Shose Sinare is the CEO and founder of Investment Capital Group, a Tanzania-based company created by female investment bankers and a lawyer.
Knowledge@Wharton: Tell us about Investment Capital Group.
Shose Sinare: Investment Capital [comprises] a group of companies that was formed two years ago by investment bankers and a lawyer. All of us were women. The focus was to create a group that could take advantage of the “Africa rising” story. We sell the growth areas of financial services, real estate, infrastructure, agribusiness and the extractive industries, because Africa is full of natural resources. We asked ourselves: How can we be part of this Africa-rising story and grow and build pan-African businesses at global standards?
Our approach right from the beginning was very disruptive, very different.
We approached our growth from a “think big” philosophy and through a collaborative arrangement. In two years, we’ve managed to grow and build eight businesses — four of them in financial services. So we own two corporate finance houses, a private equity firm together with a company in South Africa called Musa Capital, and a technology business with four cofounders. It’s in the mobile space and sits above your bank portfolio, card platform and the mobile platform. We’ve got various products around that.
Knowledge@Wharton: That’s PayLink?
Sinare: Yes. I’d like to talk to you a little bit about that.
We also own the mining rights for gold south of Tanzania. We’ve gone into a joint venture with a manufacturing business in South Africa to serve the rail industries. I’m sure you’re aware Africa has not spent much on infrastructure and there’s a huge focus on rail to enable trade between countries. So, in a nutshell, the Investment Capital Group is a group of companies that brings together all those people who are interested in Africa. We ensure that we are part of that growth story, the business that we grow. We bring projects to clients and clients bring projects to us.
“Right now Africa is a cash-based economy and we want to become a digital economy.”
PayLink is a locally-founded technology business. It has been created by four cofounders — two women and two men. PayLink looks at digitalizing Africa, digitalizing transactions. It can be from systems that enable pension payments to automating things like municipality payments. So it’s across a spectrum of possibilities because right now Africa is a cash-based economy and we want to become a digital economy.
What we also are very passionate about in PayLink is understanding the community-based environment. We created a product called the Vicoba mobile. Vicoba stands for Village Community Bank. We discovered that in Africa everything is done through groups, through societies, through communities. These groups can range between 30 people to 100 people. They save in the groups, they have kitties for insurance, for welfare and they lend within their own groups.
We traveled from Dar es Salaam to 26 regions to try and understand these groups from the rural areas to the urban areas. What we discovered is that each group is quite different. But each of them had commonalities. One, it was a community-saving platform. Two, they saved for welfare to be able to pay their children’s fees, to pay for deaths and funerals within their communities, and to be able to lend — to leverage off each other — so that they’re able to do small businesses. We found that 80% of the groups were women, based mostly in agriculture and small enterprises at the bottom of the pyramid and that interested us. These are entities that have no access to finance and no access to formal banking yet they’re targets for theft within their own groups, with treasurers running away with the money.
When we started to do a bit of research around these groups, we thought: Now can we digitalize groups that are quite diverse, very remote and have no access to the Internet? How can we bring them into the formal banking environment in an affordable manner? So we created a mobile payment platform for them. It uses the basic Nokia $10 phone because 95% of these groups had access to only a feature phone. We used existing platforms of M-Pesa. What is different between us and the direct M-Pesa? Ours is community-based. We created shared wallets within each group. Each group has a specific code. They’re able to deposit for welfare, for insurance, able to lend. We have replicated what they are doing naturally into a digitalized space. They can utilize other services. They’re able to pay for electricity.
Knowledge@Wharton: Tell us a little bit more about how you came up with this idea.
Sinare: Initially we were looking at the Tanzanian space. We found that there are seven million people in Tanzania who are part of these groups. Then we said: “Wait a minute. Seven million people. You have quite a sizable amount of money around in physical cash. Wouldn’t it be good to digitalize this and get that data?” Data becomes a powerful tool that we can share with other stakeholders. Then we said: “Wait a minute. Can we scale up?” Eighty percent of sub-Saharan Africa is employed in informal sectors. We’re talking about 800 million people.
Knowledge@Wharton: How is the informal sector defined?
Sinare: Those that do not provide formal jobs. They could be selling fish. They could buy and trade, literally doing anything to make ends meet. They could be growing bananas and selling them in the market. But they’re not in any way in the formal arena and that’s the majority of Africa. That’s the reality of Africa and I’m sure this is the reality in a number of Asian countries as well.
“We asked ourselves: How can we be part of this Africa-rising story and grow and build pan-African businesses at global standards?”
Then we looked at the data and saw that they account for 55% of Africa’s GDP. We looked at the data again and saw that only 34% of Africa’s population was banked, which means a massive [number of people were] unbanked. Then we looked at mobile technology and how Africa is leapfrogging. We saw that 12% of mobile users in Africa have mobile wallets vs. 2% in Europe. So how do we align ourselves to what is happening from a technology perspective in Africa to bring these excluded groups into society while, obviously, making returns? This is a model that is self-sustaining.
Knowledge@Wharton: You’ve talked about the potential here for growth. Talk to us about the challenges.
Sinare: The biggest challenge is access to finance. I don’t like to talk about access to finance because it’s the obvious one. Money doesn’t solve everything. We are looking at places like Silicon Valley (to raise money). But the biggest challenge has been access to finance and access to information, and access to where you can get partners that have a similar interest.
Knowledge@Wharton: You’ve obviously had big success in the past two years with this new company. You’ve grown very quickly. What — your personal leadership, your connections — has allowed you to get to this stage?
Sinare: I think foremost is my mentality. I think it’s more of an attitude. I’m being bold. A lot of people, when they leave employment, like to set up a small business and they do consultancy. We wanted to think big. I know people don’t like Donald Trump but we wanted to have this think-big mentality and also a selfless mentality.
From the beginning, our approach was collaborative joint ventures. We would not be where we are today if we did not have the approach that there is more — it’s (thinking) from an angle of surplus as opposed to an angle of deficit.
We’ve been able to get here by having the right partners. We have certain values that we adhere to and we ensure that the people that we partner with have the same values. One of them is obviously the entrepreneurial spirit; we like a positive mentality. The other one is our ethics. Another value is giving back.
Knowledge@Wharton: I know you’re really passionate about connections — from a variety of angles with a lot of partners. What can still be done?
Sinare: There are always opportunities to connect. Some people would look at connecting from just a business point of view. You know, I’m looking for a partner. Are you coming? You are my partner. It’s a joint venture. No. Our connectivity has to go through the spectrum.
So when you talk about partnerships, we look at it from a different perspective. There’s the generic that the Investment Capital Group does — which are joint ventures. But there is a much deeper partnership. Part of it is research. Part of it is how we can really learn from you? I mean, if we say we want to be a global brand, we’ve got to be close to global players. We look at partnerships from the micro as well as from the macro perspective.