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We here at Ventureburn write a lot about mobile payments in Africa. From old favourites such as Kenya’s M-Pesa to newer ones like South Africa’s SnapScan, each one is keen on seeing a cashless society. So a startup that relies on cash transactions immediately peaked our interest.
“We are avoiding to reinvent the wheel,” says Nomanini’s CEO Vahid Monadjem. “We’re creating a product that serves a pressing need that the current model doesn’t serve.” And so, after refining product after business model, Nomanini finds itself in a sweet spot where it’s agile enough to adjust its approach to a complex payments market in Africa while maintaining steady growth throughout the continent.
Monadjem in 2011 resigned from his post as a management consultant after he saw a massive distribution gap between mobile operators and informal markets. He wasn’t looking to develop another payments app. He was thinking in simpler terms — what would really benefit the merchant selling airtime vouchers.
Traditionally merchants in informal markets rely on selling airtime scratch cards which, apart from carrying around a bunch of physical goods, isn’t that big of a deal to sell. What Nomanini’s mobile Point of Sales (PoS) terminal does it replaces the physical distribution with virtual distribution, which saves time, money, and reduces the retailers’ overall risk.
“Everything people do comes down loaded with assumption,” says Monadjem pointing out the importance of doing your market research. “We found time for the merchant to be a big issue.”
Today, Nomanini has received a total of US$2.5-million in investments and is currently active in six countries with the rest of the African continent and the UK in its grasp.
Monadjem raised a pre-seed round between himself and his family of which he raised somewhere between about R4-and R5-million. Now Monadjem and his trusted investors didn’t throw money at Nomanini for the sake of just supporting an ambitious entrepreneur’s dream. Before starting the company, Monadjem had a proof of concept.
The hypothesis was that as the petrol prices were rising, the income of South Africa’s 250 000 odd minibus taxi drivers were squeezed and so they had to diversify their revenue streams. A simple mobile Point of Sales (PoS) terminal that sells airtime seemed to be a perfect fit.
Proof to pivot
As it evolved, and Nomanini’s team learned more and more about the landscape it’s operating in, the startup went through a number of very important pivots.
After receiving positive on-the-ground feedback from the taxi drivers in Soweto, Monadjem put together a team and started working on a product.
Upon testing the product’s functionality in Cape Town, the testers who were using it to sell airtime, found that a variety of people actually wanted to buy the product for themselves and become their own entrepreneur.
“We saw street hawkers and security guards wanting to get in on the action. So we thought ‘let’s test with more people to understand this wider audience.'” After receiving more feedback from vendors, Nomanini soon decided to roll out to other markets.
The startup now wanted to find a way of getting its mobile terminals into vendors’ hands operating in Khayelitsha. But selling directly to vendors are difficult as the team was now operating in unfamiliar territory. And so, the existing channel operators became Nomanini’s new clients.
“These guys have amazing field operations, they just needed the right tech,” says Monadjem. “We help them become more efficient with new tech.”
This model of “riding on the coattails of established channels” has enabled it to easily expand to Kenya, Mozambique, Namibia, Ghana and Zambia. It also gives the company the focus required to do what they do best: build product.
Chatting about Nomanini’s first expansion, Monadjem tells Ventureburn that the company got major exposure through a Google blog post on how cloud computing is enabling entrepreneurship in Africa back in 2012. Zafir Khan, a Google software engineer wrote the following:
33-year-old Vuyile moved to Cape Town from rural South Africa in search of work. Unable to complete high school, he worked as a night shift security guard earning $500/month to support his family. During the rush hour commute from his home in Khayelitsha, Vuyile realized that he could earn extra income by selling prepaid mobile airtime vouchers to other commuters on the train.
Today, Vuyile sells vouchers on the train for cash payment, and earns a commission weekly. Since he started using the Lula, he’s seen his monthly income increase by 20 percent.
Of course given the fact that Google’s blog has over 10 million followers, Nomanini then received a ton of responses from the media and interested parties of clients who want to roll-out the product in their own communities. “In June 2013 we found a small distributor in Kenya,” Monadjem. “We closed the deal via Skype and shipped out 20 terminals. And it worked.”
Apart from hooking onto existing distribution channels, Nomanini’s hardware has the advantage of being very customisable. With a price tag somewhere between US$170 and US$200 with a monthly charge around US$20, the device weighs 450 grams and has GPS and relies on 2G connection.
“We’re sitting on a lot of valuable data,” Monadjem says. He notes that the company can provide insight into informal market dynamics. It’s also keen on expanding its offering to include electricity, insurance, micro-loans other pre-paid services. The African Development Group suggests that sub-Saharan Africa’s informal economy contributes to 55% of the region’s GDP. Any means of extracting data on this sector should be highly regarded.
Today, Nomanini has around 750 active terminals spread throughout several African countries which sees over 1 million end-user transactions. It’s also a nominee of the Accenture Innovation Index.