructure of Nigeria’s fintech industry relative to those in other African countries?
In 2016, South Africa, Kenya, Egypt and of course Nigeria were the four leading countries in fintech, fintech penetration, and fintech density.
South Africa was the clear leader with 141 visible financial technology institutions. Kenya and Egypt had less than 100. Nigeria at that time had less than 50. If you look at 2020/2021, another analysis of fintech penetration and what growth those fintech institutions have there, you will find out that Nigerian has grown to about 300 now. South Africa and Egypt have about 250 each. You ask yourself, what are the growth drivers in Africa and then in Nigeria? The advantage we have in this part of the world is our love for technology. We have brought it into finance and used it to solve a lot of problems. Fintech in this part of the world has become a means of solving our problems. Waiting days to confirm cheques killed commerce. Our investment in switching capability, which is guaranteed a 99.5 percent success rate is the best in the industry.
When you look at all the monies that have come into the industry in the last three years, about 58% came to Nigeria out of the total money that came to Africa in 2021. In 2020, about 49% came into Nigeria out of the total funds that came to Africa. Nigeria still gets the largest chunk of it. A lot of the companies getting this money are deploying it to expand their technologies, infrastructures and processing capacities to be able to meet the growing demand, transactions, and subscriber base of each individual that are leveraging the expanding technological products out there. Nigeria’s fintech industry is most vibrant on the continent as we have experienced the most vibrant growth.
How much has eTranzact raised from 2015 to date? What qualities do foreign investors look out for in local fintech companies?
Private equity investors are always looking for viable and bankable projects with good returns. We have 200 million people in Nigeria in which the driving force of fintech is the younger generation. We call them the USSD and data generation. You will find out that the USSD and mobile channels are experiencing the most phenomenal growth, year on year over the last five to six years. Those are the people that are spending a lot of time on the internet, doing a lot of research and developing new ideas, and understanding how they can leverage existing infrastructure to build products and solutions they can push into the world. Money is coming into this part of the world because investors out there are scanning the market, and they have seen that there is a lot going on in technology. You already have a lot of technologies that facilitate electronic payments.
A lot of solutions we have built overtime have been renewed and improved upon. In terms of money raised, we are a quoted company, if we are to raise funds, it will be for specific purposes. And in the last 18 months, we have raised over N10 billion to address specific infrastructure upgrades and to build up the financial inclusion agency network.
How much of the revolution in the fintech industry can we attribute to eTranzact? Where do you see growth taking place?
Today, you can pick your phone and dial a specific USSD short code to get a menu of financial service options. That infrastructure was created by eTranzact in 2012. The whole idea is how we can create an interface that will allow people to make payment with three touches on their phones. We leveraged on how Apple created the iPod. We mirrored that, and it was what gave birth to USSD payments in Nigeria.
In 2018, eTranzact was awarded by the Central Bank of Nigeria as the number one mobile payment cashless driver in the industry. What that means is that we processed the largest amount of mobile transactions, and we processed most mobile wallet transactions in the industry in 2019. Again, in 2019, the Nigerian Stock Exchange (NGX) in collaboration with BusinessDay, awarded eTranzact the Most Transformed Company on the NSE. When you look at all these specifics, you will begin to see our evolution and what we have achieved overtime and the revolution going on overtime.
I see a lot of growth in the financial inclusion space. Banks studied the kinds of transactions people came in to do in the banking halls – transfers, account opening, BVN capture and so on. They still wanted to offer the services. Only that they do not want them to congregate in their banking halls. They engaged infrastructure players like eTranzact to provide these value-added services, and because of our infrastructure and services, we were able to deploy tools and equipment at each of the agent locations.
We have about 300 or more players in the sector. How are they handling competition?
Those are the 300 established players. There are probably another 300 firms that are not well-established out there. You probably have people in small rooms, offices, etc, building up products and solutions. The players in the pipeline are huge; current players also huge.
I like to look at Nigeria in that way. We are over 200 million people. How many of the 200 million people that can do transactions and participate in this evolution? Researchers have put in between 50 to 60 percent of that. That is well over 100 million. I tell you this as one of the industry leaders, any business today in electronic and digital payments that can boast of consistently of 500,000 to one million active subscribers in this business can easily be a billion-dollar business, because all you need to do is to ensure your platform is available, and customers are able to consistently do transactions every day.
Where do you see the fintech industry in the next five years?
eTranzact is the best in this market. There is a new driving force within us, as we geared up to tap the opportunities in the fintech industry in the country and on the continent. Top-notch, savvy foreign private equity investors from Silicon Valley or New York City are looking at it every day. They are not stupid by pushing money into it every time. Any fintech firm that shows signs of a huge subscriber base will get the funding required, and that will help them recruit and sustain that subscriber base.
So, over the next five years, I see an explosion in financial technology institutions in Nigeria building out on existing infrastructure and also solving everyday social problems, because that is what is really driving fintech in this part of the world.
However, as I said, the industry will become fragmented as you are going to have big players, medium players, and a lot of small players. eTranzact is at the forefront of looking at potential, small, strong players that align with our strategy, and we will explore making acquisitions to expand and quicken our growth, strategy implementation and execution because we see ourselves as the biggest player and we are going to remain and dominate the sector.