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The plucky young eaglet who soared above outrageous fortune

No-one said becoming a millionaire was going to be easy. Nigerian oil king Wale Tinubu could have been forgiven for thinking the world was against him. Penury, prejudice, howling unions and a mutinous crew all stood in his way.

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It is past three o’clock on a summer afternoon in Victoria Island, Lagos. Wale Tinubu, dressed in a dapper white shirt and donning thick, black-rimmed nerd glasses, is seated at the desk in his sprawling office on the 10th floor of the landmark Zenon House building. He is scrutinizing reports, signing cheques and receiving phone calls at five-minute intervals. He looks every inch the head of a $1 billion energy conglomerate. He smiles at the Forbes Africa team as soon as Oando’s Head of Corporate Communications ushers us into the room.

“Ah, the Forbes Africa guys,” he enthuses. “You’re welcome. Please make yourselves comfortable.” Of course, we do. The walls are painted a vibrant blue; across the tiled floors of the sprawling working area is a huge set of windows providing a panoramic view of the city’s glistening skyline. Far to the right of Tinubu’s desk, there is a huge office shelf full of numerous awards, plaques and various laurels. A framed picture of him shaking hands with the mythical maverick business intellectual, Jack Welch, occupies pride of place at the pinnacle of the office shelf.

Tinubu is inspired by the former General Electric boss. This much we know. But aesthetics aside, it is difficult to catch Tinubu in the same place for long; he’s always on the move: London today, New York tomorrow, Paris the next. You know the type. After being on his trail for several weeks, and exchanging numerous phone calls and emails with his corporate communications staff, our persistence paid off. We were finally meeting with one of Africa’s most storied oilmen.

In case you were unaware, Tinubu is the group chief] executive officer of Nigerian energy giant, Oando. Oando is a Pan-African energy corporation with operations actively spanning all aspects of the energy value chain, including the marketing and distribution of refined petroleum products, exploration and production, refining, and power generation. Oando is the largest non-government owned Energy Company in Nigeria and has a market capitalization north of $1 billion. It is the first Nigerian company to achieve a dual listing on both the Nigerian and Johannesburg Stock Exchanges. Tinubu has made himself Nigeria’s most venerable energy tycoon and inserted himself atop the pecking order in the major league of Nigeria’s oil industry.

Tinubu’s vision shaped Oando. So did his relentlessness. Forty-four-year-old Tinubu is apparently very proud, almost to the point of being cocky, of how much his company has achieved. “Our business started 17 years ago as a very small service company delivering fuels to the upstream service providers, and it has grown to become the largest indigenous oil and of multinationals operate here, but there are very few indigenous oil corporations that span the downstream, midstream and upstream like we do.” When he divulges that the group’s revenues hit the $3 billion mark in 2010, he says it flippantly, almost detached– like $3 billion is pocket change.

Tinubu’s characteristic composure and demeanor makes it seem like success has been easy. But it hasn’t always been this way. Oando’s early beginnings were humble. While Tinubu easily comes across as Nigeria’s most powerful energy entrepreneur today, his initial ambition was to be a lawyer. As the story goes, at the age of 16, he left Nigeria to study law at the University of Liverpool in England.

It’s easy to argue that his initial fascination with the legal profession stemmed largely from the fact that his father was a successful lawyer and managed a thriving legal outfit at the time. His winning streak in business kicked off at Liverpool. As an undergrad, he used to travel to Europe to buy luxury cars, using his school fees as capital. He then drove the car through Europe and back to London, trying his best to flip it off for a profit enroute. He usually succeeded. Tinubu was only 21 at the time, but he had already started making substantial amounts of money. He probably never realized it at the time, but it was the genesis of what was to be a successful career in deal making.

After his first degree, Tinubu earned a Master’s in Law from the London School of Economics at the age of 22. In Nigeria, lawyers are required to attend law school for a year before they are allowed to practise, and so Tinubu had no option other than to return home to his motherland.

After law school, he started out as a lawyer at his father’s firm. It wasn’t long before he realized that the legal route was not for him. It was too slow paced, too drab and unexciting.

Tinubu, a sucker for challenges, decided that he wanted to launch his own business. He wanted to be in charge and in control. Tinubu set up his first office in his father’s garage. It was modest, to say the least. He gave the garage a facelift, buying a second-hand carpet, painting the walls and installing a telephone he had borrowed from his father’s house.

On the first day, he sat down in his little garage-cum-office, ready for business while trying to figure out what business he was going to do. To stay afloat, Tinubu broke even by handling small corporate legal jobs right from his garage office. As time went on and as he generated income from small corporate assignments, he vacated his modest office in the garage to a more expensive office, albeit in the same street. He had used up almost all the money earned from his small jobs to rent the place. Tinubu continued with his legal practice, until the opportunity he had been waiting for came knocking.

A friend, Jite Okoloko, who would later go on to become an executive director at Oando, had been offered a rather lucrative contract by Unipetrol, a government-owned oil company, to transport diesel from a government towned refinery in Port-Harcourt to fill up fishing trawlers in Lagos. Okoloko was looking for a vessel to transport the diesel.

Coincidentally, Omamofe Boyo, a close friend of Tinubu, who was also a lawyer, represented an oil services firm which owned a 1945 World War II tanker–The Carolina–Tinubu realized they could charter the ship to fulfil Unipetrol’s requirements. Tinubu set out with Boyo to inspect The Carolina at Bonny Island, which is located at the edge of Rivers State in the Niger Delta. The ship was anchored offshore and the weather was as unfriendly as it could get. Tinubu’s eyes light up as he recollects the episode. “It was raining heavily.

We were on board this outboard engine speed boat that was moving at tremendous speed–I think it was 60km per hour–and all we had was a rain sheet over our heads. And I was asking myself: “What the hell am I doing here”, because we had no life jacket. The canoe was bouncing up and down in the lagoon, the weather was so bad. But then, when I saw The Carolina ahead of me, I just knew it was my destiny in seconds.” When the two friends went on board the boat, they were surprised to find that the crew members were peeved. Apparently, they hadn’t been paid for months by the ship’s owners, and their general welfare had been neglected. They were disconcerted and they showed it; they were not ready to work. A mutiny, rather than a delivery, was more likely.

But Tinubu and his partner, ever the dealmakers, put their negotiation skills to play. They calmed the crew down, massaged their ego, and paid them N50,000 ($104) on the spot. Tinubu offered to charter the ship and promised to tend to their welfare needs. By now, the crew were excited and ready to work with Tinubu. But chartering the ship was not cheap. It cost thousands of dollars and Tinubu did not have the money. He turned to his parents, who loaned him $10,000 to charter the ship. With the money in hand, he was good to go. He informed his friend, Okoloko, that he had a ship to transport the fuel.

“The Carolina was an old lady, she did five knots of speed every time she was loaded, and when the tide was against her she would go backwards, but she always delivered in the end.” Tinubu kept transporting diesel for Unipetrol. It was a lucrative venture and he was enjoying every minute of it. Tinubu should have been making money hand-over-fist, but in reality, he was struggling through not getting paid on time. He was to learn that the larger companies had a tendency to drag their feet when it came to paying up.

Tinubu was at the receiving end–the victim– and his debt was piling up. He didn’t even have enough to pay for the charter of The Caroline. “We didn’t know there was something called trade account receivables, that when you sell something you didn’t get the cash. Particularly the bigger the company you work for, the longer it takes for them to pay you. And so we had lots of bills pending, and the bills wouldn’t be paid to us and I used to have difficulty paying them their freight,” he says. As Tinubu’s debts increased, the ship owners became more impatient with him.

One day, he summoned up the courage, approached the ship’s owners, and made a rather audacious suggestion to them. “I said to them, rather than us owing you money, why don’t we just buy the tanker from you on credit and then you know that at least you sold it and you made a profit.” Tinubu takes a moment to smile at himself in retrospect. “I thought it was perfectly logical. Someone might think its a bit cheeky today, but I thought it was a logical business decision to make because at least they stood to crystallize their profits.” A price tag of $100,000 was agreed.

Once again, Tinubu didn’t have the money, but he was not going to be deterred. This was an opportunity he could not let slip through his fingers. He was determined to buy the ship and blow the consequences. In his bid to raise funds, he approached a small finance company for the loan. “It was not a bank; it was a finance company. The finance company was staffed by three people who had the credit to get loans from the bank and in turn, loan us struggling businessmen. We were all downstairs waiting for money. I got the money, and I was very happy that someone could lend me money. That inspired me to deliver.”

With $100,000 in his pocket, Tinubu bought the ship. It was a defining moment in his life. He no longer owed the tanker owners; he now merely owed the finance company and he had to pay back the loan at high interest: 10% a month. Tinubu set out to repay his debt. It wasn’t easy. The oil trading business at the time was even morestrenuous than it is today. “There were obstacles; we didn’t have credit, we didn’t have cash and we didn’t have the transfer system.

I remember many times carrying a million naira on my back in a duffel bag. In those days there were only N50 and N20 notes, and it was so heavy, but there were no transfer systems, and I had to physically carry duffel bags full of cash, sitting in the planes–old planes that were shaking in turbulence–from Lagos to Port-Harcourt to go and pay for the port charges so that I could get my ship loaded. And then the ship would sail, I would hold the bill of lading, get on a plane, fly to Paris, cash there and then turn around the next day and fly right back to Lagos. I would change the money into naira, and then carry my duffel bag and go back to Port-Harcourt.” Despite the toughness of the oil trading game at the time, Tinubu’s small oil trading operation prospered. The Carolina proved to be a smart acquisition for, as Tinubu says, “It was profitable and it made its value every month”. Before long, he had paid off the $100,000 loan.

As Tinubu’s company Ocean and Oil grew in stature, modest success followed. Tinubu’s company grew its fleet from one ship to two, three, and then seven ships. Within a few years of operations, Ocean and Oil had become the undisputed leader in the supply and trading of fuel products. And Tinubu, who was barely 30 at the time, savored it all. The biggest opportunity was yet to come. In 2000, the Nigerian government, through the Bureau of Public Enterprises (BPE), sought to divest its shareholding in Unipetrol, a leading petroleum marketing company.

Unipetrol had been floated on the Nigerian Stock Exchange in 1992, and the government owned 40% equity, while the remaining 60% was held by the Nigerian investing public. By 2000, the government had decided it was going to divest its shareholding by selling 10% to the public and 30% to a strategic private investor. The government called for bids from prospective investors. Tinubu and his two friends, Mofe Boyo and Jite Okoloko, decided to bid.

The price of the 30% stake was put at $16 million. Even though Tinubu had already started raking in substantial profits from his oil trading business, he did not have that kind of money. But it’s not in Tinubu’s nature to be deterred. The three friends put in their bid for the stake, and held their breath. Tinubu and his friends were barely 33 at the time, yet they were seeking to gain control of one of Nigeria’s largest petroleum companies. The odds seemed stacked against them. Tinubu was daring to achieve the impossible, particularly in a country like Nigeria where concrete political connections are almost a prerequisite for winning lucrative tenders and acquiring government-owned assets. Here was Tinubu and his team, barely 35, withoutany political connections, attempting to acquire a government-owned petroleum firm.

Tinubu’s energy is infectious; and so on theday he presented to the panel of the BPE, they were extremely impressed. Tinubu and his team clearly had a well-articulated plan for the company, they seemed smart enough to run a multi-million dollar company and they were driven to succeed. Tinubu and his team won the bid. But the celebrations did not last for long. The win was a controversial one. Analysts and critics believed that Wale Tinubu and his new team lacked the experience and wherewithal to effectively manage a corporation as huge as Unipetrol. It was completely unheard of in corporate Nigeria that a crop of young entrepreneurs, all aged under 35, could acquire such a huge company and have the funds and technical know-how to effectively manage it.

It caused uproar in several quarters and the BPE was under immense pressure to relinquish the sale. Because the BPE could not reverse its decision for legal reasons, it set new rules for the game, namely: Tinubu and his team had only two weeks to raise the $15million for the stake. If they couldn’t raise the money within the specified time, they stood to lose Unipetrol.

Tinubu was under withering pressure, but he moved swiftly. He raised $15 million within two weeks by obtaining a $10 million loan from a local bank, and selling equity in Unipetrol to a venture capital company for $5 million. On top of that he had $1 million in cash. Once again, Tinubu had defeated the odds. Apparently, employees at Unipetrol were less than impressed by the successful acquisition by Tinubu and his team. They couldn’t stand the idea of the company being led by three youthful individuals. Obstinately, they refused to work under this new leadership. The unions went on strike.

In their opinion, Tinubu and his team knew absolutely nothing about running a company and were only interested in running it into the ground. And so every morning, when Tinubu and his team turned up for work, they were greeted by placards brandished by their new staff. The placards branded them ‘eaglet managers’, in reference to their age which was about the same as that of the Nigerian junior team, ‘the super eaglets’. As Tinubu reminisces, he interjects: “You know, they still call us eaglets to this day.” It was a frustrating time for Tinubu.

The Unipetrol employees refused to accept Tinubu and his team as the new helmsmen; they refused to work. Ever the master strategist, Tinubu realized that he could never win without the support of the team, but at the same time, he knew he could not address the whole team at the same time. Tinubu identified the union leaders and the major movers, isolated them from the crowd and held talks.

Tinubu convinced the union leaders of his good intentions and also appealed to their self-interest. Hepromised the team that there would be no layoffs; employees who were due for promotion would be promoted; he promised a better welfare package for everyone. The uproar died down; there was still some skepticism in some quarters, but for the most part, the employees were ready to work again. Meanwhile, Tinubu set out to deliver committed… And after a while, frombeing the eaglets, we started beingreferred to as the old lions. From being the eaglets, we now became the bald eagles, because we were the ones with the wisdom, the strength and theconviction to do what was right and we always delivered all the time.” It’s been several years since Tinubu took over the company’s operations.

In 2002, he spearheaded another audacious acquisition. This time around, it was for Agip’s downstream operations in Nigeria. Unipetrol acquired 60% equity in Agip Nigeria PLC from Agip Petroli International. Unipetrol subsequently merged with Agip in 2003, and the new merged company was rebranded Oando PLC. With the merger, Oando emerged as the largest downstream company in Nigeria. Oando now has retail outlets in Benin, Ghana, Sierra Leone andTogo. Its growing regional expansion is in line with Tinubu’s grandiose ambition to build Africa’s first oil major. Tinubu has pursued some rather ambitious projects in rapid succession. Oando achieved a first in 2005 when it became the first Nigerian company to accomplish a cross-border inwardlisting on the Johannesburg Stock Exchange. Seeking to diversify his company’s operations from a mere fuels retailer to the realm of a major indigenous upstream player, in 2005 Oando incorporated Oando Energy services, an integrated oilfield services company.

Two years later, in 2007, the company acquired two oil drilling rigs for an estimated $100 million for use in the Niger Delta. In 2008, Oando acquired a 15% stake in two producing deep water assets–OML 125 and 135 located in Niger Delta. By 2009, Oando’s fleet of rigs had increased to five. Oando is also a major player in the midstream sector of the petroleum economy. In 2007, the company’s subsidiary, Gaslink Limited, completed the laying of a 100km gas distribution pipeline in Lagos state. Gaslink has successfully phased and executed the construction of about 100km of natural gas pipeline distribution network from the Nigerian Gas Company city gate in Ikeja, to cover the Greater Lagos Area including Ikeja, Apapa and their environs. Gaslink currently deliversover 40 million standard cubic feet of gas to over 100 industrial customersevery day. “Africa is a challenging continent; you fight for water, you fight for food, you fight for shelter. We compete by nature, so it’s always difficult but we don’t always know it is difficult because we have a spirit of survival. And that’s what we do–we survive. Here at Oando, we deliver on the tough things,” he says with a grin. Tough? Now we are back to the beginning and the leaky tanker with its mutinous crew

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Forbes Africa | 8 Years And Growing

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As FORBES AFRICA celebrates eight years of showcasing African entrepreneurship, we look back on our stellar collection of cover stars, ranging from billionaires to space explorers to industrialists, self-made multi-millionaire businessmen and social entrepreneurs working for Africa. They tell us what they are doing now, how their businesses have grown, and where the continent is headed. 

Since its inception in 2011, and despite the changing trends in the publishing industry, FORBES AFRICA has managed to stay relevant, insightful and sought-after, unpacking compelling stories of innovation and entrepreneurship on the youngest continent, in which 60% of the population is aged under 25 years.

 Many of those innovations have been solutions-driven as young entrepreneurs across the continent seek to answer questions that have burdened their communities.

 Always on the pulse, FORBES AFRICA has chronicled and celebrated those innovations – prompting the rest of the globe to pay attention and be fully engaged.

 A prime example of this is the annual 30 Under 30 list, which showcases entrepreneurs and trailblazers under the age of 30 from business, technology, creatives and sports. In 2019, we had 120 entrepreneurs on the list, finalized after a rigorous vetting and due diligence process to well laid down criteria.

 We have always maintained the highest standards of integrity in all our reporting.

 As we transition into the next milestone, FORBES AFRICA reflects on the words of civil rights activist Benjamin Elijah Mays, who once said: “The tragedy of life is not found in failure but complacency. Not in you doing too much, but doing too little. Not in you living above your means, but below your capacity. It’s not failure but aiming too low, that is life’s greatest tragedy.”

 With the transformation in the media landscape, the recent awards given to the magazine for the work done by a hard-working, determined and youthful team, serve as a reminder that we are doing something right.

 Early this year, FORBES AFRICA journalist Karen Mwendera received a Sanlam award for financial journalism as the first runner-up in the ‘African Growth Story’ category. In January, FORBES AFRICA’s Managing Editor, Renuka Methil, received the ‘World Woman Super Achiever Award’ from the Global HRD Congress.

 In reflecting on the last eight years, this edition revisits a few of the strong, resilient men and women who have graced our covers.

For some, fortunes have literally changed, as witnessed in the fall of gargantuan African empires such as Steinhoff. Of course, there have been massive moments of triumph too, which have seen some new names feature on the annual African Billionaires List. There have also been moments of tragedy with former cover stars passing away.

 Africa is ripe for the taking and is seen as the next economic frontier. The unique position the continent finds itself in will no doubt give FORBES AFRICA plenty to report on. Here’s to more deadlines and debates for the next eight years.

– Unathi Shologu

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Entrepreneurs

Having A Ball With Data

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Stephan Eyeson started a basketball business at the age of 19. That venture failed, so he tried the data business instead. He is working and playing hard.


First, the facts.

Africa has a data problem. For all the talk about data being the new oil, the continent comprises about 12.5% of the world’s population but only accounts for less than 1% of research output, according to global information and analytics firm, Elsevier.

And Survey 54, an AI mobile survey platform solving the problem of data collection on the continent, wants to offer a solution. Founded by Stephan Eyeson, Survey 54 focuses on providing good quality data essential for governments and private businesses to accurately plan, fund and evaluate their activities.

READ MORE | Owning The African Narrative

“Data in Africa is such a prevalent problem, in a sense of when you are going to start up a business, it is hard for you to get consumer data on say ‘how many people eat out in Lagos every day? what is the transactional value? what are the types of things that people eat? what do they want to eat etc?’ All these things are available in the West but for people who want to move into Africa for business, how do they get their data to make their decisions and how do we make it really easy for them and not just for a startup but for even governments and larger businesses,” says Eyeson.

Fresh out of a master’s program in innovation and management from Loughborough University in the United Kingdom (UK), Eyeson joined Survey Monkey, an online survey development cloud-based software as a service company, as part of the team responsible for building their enterprise function in London as well as looking after customers in the EMEA (Europe, Middle East and Africa). After learning the ropes, he decided to branch out to start his own company to offer a more robust and tailored solution for the African market.

“For people who want to move into Africa for business, how do they get their data to make their decisions and how do we make it really easy for them?”

“The problem around data in Africa and emerging markets is a massive one. So, for us, it’s about how do we become a data platform not just for a company but for governments to help them understand their people easier.”

Data is the first step. Then you need intelligence around that data to enable you to make objective analysis that will shape your decision-making process, as well as provide the foundation for policy-making and budgeting.

“Instead of hiring an agency to go to Ghana and do a face-to-face interview, for example, we look at how governments can get mobile data faster and then how they are able to manipulate that data to get the results they need,” says Eyeson.

READ MORE | The $100 Trillion Opportunity: The Race To Provide Banking To The World’s Poor

Due to the dearth of knowledge, Eyeson’s unique understanding for the data space is relied on by many startups and larger businesses who depend on his expertise to drive results in Africa.

“Stephan has great expertise in strategy and high-level corporate business development. Survey 54 has and will be instrumental for companies to make decisions within Africa and emerging markets, making it easier to use and understand consumer data. A platform like Survey 54 is essential for companies operating on the continent,” says Nana Adomako, head of UK & Ghana growth at Taptap Send.

Born to Ghanaian parents in London, Eyeson’s first stint at entrepreneurship began in his early years at university, when his dream to become a professional basketball player was shattered.

“I had a scholarship into America for basketball and that scholarship was taken away due to some technicality with my results so I couldn’t go and so I started a basketball business instead when I was 19. It helped Americans play in Europe and Europeans play in America. I made the system easier. So, players paid a monthly fee to get seen and coaches paid to get access to talent.”

But unfortunately, the business failed to take off because the market was not big enough for Eyeson to remain profitable.

The data business, on the other hand, is huge: worldwide revenues for data and business analytics are forecast to reach $189 billion this year and $274.3 billion by 2022, according to technology market research firm IDC. Even though Survey 54 is in its first full year of business, the company has already secured contracts with multinationals like Colgate, amongst many others.

READ MORE | A Germ Of An Idea

“I was one of Survey 54’s first clients and it has been a pleasure watching Stephan grow the company into what it is today, working with some of the world’s largest brands.

“There is a significant lack of data in the region so the need for a sophisticated data insight product is essential and I believe Stephan’s mission-driven leadership style will enable the company to become one of the largest software businesses driving investments to the content,” says Yvonne Bajela, Principal and Founding Member at Impact X Capital.

The company has recently secured a spot on the coveted Startupbootcamp platform in Cape Town. While Survey 54 is trying to secure a first-mover lead in data on the continent, challenges remain. As the company scales, they will need to overcome the language barrier across the African continent and learn to interpret data by bringing the cultural context into the surveys organizations are seeking.

Eyeson has his eyes set on moving into the US markets as a long-term plan, but for now, the goal is transferring the abundant and ubiquitous asset of data in Africa into millions for his startup.

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Entrepreneurs

The $100 Trillion Opportunity: The Race To Provide Banking To The World’s Poor

Companies like Tala are at the forefront of the race to deliver rudimentary financial services to the 1.7 billion people on the planet who lack even a bank account.

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Two years ago, Amylene Dingle lived with her husband and 7-year-old daughter in Payatas, an impoverished Manila neighborhood with the largest open dump site in the Philippines. Her husband worked on the security staff in a government building, earning 4,000 pesos a week, the equivalent of $80. She had always wanted to start a business, but she was unemployed, had no money saved, no credit history and couldn’t get a credit card or a bank loan.

Dingle’s fortunes took a dramatic turn after she responded to a Facebook ad for Tala, a Santa Monica-based startup that makes small loans through a smartphone app. After granting Tala access to her phone, through which the app cleverly parses mobile data to assess a borrower’s risk, she got a 30-day, $20 loan. She paid 15% interest and used the money to buy cold cuts, hamburgers and hot dogs. She marked them up 40% and sold them door-to-door, earning $4 in profit after paying back the interest and a small processing fee.

Loan Ranger: Tala founder Shivani Siroya at her startup’s Santa Monica headquarters. She uses cellphone data to establish creditworthiness for people rejected by banks in the developing world. ROBERT GALLAGHER FOR FORBES

Today Tala lends Dingle, 42, $250 a month for her now thriving food business. Her $70 in weekly profits have nearly doubled her family’s income and funded their move to a two-bedroom home in the quiet, clean Batasan Hills district. Tala is thriving, too. Founded in 2011 by Shivani Siroya, a 37-year-old former Wall Street analyst who had worked at the United Nations, it has raised more than $200 million from top U.S. investors, including billionaire Steve Case’s Revolution Growth fund. With estimated 2019 revenue of more than $100 million, Tala is valued at close to $800 million.

Companies like Tala are at the forefront of the race to deliver rudimentary financial services to the 1.7 billion people on the planet who lack even a bank account. Providing them with the basics of credit, savings and insurance is one of the great challenges and opportunities of the century. With access to the financial system, people can buy a car or a home. They don’t have to resort to loan sharks if they face a medical emergency. They are happier. They live longer. They are more productive, and their increased productivity will help lift their nations out of poverty. Serving the unbanked will generate some of tomorrow’s largest fortunes. It is both capitalism’s moral imperative and the route to one of the most significant untapped markets.

While the unbanked pay for everything in cash, an even larger swath of people, the more than 4 billion “underbanked,” may have accounts but struggle to make ends meet, racking up steep fees when checks bounce and resorting to high-interest alternatives like payday loans. Traditional banks alone could boost annual revenue by at least $380 billion if they turned all the unbanked into customers, according to a 2015 Accenture report.

The multiplier effects are staggering. The GDP of emerging-market countries would surge $3.7 trillion by 2025, or 6%, if they adopted a single innovation—switching from cash to digital money stored on cellphones, McKinsey estimated in 2016. Diego Zuluaga, an analyst at the Cato Institute’s Center for Monetary & Financial Alternatives, has studied the likely effects of full financial inclusion: “If we were to give the unbanked and underbanked in the developing world the same kind of access to credit and investments that we have in rich countries, you could easily create an additional $100 trillion in financial assets over the next 50 years.”

 
Tala founder Siroya was raised by her Indian immigrant parents, both professionals, in Brooklyn’s gentrified Park Slope neighborhood and attended the United Nations International School in Manhattan. She earned degrees from Wesleyan and Columbia and worked as an investment banking analyst at Credit Suisse and UBS. Starting in 2006, her job was to assess the impact of microcredit in sub-Saharan and West Africa for the UN. She trailed women as they applied for bank loans of a few hundred dollars and was struck by how many were rejected. “The bankers would actually tell me things like, ‘We’ll never serve this segment,’ ” she says. 

Where banks saw risk, she saw opportunity. For the UN, she interviewed 3,500 people about how they earned, spent, borrowed and saved. Those insights led her to launch Tala: A loan applicant can prove her creditworthiness through the daily and weekly routines logged on her phone. An applicant is deemed more reliable if she does things like regularly phone her mother and pay her utility bills on time. “We use her digital trail,” says Siroya.

Tala is scaling up quickly. It already has 4 million customers in five countries who have borrowed more than $1 billion. The company is profitable in Kenya and the Philippines and growing fast in Tanzania, Mexico and India.

Rafael Villalobos Jr.’s parents live in a simple home with a metal roof in the city of Tepalcatepec in southwestern Mexico, where half the population subsists below the poverty line. His father, 71, works as a farm laborer, and his mother is retired. They have no credit or insurance. The $500 their son sends them each month, saved from his salary as a community-college administrator in Moses Lake, Washington, “literally puts food in their mouths,” he says. 

To transfer money to Mexico, he used to wait in line at a MoneyGram kiosk inside a convenience store and pay a $10 fee plus an exchange-rate markup. In 2015, he discovered Remitly, a Seattle startup that allows him to make low-cost transfers on his phone in -seconds. 

Immigrants from the developing world send a total of $530 billion in remittances back home each year. Those funds make up a significant share of the economy in places like Haiti, where remittances account for more than a quarter of the GDP. If all the people who send remittances through traditional carriers, which charge an average 7% per transaction, were to switch to Remitly with its average charge of 1.3%, they would collectively save $30 billion a year. And that doesn’t account for the driving and waiting time saved. 

Remitly cofounder and CEO Matt Oppenheimer, 37, was inspired to start his remittance service while working for Barclays Bank of Kenya, where he ran mobile and internet banking for a year starting in 2010. Originally from Boise, Idaho, he earned a psychology degree from Dartmouth and a Harvard M.B.A. before joining Barclays in London. When he was transferred to Kenya, he observed firsthand how remittances could make the difference between a home with indoor plumbing and one without. “I saw that $200, $250, $300 in Kenya goes a really, really long way,” he says.

Oppenheimer quit Barclays in 2011 and together with cofounder Shivaas Gulati, 31, an Indian immigrant with a master’s in IT from Carnegie Mellon, pitched his idea to the Techstars incubator program in Seattle, where they met Josh Hug, 41, their third cofounder. Hug had sold his first startup to Amazon, and his connections led them to Bezos Expeditions, which manages Jeff Bezos’ personal assets. The fund became one of Remitly’s earliest backers. To date, Remitly has raised $312 million and is valued at close to $1 billion.

Oppenheimer and his team can keep fees low in part because they use machine learning and other technology to bar terrorists, fraudsters and money launderers from transferring funds. The algorithms pose fewer questions to customers who send small sums than they do to those who send large amounts.

Remitly transfers $6 billion a year, serving senders in 16 countries, including the U.S., Australia and the U.K., and recipients in 45 nations. In the first half of 2019 it added 15 receiving countries, including Rwanda and Indonesia. The company is not yet profitable, but last year estimated revenue came to $80 million. Oppenheimer sees a huge growth opportunity. Fewer than 1% of the world’s 250 million immigrants are Remitly customers. 

In 2012, Dorcas Murunga lived in Gachie, a crime-ridden neighborhood on the outskirts of Nairobi. She earned $80 a month babysitting and cleaning houses, and her husband made $120 installing elevators. He covered most of their expenses while she struggled to save money. Whenever she had cash, she says, she spent impulsively on clothes, junk food and alcohol. She managed to put aside the $5 minimum balance required to open a savings account at Equity Bank of Kenya, but she had a hard time coming up with the $3 monthly fee. To make a deposit, she took a bus an hour each way and waited in line for an hour at the bank. She closed the account after just one year. 

Like most Kenyans, Murunga was already using M-Pesa, a service created by Safaricom to send money via text message. In 2012, Safaricom, a subsidiary of British telecom giant Vodafone, introduced M-Shwari, a savings account and loan service it integrated into M-Pesa. Two years later, it started offering an account that locked up a customer’s funds for a fixed period at a fixed interest rate.

Determined to improve her finances, Murunga committed to saving $1 a day through her locked account. When she got the urge to buy vodka or a pair of shoes, she says, she’d make deposits through her phone instead. She cut her spending by two thirds, to $10 a week. By 2016, she was saving $300 a year. She had started a business making handbags, and the savings helped pay for design courses. She has invested in real estate with her husband and says she spends more than $200 a year helping friends and family. 

The spark for M-Pesa (pesa means money in Swahili), the first mobile money provider in Africa, came in 2003 from Nick Hughes, a Vodafone executive who managed a five-person team tasked with creating wireless products with a social impact. Hughes’ idea: set up a digital money-transfer system that would operate through personal cellphones.

Since M-Pesa launched in 2007, it has exploded in size and popularity. Kenyan taxi drivers complain when riders try to pay in cash. Ninety-six percent of Kenyan households now transact through M-Pesa. Before M-Pesa, only 27% of Kenya’s then 38 million people had bank accounts. Kenya’s population has since risen to 51 million, and 83% have checking or savings accounts. The service has spread to eight countries, including Egypt and India. Sending less than 50 cents is free. M-Pesa charges 1% to 2% for larger amounts. Through its various subsidiaries, M-Pesa generates some $840 million in annual fees for Vodafone.

The adoption of M-Pesa has had a tremendous impact on Nairobi’s startup scene. Durable-goods providers have introduced pay-as-you-go plans that bring in millions of new customers. For example, three-year-old Deevabits, based in Nairobi, sells $80 home solar systems in remote villages with no access to electricity. All its customers use M-Pesa to make an initial deposit. They pay the remainder through M-Pesa in 50-cent daily increments over eight months. “The presence of M-Pesa has transformed how business is done in Kenya,” says Deevabits founder and CEO David Wanjau, 32. “We couldn’t operate without M-Pesa.”

Dixie Moore used to strain to make paychecks last to the end of the month. A 25-year-old single mother with two small children, she earns $12.25 an hour as an assistant manager at a Bojangles’ fast-food restaurant in Canton, Georgia. In 2011, she was paying $30 a month for a Wells Fargo checking account, but when a bounced check and multiple overdraft fees left her with a $1,200 negative balance, she lost the account. She regularly paid up to $6 to get her paychecks cashed. “I was stuck between a rock and a hard place,” she says. Then a friend told her about MoneyCard, a Walmart-branded product offered by Pasadena, California–based Green Dot, the largest provider of prepaid debit cards in the U.S. Now her employer deposits her paychecks directly onto the card, and she uses it to pay for everything from groceries to dentist appointments. “It has really been a blessing,” she says. 

Green Dot offers a financial lifeline to people like Moore. Until she started using the card two years ago, hers was among the 7% of American households—representing some 14 million adults—that get by entirely on cash. Founded in 1999 by a former DJ named Steve Streit, the company initially focused on teenagers who wanted to shop online. But seeing a larger opportunity, in 2001 Green Dot shifted its focus to adults who were using the card because they had bad credit or couldn’t afford commercial bank fees.

One advantage of cash cards: When users spend all the money on their card, it’s like running out of paper cash. They avoid overdraft fees that can run as high as $35 for a single infraction. The cards also make it possible for users to buy online.

Streit, 57, says that nearly 40% of Green Dot’s 5 million customers were previously unbanked.

In 2007, he struck a deal with Walmart that was a boon for the chain’s then 130 million customers: a cash card with a monthly fee of just $3 (today it’s $5). That’s down from the nearly $8 monthly fee paid by users who bought their cards at stores like CVS. The surge in Walmart card sales helped make up for the shortfall from the lower monthly charge.

In 2010, Streit took the company public. Though Green Dot generated revenue of $1 billion last year, its stock slid 40% this past August as it lowered its revenue expectations, citing the increase in well-funded competitors entering the market. But bad news for Green Dot is good news for America’s unbanked. Smartphone-based cash offerings from venture-backed startups like Chime, a six-year-old digital bank based in San Francisco, and digital-payment company Square’s Cash App are signing on millions of customers.

Harvard Business School professor Michael Chu, a former partner at KKR who cofounded Mexico City-based Compartamos, Latin America’s largest microfinance lender, says the opportunity to serve the underbanked in the U.S. is “huge.” But paradoxically, the richest nation on earth poses some of the greatest barriers to financial-inclusion innovators. A patchwork of state laws intended to protect borrowers from predatory lenders and federal laws that guard against money laundering requires startups to navigate through a maze of red tape.

Another problem: The technology that transfers funds between U.S. financial institutions is old, slow and expensive. While M-Pesa zips mobile money across Kenya in seconds at virtually no charge, an electronic fund transfer from Miami to New York can take two days and cost as much as $40. 

But in the grand scheme these are minor obstacles. The Fed has promised to build a new and improved U.S. transfer system by 2024. Entrepreneurs will lobby—or innovate—their way around the bureaucratic barriers. After all, there are billions of dollars to be made—and countless lives to improve.

By Jeff Kauflin, Fintech, Forbes Staff and Susan Adams, Education, Forbes Staff.

Additional reporting by Anna Corradi.

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