Interview: PesaPal’s Agosta Liko on African mobile payment solutions

Agosta Liko, CEO of PesaPal, relocated to Kenya from the US to start Verviant, a software development company in Nairobi. Three years later, the team at Verviant launched PesaPal with a vision of enabling Kenyans to make online payments.

PesaPal is making great strides in bridging the mobile and electronic payment divide in Kenya, and is set to expand to more African countries next year. Mark Kaigwa sat down with the CEO to discuss his perspective on doing business in Kenya, the African condition, and on how PesaPal was able to gain traction with ordinary people.

MK: How would you describe PesaPal at present, and where do you see the company heading in the future?
AL: In short, PesaPal is electronic payments; payments for the African condition. Doing things and answering problems that wouldn’t make sense if my co-founders weren’t African. It may make no sense to others but it applies for Africa.

“Social Cash” is a part of the African condition and culture. Social cash is how you raise money for weddings, funeral committees or harambee (a type of Kenyan fundraising meeting between family, friends and well-wishers.) When these people get together, they bring with them cash, cheques, mobile payments, bank transfers, etc. If you can have all that maintained and tracked from one account you’ve solved a problem. And it’s good for bookkeeping and for their affairs.

To the rest of the world Africa is a place of “micropayments” but to us it’s a lot of money. They talk about $2 a day and conclude “that’s not a lot of money”. It’s easy to come at it from a World Bank statistical perspective and come to conclusions, but I know people in my rural village who live better than some $30,000-a-year Westerners in Raleigh, North Carolina (where I lived and worked.) Of course Ksh.300 ($3.75) isn’t a lot by international standards, but it’s a kilo of beef where I’m from and that’s something.

MK: There have been many theories to describe the secret of M-Pesa’s success and uptake, what’s your opinion of why it’s gained such traction in Kenya?
AL: I don’t think there’s a “secret.” They built with a specific problem in mind and it’s a solution which was executed well. And M-Pesa came first. It’s a fast-moving product and they have the biggest reach in this country. Go figure.

MK: What role does SchoolPay, the school fees payment extension of PesaPal, play in PesaPal’s overall strategy?
AL: PesaPal’s core API is about payments. [In Africa] if you just release an API, 2-3 months down the line there’ll be nothing done. Before the API becomes useful, people have to be familiar with the service. With PesaPal, instead of waiting for it to keep growing we took the approach of let’s sell plug-ins, corporate integrations, and solve problems we could fix immediately.

We picked school fees. There are over 30 000 schools in Kenya. When it comes to paying fees, in Kenya they are paid by banker’s cheques. What this means is that the parents are charged – Ksh.200 ($2.50) for the transaction. And the schools are charged Ksh.100 ($1.25) for every banker’s cheque they receive. We saw that schools could save between Ksh.50,000 – 170,000 ($625 – $2,125) a year on average. I say, fix a problem. I can’t say I’m a firm believer in the “build it and they will come” approach.
What we do know is that education is all over Africa and it’s a payment that’s guaranteed and PesaPal can make it easier and cheaper.

MK: There’s speculation that Safaricom may open up M-Pesa’s API later this year. What does this mean for PesaPal?
AL: When I started Verviant, there was always the worry that a prominent large competitor looming could take over all our business. M-Pesa is Safaricom’s mobile payment platform; PesaPal is an electronic payment service. PesaPal gives you Visa, PayPal, Zain’s Zap, Safaricom’s M-Pesa and PesaPoint (ATM network); I think PesaPal will be stronger as a result.

MK: What were some of the challenges you had to overcome as one of the first to bridge the mobile & web payment gap in Kenya?
AL: Getting the first client; it’s like that for any product that you build. Building software is building software and it’s all we’ve ever done. But marketing is something else. Our background is in technology not in sales.
And just to clarify, we were not the first to bridge mobile and web payments. In that respect we didn’t have the first mover advantage.

MK: Kenyans have been described as peculiar for their habits when it comes to how they use mobile phones. How important is an understanding of local context or positioning of a mobile app/product in the Kenyan market?
AL: My investors happen to be European and are willing to look at the business from a qualitative view. This is critical as I explore the African condition in a Kenyan context. In Kenya, we’re at the early stages in e-payments. School fees will be an eye opener and we’re hopeful. You’ve got to know what your market is likely to take up. If I expanded to any other country, I would seek insight to position it right. For Kenya I can say, since it’s my country and it adopted mobile money in such a remarkable way, they’ll be likely to get the next step of e-payments.

MK: As a hub for technologists and tech-focused start-ups and companies, how do you think Kenya and East Africa measure up with West Africa and South Africa?
AL: South Africa rules. Kenya and West Africa haven’t done anything to compete on the same level yet. Kenya and West Africa don’t have as much to say. PesaPal is only beginning. And besides, the “East/West/South Africa” thing is as subjective as the East vs. West Coast beef in rap. It will boil down to answering the question “What have we done with what we have?”

MK: What does the Tech4Africa conference mean for you and PesaPal?
AL: It’s a chance for us to talk about what we are doing; sharing where I think Africa is going. I’ve been running a software company for 3 years and I want to give the Kenyan viewpoint. Not as anyone pointing from afar, but as someone who is in the trenches. And besides, the saying goes “Until lions have their historians, tales of the hunt shall always glorify the hunters.”

MK: What are PesaPal’s plans for expansion?
AL: We’ve got an interesting list of countries. Uganda, Tanzania, Rwanda, Ethiopia, Ghana, Nigeria; each of them share commonalities with Kenya, none of them has an electronic payment equivalent. In the 1st half of next year we’ll be in some of those countries. We’ll be looking for strong partners who can help us roll out the platform. The platform is partner-dependent and that will be a key factor to success.