Government should engage fintech to drive growth — Afolabi

Olamide Afolabi is the CEO of Touch and Pay Technologies Limited. He tells BELIEVE AJAYI about the career and the financial technology industry

You studied mechanical engineering at school. Why and how did you enter fintech?

Basically, the core of what we studied at school was figuring out a way to solve problems. Many people don’t end up doing what they studied in school because they just went to school to learn how to solve problems.

My partners and I realized that one of the problems we had in the country was in the fintech sector. Every time we came to Lagos, we always saw people fighting at the bus stops over “change”. No one seemed to solve that problem, so we decided to take it upon ourselves to solve the problem. And it (the solution) turned out to be in fintech. We actually didn’t know which field it was at the time of the eruption.

Who are your partners?

My business partners and co-founders of the company are Michael Oluwole and Kabiru Yabo. We started the business in 2019 when we were still at university.

After secondary school, it took two years before you were admitted to university. What did you do during that period?

Right after secondary school, I start learning coding, and focused on training in information technology.

While in school, you competed in the Microsoft Imagine Cup. How was the experience for you?

That was practically the starting point for what I’m doing now, because it’s like the world championship of software. Microsoft partnered with the UN and decided to choose one of the sustainability goals and solve one of the toughest problems in Africa. The idea was to use technology to solve a big problem in Africa. Participating in the competition was a great experience. That was one of the things that kept us consistent in learning to code, building solutions, and trying to sell the solutions to judges or our friends, to see if it made sense.

As the founder of Tap with a Mission, which aims to digitize and process microtransactions in Africa, why did you decide to start with the transport sector?

I realized that while there were companies like Flutterwave and Interswitch, providing payment solutions, little or nothing had been done for the common man trying to buy snacks on the street, or pay as little as N50 as a bus fare. It didn’t look like there was any infrastructure in that area, so me and my partners decided to focus on building that infrastructure to process microtransactions and digitize them, because that’s one of the reasons people need to withdraw money.

We also reasoned that the reason many people were below the poverty line was because they could not expand their business, due to the fact that they only did cash transactions. We then took it upon ourselves to process small transactions for credit facilities or financial institutions so they could give people the money they needed to get their business up and running. That was the basis for what we do in the transport sector.

Since the company was established, you have had some growth. What are the factors that played key roles in your success so far?

The key factor is the support we got from the Lagos State government. The company was launched around the period of the COVID-19 pandemic shutdown. Then the government did not want to restart the public transport system without taking some responsibility, especially in the area of ​​contact tracing. They wanted to know the people who boarded BRT buses daily, so that in the event of an outbreak they could track the passengers. It was made compulsory for everyone who boarded the buses to register and pay with a prepaid card (cowry), and a means of identification. It was actually our launch pad.

The learnings from there helped us improve the technology to make it easy for people to adopt and use. Right now the cowry card is used in Oyo, Ogun, Kano and Lagos states. We plan to expand to other parts of Africa.

How were you able to secure a partnership with the Lagos State Government for the cowry card to be accepted as a means of payment for BRT buses?

We didn’t really know anyone, and no one was interested in us. We had actually partnered with Lagos Bus Service Limited and we helped them with their revenue assurance solution. They liked the way we handled it and they introduced us to ‘Lagferry’; and we gave them the same solution for income protection. When Lagos State was scouting for people to solve that problem at the height of the COVID-19 pandemic, they were keen to get local content. They stated that they did not want to pay dollars to any foreign company, or look for a foreign partner. They needed smart people in Nigeria who could solve the problem. The governor then decided to try us, seeing that we were young Nigerians and we could find a solution.

The project is essentially a private public collaboration. Lagos State does not need to pay us before we can implement it. We invested by bringing in the necessary infrastructure. It is not until people “tap” that we make a profit.

You once said that it’s not about building something the market finds interesting, but creating something the market will pay for. How can you find a balance between creating a solution-driven product/service and a lucrative one?

I realized that many people get things twisted when it comes to value. Everything we try to do has to be sustainable or has to be able to finance itself at the end of the day. When it comes to strategy, people have used so many models to sustain their business. There are some businesses that you need an initial capital to start; and to get these funds, they would probably have to borrow from banks. If so, they have to prove the value (of their product/service) before they can start charging people for it.

At the end of the day, every business must be sustainable. You can do a business that takes money from you even if it adds value. It is not a one-size-fits-all situation.

What are the challenges you face in the fintech industry?

One of the biggest challenges we face in the industry has to do with regulation – the fear of what policy the government might introduce tomorrow. It’s not that we don’t want to be regulated; the problem is when the interpretation of the regulation is not so clear. I feel that the government is not working closely enough with people to find a balance.

The second challenge we face is monetary policy. One could have money, but repatriating (collecting money in dollars) one’s funds can be a big challenge. Also, it is a challenge to be able to pay people in dollars. What many do is that when they get investments in dollars, they open bank accounts in the US, because they don’t want the money to go into the (Nigerian) system. That’s because it’s usually challenging to pay suppliers or partners in the US or China. And it does not allow people to safely bring many dollars into the economy, although it could have mitigated the effect of the dollar shortage currently facing the country.

If the government can help us relax monetary policy and still find a way to fight money laundering, that will help a lot.

Your company was recently the winner of the “Ecobank fintech challenge”. What are the factors that helped you win the competition?

In addition to having many customers using our system, we also have a lot of adoption, even in the northern part of the country. We generate enough revenue to stay afloat as well.

We actually solve a problem, and the customers approach themselves.

Clients see our work as a solution to the problem they had and didn’t know how to solve.

How did you get into the Y Combinator program and what was the experience like for you?

Y Combinator is the largest technology accelerator company in the world. They receive many applications from all over the world twice a year, and they carefully select the companies they want to finance. If Y Combinator backs one’s company, it sets one apart, because people know they have high standards.

We were lucky to be part of the 2022 cohort and they also funded us on this journey. When we raised money for the company, most of the investors came from Y Combinator.

The program is not about funding alone; it is also about a community of investors, entrepreneurs and partners.

In what ways can the government improve the business environment for fintechs in Nigeria?

The government must carry out more engagements with people in the sector; because if they don’t understand the industry, they wouldn’t be able to help. The government needs to figure out a way to engage with society, providing things like sandboxes and creating avenues for businesses to grow.

I remember someone once came from the Czech Embassy to promote a business from their country here in Nigeria. I don’t think we have situations where the government is actively marketing businesses in Nigeria to other countries. Still, at the end of the day, it’s one of the things that can help boost the economy. The government must come to that level of commitment and help businesses in the country.

What are the leadership qualities that have helped you excel in your job?

I am very patient, persistent and loyal. Also, I don’t write people off or underestimate them.

Fintech has been described as the “new oil”. Do you think the government is doing enough to position the country to benefit from this paradigm shift?

I do not think so. One of the most important things the government has to do is to build trust with citizens. Even start-ups, people interpret them in different ways because they don’t trust the government. Fintech is described as the “new oil” because a lot of funds were invested in it. The sector can make so much money, but the government is not positioned to benefit anyway. They really need to do more.

Some fintechs that have benefited from massive foreign investment have been accused of not having strong corporate governance structures. What are you doing to ensure that your company operates above board?

What many fintechs are afraid of is the fact that you cannot innovate when you have so much weight. If you have to apply for approval from a board before you can change the direction of your business, that can be a problem. A startup is basically a business that grows very quickly. For it to grow very quickly, one must be able to make decisions quickly. If you can’t do that because you need to get approval from a board, that becomes a problem. As for us, we try to balance the scale because even without boards one cannot be considered credible. We always try to balance the scale by carefully selecting members of our board.

What advice do you have for young Nigerians who want to go into fintech?

Gather the skills you need, be very resilient, and be ready to work with people

What is the best business decision you ever made?

It’s about being focused. Many business leaders constantly face the temptation to dive into anything and everything, but staying focused on one thing and mastering it is one of the best decisions I’ve ever made.

Some people are afraid of digital transactions for fear of being hacked and losing the money in their bank accounts. What is your assessment of the security architecture in place to prevent these incidents?

We have put in place all measures to ensure that our system is secure. If one keeps one’s money outside the bank and it disappears, no one can be held responsible for it. But if the funds are kept in a bank and they disappear, the bank can be held liable. When people adopt the digital transaction system, there will be proof that their money is in our system. That puts the responsibility of the money on us and we are able to ensure that we stay ahead of the game to keep such money safe.