Making Borders Matter Less - A Conversation with Dare Okoudjou

November 11, 2021

As MFS Africa announces its $100 million Series C, The Flip's Justin Norman and Sayo Folawiyo sit down for a conversation with MFS Africa's Founder and CEO, Dare Okoudjou.

[02:34]- First question, on MFS Africa's recent acquisition of Baxi, and their expansion into Nigeria.

[05:36] - Why Nigeria? And why now?

[09:15] - On MFS Africa's expansion capabilities.

[12:49] - Beyond remittances. - on trade clusters and markets.

[18:05] - How does MFS Africa think about collaboration in the ecosystem while keeping the discipline to focus strictly on a B2B service?

[22:26] - On sexiness and fundraising.

[29:51] - On valuations and fintech consolidation.

[35:39] - Having scaled across 30+ countries, what does Dare think about regulatory fragmentation? And what does he wish happens from a governmental point of view?

This season is sponsored by MFS Africa.

All this season, we're exploring value chains. And in the payments value chain, no fintech has a wider reach on the continent than MFS Africa. Through their network of over 180 partners - MNOs, banks, NGOs, fintechs, and global enterprises - MFS Africa's API hub makes connects over 320 million mobile wallets across 30+ countries in Africa.

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Justin Norman: All this season, we're taking a peek behind the curtain to explore and better understand how a variety of value chains work throughout the continent. And halfway through the season, a few themes are emerging.

We've discussed topics like digital infrastructure, and the decisions fintechs need to make about building out the full stack themselves or relying on third-party B2B companies to provide solutions at one level of the value chain. We've talked about the second-order effects of building infrastructure from an enablement perspective, in terms of unlocking latent demand or making it easier to conduct business across borders. And throughout the season, and in past seasons of the show as well, we've talked about expansion - the difficulties of doing so in regulated sectors and what it means to be a pan-African company.

This October, The Flip’s b-mic Sayo Folawiyo and I had the opportunity to sit down in Johannesburg with MFS Africa's Founder and CEO Dare Okoudjou to record a conversation for a future episode of The Flip. And when all of these themes emerged in our conversation with Dare, we chose to make it a standalone episode.

See, I think Dare is a really great entrepreneur to hear and learn from, and I promise I'm not just saying that because MFS Africa sponsors this show, although a big thank you to MFS Africa, of course. But MFS Africa is a company that's been around for over 10 years now, started by Dare in 2010, after his stint launching new mobile money markets with MTN. It was built to be the connective tissue, making mobile money interoperability possible across MNOs and markets.

Today, MFS Africa's API hub connects over 330 million mobile wallets across over 30 African countries. And a few weeks ago, they announced their expansion to Nigeria through the acquisition of the agent network Baxi, which we'll see Baxi’s 90,000 agents, and they're hundreds of thousands if not millions of customers, better connected to the rest of the continent through the MFS Africa hub, as well.

Simply put, there are few African entrepreneurs in technology we could speak to whose business has achieved this level of scale to date. And so in this episode, Sayo and I get a masterclass in strategy. We talk with Dare about the degree of cross-border trade happening across the continent. We talk about the company's decision to focus on being a B2B infrastructure company. We talk about fundraising and sexiness and storytelling, and we get some perspective on what's happening today from the Internet's nascent days in the nineties.

So as MFS Africa, this week announced their $100 million Series C, we are proud to share with you this conversation with its CEO Dare Okoudjou.

VO: You’re listening to The Flip. The podcast exploring contextually relevant stories from entrepreneurs around Africa.

Justin Norman: The first thing that I want to talk to you about is Nigeria, obviously with the Baxi acquisition and with the announcement that you guys are going into Nigeria. The first thing that I was really intrigued by was this 330 million mobile wallets number doesn't even really include Nigeria. So, can you just talk a little bit about this deal, about Nigeria, and then we're going to dive into the specifics from there.

Dare Okoudjou: Every year for the last 10 years we had a Nigeria project. Normally it starts around September, we discuss it a little bit and by November we agree not to do it. And that has been the story of the past 10 years. And there were always the same reasons not to do it. The first one is that you don't go in Nigeria to try. You go to do. You have to be ready for it.

And the second one was that our normal or traditional path into a market was not there in Nigeria. And that will be a path where we partner with mobile network-led mobile money schemes that will give us easily 60, 70% of the market through a couple of deals, and we'll immediately make the network more valuable for people in that country, being Nigeria, and become an attraction for existing members of our network.

Now in 2015 or 16, we entered an agreement with a few players in Nigeria, including Paga, who has been all these years probably our main partner in Nigeria. But mobile money never really took off as you all know. So even those relationships that we had in Nigeria turn out to be more of a banking relationship. It turns out to be, you know, as far as cross border payment was concerned, it was to send money into bank accounts. And because it was that way, the outbound was never really there, as well. So it was more one way, that direction. So that's why it took us so long.

And about two years ago, we decided that look, we have to go. So we have to just re-look at how we get that done. And that meant deconstruct our assumptions about market entry, understanding better the lay of the land in Nigeria, and they decide a path from there. And the commonality we saw, you know, the common denominator for us was the agent network, which is still the foundation on which mobile money is thriving across Sub-Saharan Africa. And it is, in our opinion, the foundation on which the fintech market in Nigeria eventually will get built. So we thought that would probably be the best place to enter because that's the closest to the asset, if you will, and hence, we started looking in that segment in particular. It helped that I knew Dee and Baxi for years. And so, when the opportunity came it made a good fit. Then we still had to do the deal, which I'm glad we got done.

Justin Norman: Yeah. So, before we get into those particulars, it may be obvious to ask like, why Nigeria. And then why now for why Nigeria. But can you give a little bit of insight into your thought process of why Nigeria?

Dare Okoudjou: Yeah. So why Nigeria is very simple. For me it's like, if you take the continent, usually people split it into four, right? Nigeria, Egypt, South Africa, and the rest. And the rest is actually the most complicated because it's like 50 countries, different currencies, different, but from an economical, for market size point of view, you need almost all the rest to match the size of Nigeria. So you go back to fintech, at the core of fintech there is an implicit assumption of scale, right, which most African markets will not give you. And we spoke about this before, most of them are subscale. Nigeria is that one market where actually you don't need to go anywhere else. You could run a really successful and really big fintech business just being in Nigeria. That's why Nigeria is so important.

And also, we have seen in so many other industries that, you know this from strategy. Markets matter. Like if someone were to dominate in a market like Nigeria, we'll see this in telecommunication, for instance, where MTN from a second place in South Africa went on and dominated in Nigeria and ended up dominating in Africa because if you dominated in the right market, you can have access to so much more resources to eventually dominate in all markets. So that dynamic is going to play out in fintech, as well.

And there is a movement to slowly erase borders, as we say. So we know it's not just the African Continental Trade Agreement, it's just the people, it's cities. More and more, it's hard to tell who lives in Nairobi, who is from Kampala, who is in Accra. So there is already that convergence eventually into kind of one market in Africa. And for us, it's just not possible to not have Nigeria included into that. It just doesn't make sense. And it will weaken our ambition and what we set out to do.

So that's why Nigeria and I still believe that more than ever, we are going to see models being experimented in Nigeria first. So what we're seeing right now is a concentration of the fintech industry and fintech players in Nigeria that is likely to make Nigeria a little bit of a center of excellence. And again, you cannot afford not to be there. So that's why Nigeria, that's why now.

Justin Norman: I'd imagine… So you talked about the Nigeria project, every year, so even still on the why now was it specifically Baxi or was it like it's getting too late, like Nigeria fintech is getting even hotter than ever before. You know, you talked about market dominance, it's a crowded market now, so…

Dare Okoudjou: Yeah, but I think, you know, if you measure it at the yard of the last 12 months, maybe 24 months, it’s crowded. If you’ll take a 10 years’ perspective, I think we're getting started. And for us, yes, I mean, we have decided that we will be Nigeria by the end of this year, and we had two approaches to it. We had inorganic and organic. So we actually went out and we hired Folakemni, who is now our country director for Nigeria. We’re putting a team in place. So for us, it's not like we absolutely had to do an acquisition to go into Nigeria. We were very happy to go organically, as well. It's great that we actually have both now. So we have a team that we have been building ourselves, and then we have the Baxi team that is joining. So both ended up working out.

Sayo Folawiyo: I have this conversation a lot. Why not Nigeria? Why not Nigeria? And as you said, I think very perfectly put, you don't try in Nigeria, right, you do it. And I guess it would be interesting to understand from your experience in other countries, how did that make you guys ready, actually, to do this? Like from an expansion perspective, what are the kinds of capabilities that you guys have built as a team?

Dare Okoudjou: Yeah, I think it starts with the, you know, the people you have. I mean, for instance, I've been able to spend probably half my time on this project this year. I couldn't do that two, three years ago, and that's kind of what it takes. I think you have to, you know, if you cannot have your A team in Nigeria, you probably don't want to do it, right? So we couldn't afford, and it's a little bit of a trade-off between, marginal efforts, marginal results.

So we started in the rest, and it was always going to make more immediate sense for us to add Burundi to our East Africa cluster, right, because we have transactions going, it's a great cluster, it's immediate, you can see. To add DRC to that, to add Malawi in the south. To add places like Liberia, Sierra Leone, Gambia that, you know, if you just look at the macro, why do you want to go into Gambia? Well, it makes sense if you have Senegal and if you have Sierra Leone and if you have the rest.

So that has always been there, but we got to a point where we could afford two A teams, if you see what I mean. That we could have an A team that was still going after our expansion and our wiring up of the rest, while we can devote another A team for the Nigeria entry. And now I'm glad we also acquired an A team to actually run the Nigeria business. So it goes back to that, I mean, how much resources you have and what can you spare?

Sayo Folawiyo: And in terms of expansion capability, do you have a team, is it the same team that's going from place to place? Or how do you guys kind of, I guess, entrench that capability in your team?

Dare Okoudjou: So, I mean, you have to remember that our business starts as a cross-border business. So we actually don't think about it as expansion, it’s what we do. Normally we don't go too deep in a market. We will make sure that the market can connect to our network, so it's part of our mode of operation.

Having said that, a couple of years ago when we decided to also starting investing in SMEs, that became a little bit different because, you know, that requires a little bit of local entrenchment and some activities. We started in the east where we had the Beyonic team that was there, it was established. We've been able to beef up that. Nigeria is actually the first one where we really thought about it as an entry, because it has such a huge domestic component compared to the other market that we've done.

But in general, we start the year with a plan of countries that we want to have to touch and we have pretty tested ways of, you know, getting that done. It's a lot of business development, integration that usually happens mostly remotely. Some of them we have to visit and spend some time, but it's, 80% of the cases we can bring a country online without visiting. That was the case for Sierra Leone this year, for Liberia last year. So that's one of the good things about our model of cross-border payments

Sayo Folawiyo: Very cool. I don't want to take...

Justin Norman: I ask questions all the time. We never do an interview where you get to ask questions. So you go...

Sayo Folawiyo: It's so much fun. This is your life?

Justin Norman: Yeah.

Sayo Folawiyo: So kind of from a product perspective, just out of interest, you mentioned clusters. How do you guys think about that? Like from a... even because remittance is hard, it's a lot of flows in many directions.

Dare Okoudjou: You know, I learn every day in this business because it's actually, we've seen, we had so many surprises. We started thinking we're going after $15 billion intra-Africa remittance market that was being priced at 17, 20%. That was 2014, 15 when the hub started getting traction. What we found now is actually the cross-border trade market that we are servicing. 60% of the users in East Africa told us that they use the service for trade reasons, even if they're using the P2P that is offered by the M-Pesa in Kenya, MTN in Uganda, Orange in Burkina Faso. It's trade.

So we have to rethink trade routes. And if you actually think trade routes, you see the corridors that are going to emerge. You understand that actually Malawi is not a net receiver. It's a net sender because it needs to port in Dar es Salaam, and a lot of things need to come from there, right? When you start looking at, you take a country like Benin Republic, it's a net sender to Nigeria. If you take places like Togo and Benin, there's so much trade between the two that is so much bigger - if you believe the World Bank remittance numbers, we are doing something like 90% of that market. But if you add trade to it, yeah now it looks more reasonable.

So we are talking about clusters earlier because that's actually what we’re seeing. We seeing that the flows follow traditional trade routes. You look around Côte d’Ivoire, there was a traditional trade route that goes all around, you know, Francophone West Africa, but also going to Guinea, going to Mauritania. So it's not, looking at the borders, you will think, okay I know these are Francophones, same currency, they will trade together. No, a lot of the traders in Côte d’Ivoire are from Mauritania, they are from Guinea Conakry, and those are not in the XOF zone. So that's part of the things that we need to fix.

I spoke about, you know, Mozambique, , Zambia, Zimbabwe and the DRC, you know, the copper belt. So we are seeing those natural trade clusters and trade routes in the transactions that we think. And that's what makes us so much more excited about the SMEs on the continent because although the proposition or the most used proposition is in a form of a P2P, originated from one of our mobile network partners on a phone, somewhere terminating on the phone, we know the reason behind this transaction is not migrant workers remittance. It’s trade.

Sayo Folawiyo: Hmm. That's fascinating. That's so interesting. And, it’s actually a question I was going to ask, when you now have the rails, what do you build on top of it? But it's like, it's already, it's already happening...

Dare Okoudjou: Exactly, but it's about making it a bit easier, right? Because you will see a user, from a consumer point of view, he looks like a power user because he's sending this thing every week or sometimes twice a week. But it's because he is limited to what a consumer can do. And if you offer him a better interface, if you offer him a better way to do this, you know, he will continue to do it and he will do it a little bit better.

So we see opportunities there to adapt at the user interface level, experience level, but also solution level our proposition to SMEs. So we think that will continue, we will continue to see a lot of transactions, P2P transactions through our partners across Africa. But we also think that more and more partners that will be able to service SMEs will generate also more traffic.

And this can come from banks. We see more and more banks actually coming to our hub, not so much for the consumers, but for the SME proposition, but other fintechs as well. We're seeing more and more, especially lending fintechs, who are lending to SMEs coming onto the hub to allow those SMEs to make payment directly. To be able to buy in China or to buy in South Africa or pay into Kenya and so on. So that's kind of the next layer of use case for us on the hub.

Sayo Folawiyo: Really, really cool. And I was trying to think of an example and the only one I can think of right now is PayPay, right, but PayPal started kind of P2P and then became almost the infrastructure for commerce kind of stuff. Is that where you see…?

Dare Okoudjou: Without the consumer stuff. So, I mean, we are pretty clear we don't want to be a consumer business. And we want to focus really on large enterprises like the mobile networks, the banks, the money transfer organizations, global digital merchants that we can service, and small and medium businesses in Africa. So we are pretty set on that. And I like to think about us still as an infrastructure play. You can argue that PayPal has some, you know, there is a huge part of PayPal which is infrastructure, but we like that space better and we believe that if we get that right, it opens up so much more possibilities for other people who, once we engage with the consumer, to build on top of that.

Sayo Folawiyo: Great, and so in our world where, you know, we would like to play on one layer, but it never looks like that, how do you, number one, keep the discipline? Cause there's a lot of discipline to that mission. And then number two, not scare everybody who probably thinks about you as a competitor, but you'd like to think of you as a customer?

Justin Norman: Yeah, and number three, are the collaborators in the ecosystem, are they all there? I think a lot of people get compelled to just say, like, I'm just going to build this myself because someone else is isn’t good enough.

Dare Okoudjou: Yes. So let me start with number three. We do get that a lot and because we are kind of a bit patient, things tend to come back. And usually , it's a sign of maturity of our counterparty when they understand, you know, the limit of their abilities, let me put it that way, or where they want to invest. I mean, take a normal money transfer company, you know, anyone, a digital one from the global north trying to send money into Africa right now. I think it's hard enough to just keep your app on the phone of the sender right now.

If you're in London, I mean, everybody has two or three, right, comparing all the time. So keep your app that there, so they don't delete it, and make it the number one choice when they actually decide to send money, and if they did come, they do decide to compare with your neighbor, with the other app, that you still win that business. I think that is incredibly hard and it's great for the consumer, but it's incredibly hard. At the same time, you want to keep the VPN up with MTN Liberia, and they just changed the VPN parameters, and after you fixed that, they just changed it again in Uganda. And you want access to the right float and not overpay in Mozambique where, by the way, it's number 32 on the destination that you're servicing.

So at the end, in the world, you know, we will see specialization and we believe that being able to integrate everything all the way from, you know, have the best customer engagement on the app, all the way to the best termination and smart routing at the end of of the delivery is not just hard, but it's expensive. And expensive in money and expensive time. So mature clients, mature partners recognize this, and we will have a much healthier relationship, multi-years, and we can actually plan things ahead.

But it's sometimes hard to convince someone who just started off this, it looks so simple. Of course I can get an app and I can plug a full stack and I can connect everybody and sometimes we just have to wait and let that play out. So I think we, as the industry and the ecosystem mature, the role and the importance of what MFS Africa has to offer is becoming clearer. And also, the quality of the engagement we have with the players, big or small, is also getting better, because we’re all getting more honest about what we can do and what we cannot do.

How do we keep the discipline from, you know, focusing really on the B2B and on the infrastructure? I guess having the wisdom that comes with being in the pocket for long, because we have seen many, many horror stories and I always say, we don't want to be a story, we want to build something that will last a hundred years. So with that kind of perspective in mind, it's relatively easier. We're pretty clear.

We've also when we hire people, that we want to hire people who get excited about what we're building. It's probably not the most sexy. It's probably one of the most complicated things to explain to your parents, what do you do at MFS Africa, you know, who is MFS Africa? It’s not the easiest, you know, there's no app you can point to, there's no tangible thing you can see. But what you find is people who are actually passionate about this space are really passionate about it and tend to be really, really good at it. And that helps us.

So every now and then, you know, , on the funding market, I guess we'll talk about that at some point, I guess it's a few years ago it was much harder to make the case for infrastructure where what everybody was seeing was the consumer. But that is changing. I think we also see more infrastructure investors, people who actually understand infrastructure, coming into Africa. And so I'm finding it actually easier and easier to explain that we just play out in the backend, we are just pipes, we want the infrastructure.

Sayo Folawiyo: I was going to go to sexiness.

Justin Norman: Yeah, you go for it. Sexiness.

Sayo Folawiyo: Sexiness?

Justin Norman: Yeah.

Sayo Folawiyo: Yeah, I mean, probably to a much lesser extent, but you know, it's something that I struggle with, for instance, just especially, maybe where you guys were a few years ago is where we are, in that we’re kind of boring when you look at it. It's like, oh, find a plumber. But it's like, obviously I'm not that interested in if people get their plumbing. It's like, there's an infrastructure, again, that we want to build that powers, small service business, right? And access to market just happens to be a very good acquisition channel. But what I found anyway, especially in and probably, yeah, definitely less for me than for others, but there's a huge storytelling element to this game that we're in, right, that sits a lot in, and it's probably because people don't know what they don't know, and there's a herd that has to be kind of managed, in a way.

And then that trickles down from your funding to your employees to even your customers sometimes that you have to almost... And I'm stubborn, so I'm always just like, look guys, we're doing the work, so that's what counts. Do the work, you know, that's what matters. And I'm learning. I'm not there yet. Justin's always getting on me to be better. But, I'm interested to kind of hear your journey from doing the work and clearly being, if not the, somewhere near the kind of deepest thinkers, best, probably numbers’ wise as well, in this game, in a space that has now become a lot of stories and a lot of branding and a lot of flash, and longest as well. So kind of watching that happen, you know, how have you guys felt about that and then how have you also maneuvered yourself to not be like me and being stubborn about it?

Dare Okoudjou: No, you cannot be stubborn.

Sayo Folawiyo: I know.

Dare Okoudjou: You need to change.

Sayo Folawiyo: I know.

Justin Norman: He’s working on it.

Sayo Folawiyo: I'm working on it.

Dare Okoudjou: So I’ll tell you, the light went on for me somewhere around 2014. Up to that point, so I started MFS in 2010, so four years in, I always thought fundraising was some sort of, a piece of difficult thing you do, like it's a project and then you finish the project and you move to the next project. And after a near death experience in 2014, like, I mean, we were like two weeks from bankruptcy, and somehow we came out of it, and I realized, actually, this is my job. I need to always be fundraising. It's a permanent thing.

And when you think about it that way, two things then happen for me. I just approach it as long-cycle sales. So I have my prospects and I'm just working towards converting. And I also factor in now the time that what it takes, I just realized that, empirically, I never raise money from anybody I haven't known for 18 months. So I started thinking like, okay, if I need money in 18 months... if I need money now, I can only get it from someone I knew 18 months ago. So if I need money in 18 months, I need to build more.

So I think part of the reason why entrepreneurship is so hard is that you can not just do the work. You have to do the work and talk about the work and you have to be able to persuade people to get behind you, from your employees, as you said, all the way to investors. Now, obviously the market goes through phases where, you know, either the supply is too small or supply is too large, and some things are fashionable and some things become less fashionable, and you have to be able to read all these things.

So the danger is to go with the wind, the flavor of the moment, you lose yourself in that. And actually, I think that must be a pretty terrible experience, personally and emotionally, but I think if you're able to set yourself the goals and then you see everything else as a tool, and remember that it's like any other B2B sales. Some guys need to be convinced first to become your champion. And then who's going to go and talk about your product, so your equity, in this case. They’re going to come back with more questions and they're going to be naysayers and you have to decide how much power he has to actually push this through. What can he help you, you know, what's your chances?

So really, I really approached this just like any other B2B sales. So my thing is like, as a CEO, I mean, there are many jobs in the company, but as CEO you cannot not do fundraising. And sometimes it can be 100% of what you're doing. I think it will never be less than 50%. And to keep in mind that success is to put more time between when you're talking and when you need the money. It gets really hard when you're talking now and you need the money now because you have to, now you are ignoring the conversion that needs to happen. And you try and force your way through it. It can happen, but it's probably not, this market is not mature enough.

So the longer you have, so now if you're talking to someone and you need money in a year, you got time to show proof, to keep that going, to tell the story many times. They never get it the first time. They can know that as much as you want, you know, there's always a few things that... And then they will send you another email and you realize that Jesus, they did not get anything about what I talked about. So you're going to have to go through those cycles. And if those things need to happen in six weeks it is incredibly hard. It is. Now if you find yourself there, well find a way. But if you find your way out of it, just think of the next one like give yourself 12 months if you can. Just stay in the market, even if you’re not raising. Just talk, engage. The thing is, you have to be a bit of a preacher. So keep preaching about your business. That's it.

Sayo Folawiyo: Hmm. And in the context of, and you mentioned, I like what you said about the winds. Cause that's the thing, right, it's like, you don't want to follow every wind, but some winds are your wind, right?

Dare Okoudjou: Oh, 100%.

Sayo Folawiyo: And you have to double down.

Dare Okoudjou: Yeah, and right now, I mean, there's a lot of money in the system globally. Some of that is finding its way into Africa, much more than we ever had. Who will it go to? Put yourself in the shoes of the guy sitting in the US or in London and in Singapore, Dubai looking at this. Internet is the first place they will start. Even if someone tells you about, you know, this great business, I will go on the internet. So are you on the internet and what are people telling about you on the internet?

So it's not, you know, I used to be one of those cynical, I'm like, I need 2000 people to know about me. That's it. I used to literally answer that to people who tell me you need to do PR. I need 2000 people to know about me. I can go and meet each of them. And I have, I mean, I spend a lot of time traveling across and meeting people in person, but it gets to a point that does not help you for the guy who is trying to find you on the internet. And that guy is your first champion. If you don't pass that guy, there's maybe $100 million you don't have access to, and now you are fighting for 10 million here in Nairobi.

So I think we have to get it, it's part of the job, you know, and if you can do it well, get someone who can do it. And as a team, you need to be able to do it. We knew, we recognized that at least someone needs to be doing this. I mean, we need to be out there as well. And if your ambition is to build something that requires venture money, you have no choice.

Justin Norman: I'm curious to know if you have a perspective on or a point of view on, you just mentioned like obviously a lot more money in the ecosystem than ever before. I sort of wonder, to what extent, I think some people are getting uncomfortable with valuations, especially at the earliest stages. I don't know that that matters. I wonder to what extent the investors have caught up on the ecosystem or the ecosystem has really developed a lot. But I'm curious to know, considering that you're always fundraising now, if you have a perspective on that?

Dare Okoudjou: Yeah, I mean, for sure the ecosystem has matured and things got better and it's a bit of a cycle, right? So the better it gets the more money comes in, the more money comes in, the better it gets, right? So, and just take the layers, take quality of people, I mean, we know have multiplied probably by 10, 20, the number of product managers, tech product managers that we had on the continent, you know, five years ago. And that happened through funding to hire and employ these people, give them the experience, and as they get better, they will also do better businesses. They will be able to attract more capital and then you get that cycle. And I'm just taking product managers as an example, but you can look at this for Chief Commercial Officers, CTOs, as well.

So overall, even if people are moving, businesses are getting created and dying and so on, the ecosystem just from a talent and competencies point of view is growing a lot and that's good. And the more money comes in the better,. and then the better it will attract more money.

Is valuation a problem? Well, it will always be for some people. But for me, no, because I believe on the discount on the future. I believe obviously anybody who's playing in this space I hope is prepared to lose their money. So it's not so much, actually I mean some of the evaluation that we are still talking about, I still see like it's all or nothing. I mean, it's not like you're going to get some of your money back. I mean, most of them is all or nothing. So when it's all or nothing really does it really matter if it's 10 million or 50 million? It doesn't, I mean, of course don't get me wrong, it's not my money so I can talk like this.

Justin Norman: But are you answering this question as an investor, as well, because you have this valuation conversation on the other side of the table?

Dare Okoudjou: Yeah, that's true. That's true. That's a good question. So, no, I was not. I was answering it more as someone who's deeply vested in what tech can do for Africa and what tech entrepreneurs can do for Africa. And the more we have the better.

From an investor point of view, obviously, we are very different type of investor, right? We’re primarily investing for MFS Africa. So we will look at every deal from that perspective and there will be a commercial angle, which will be valuable for us that - let me take an example Numida, which we invested in earlier this year as a digital, lending business for small and medium businesses in Uganda - our biggest joy, my biggest joy is much Numida has grown, and the growth of Numida means processing transactions on MFS Africa hub. So the bigger they get, the more transactions they process on our hub. And that's already giving me some joy.

Now, if we can help them as a team that is trying to solve a problem that we believe is important, by either catalyzing the round, you know, provide the capital or provide some of the things, it’s great. And because also, we’re coming for being an operator, I think our valuation discussions are a little bit healthier because we come from that point of view, we are not faking it, you know, we don't need to go too much around the bush. And if we cannot afford what the entrepreneur is asking for, we will also be very quick. We don't do long deals in that way. So overall, even with my investor, occasional investor hat on, I still believe that the debate cannot be about valuation. It's way too early, we are talking about so little amount of money that the argument can not be about valuation. Sometimes it's more about ego than about valuation.

Justin Norman: Do you have an expectation? I mean, we talked about this over a year ago now, right, fintech consolidation. You guys acquired Beyonic. A year later, you guys have acquired Baxi, but we're still, we're not like, we're seeing more, but not a lot of M&A. And I'm also convinced that that's how ecosystems grow the most is not by… we talked about what a typical exit path would be, and people are looking at corporates or overseas or whatever, but do you have an expectation, are you saying to your fellow growth-stage founders, like guys, please, can you also do this because it's important. Or do you have an expectation that will increase?

Dare Okoudjou: I think it will increase for sure. And, you know, there is part of it that you cannot program, which is the chemistry between the teams, right? And you cannot, and we are still at a stage where it's impossible to do these acquisitions, where teams would walk away. So we are still at the phase where, this merger, this acquisition requires teams to find chemistry, to find the common ground, trust to make these deals.

I think for me, that's the biggest impediment. I don't think anybody rationally will argue against it, but how do you actually orchestrate this? This chemistry is actually quite difficult, especially in a world where for 18 months we couldn't travel around, we couldn’t bump into each other in lounges and in airports and get stuck together for six hours on a plane and get to talk. So I think that that's what is holding it back. I don't think it's the logic of the idea. It just, we are not at a state where someone can just buy and then you walk away. It's still like, okay, let's work together. And, you know, it's like you’re hiring a team of 200 people in one go. This is not… you can’t just program that.

Justin Norman: I want to switch gears and ask about, I want to talk a little bit about, it's kind of in the context of unsexiness, but it is regulation, right? So, your motto is making borders matter less. And I'm on this personal thing right now where - Sayo’s laughing because he knows - where I just became convinced that all of this stuff that we're talking about is sort of a band aid approach unless we can figure out - we, unless whoever, right, the regulators - can figure out how regulatory harmonization can exist. And just talking to a lot of people who are navigating regulation as financial service entities, it's just so onerous and you guys are in 30-plus markets, so I'm sure you're well aware. And, I'm also stuck on this idea of like let's just do the most drastic things and are we not talking enough about how burdensome and how important it is to figure out how to make regulation and expansion easier? Or is that not entrepreneurs’ roles? Is it not feasible?

Dare Okoudjou: Oh, it is our role. Look, I think it's sometimes you look how far we've come. So until MFS Africa did it, you couldn't pick up your phone in Rwanda and send money to Uganda. You couldn't. You couldn't pick up your phone from Côte d’Ivoire and send money to Benin. Then it happened. And I now it happened in like 30-something countries. I mean, if you wake someone from like the 80s they will tell you we'll never get there. Here we are. So that gives me hope that actually something is moving. But I absolutely agree with you that, you know, the scale of the change that we need is not much by the progress we are making. It just, it feels so slow.

But I also believe that there is always a tipping point. I think Nigeria, again, South Africa, probably hold the key in Sub-Saharan Africa, and to a lesser extent a place like Ghana. I think if one or all these three countries, and let's take Ghana to start with - Ghana is this country bordered by Francophone countries, it’s this one not-CFA country. You know, it has Côte d’Ivoire, Burkina Faso, Togo. You trade with your neighbors, whether you like it or not. I know that the flight, the most popular flight, is the Accra to Lagos, but if you go to the border at Aflao, you realize that people actually trade with their neighbors, right? Same with the cacao into Côte d’Ivoire.

The truth is we talk about regulation, but it's lack of trust. The Ghana government, there's no trust, the CFA countries to hold it because... all we’re talking about here, and I'm talking about the cross-border payments in particular, is why can't I just settle those two together? Why can't I pick up my phone in Ghana and make a payment to Togo the same way I can do Togo to Benin? And the truth is that to settle this transaction right now I probably need to go through Dollars because it's not like I can give the CFA to the Bank of Ghana and they will hold it, or I can give the Ghana Cedis to Bissau and they will hold it.

So we are there because we actually don't trust each other. The states don't trust each other. They don't trust the governance of each other. They don't trust the currency of each other. I have some hope around the African Continental Trade and especially the work they're doing around PAPS, which on paper, is supposed to solve this. It’s supposed to create this framework where actually the Central Banks, via Afreximbank, if I understand it correctly, will hold these currencies, which will make it possible to cross.

If that happens, actually, we'll see a huge acceleration in cross-border trade and payment and fintech like ours, our growth will be unleashed. But will that happen? Can I put a probability on it? I don’t know. And what gives me hope, but also makes me a little bit skeptical is actually it usually boils down to the leadership of few people and their willingness to take on the system. I hope we have those people and I hope we have the attention of those people. But if we don't, yeah, 20 years from now, we could still be talking about this, which will be sad.

Justin Norman: To be honest. I don't know if those people listen to The Flip.

Dare Okoudjou: They should.

Justin Norman: Cause then on the other side of the spectrum then, I also say, you know, the cynic in me says, well, it's not going to happen. Or even if it might happen in 10 years or whatever, like, crypto now people are doing CBDCs and even just, you know, stablecoins that are making it interoperable across more markets. Like, I guess, on one hand, I'm saying I'm learning and realizing that technology cannot solve a lot of the problems. We're doing a logistics episode on infrastructure and people just need to build roads and ports, and technology's not going to solve that. But fintech, right? So is it rational to maybe say like, and I don't believe crypto disrupting the regulators, but, you know, that we should skip, in the context of leapfrogging, like let's just skip this stuff and just go to crypto remittances.

Sayo Folawiyo: To stablecoins.

Justin Norman: Yeah.

Dare Okoudjou: I don't know if it will be stablecoins, but I, you know, I was lucky enough, I kind of grew up in the internet times, right? So I was at university and I can tell you, we were having the same debates about ecommerce. The laws did not allow for e-commerce. Like, okay, where are we going to pay the tax? Who's the protection of the consumer? And when you think about it back then, you put yourself back 95, 96, 97, it looks so big and so complicated. Here we are. We’re just doing it. And sometimes despite governments, sometimes with the help of governments, it depends which government. I think this will play out the same way.

The trajectory is forward. You take the average person in Africa right now in any of the main cities, Kampala, Lusaka, Dakar, and so on, so forth. I can tell you, they don't feel constrained by the borders around them in the way they talk, the way they dress, the things they watch, what they want to do with their life. I don't think any government can tell them how constrained they are with their money, even if they wanted to.

Now, if you take the nest next 12 months, is something going to change? Probably not, because, you know, the forces are slower. But if you take a 10 years perspective, I feel in my bones that people will be able to transact without limitation. Now, this will be sometimes with the support of some government, sometimes it will be against some government. But it's just a sense of history. It's just what people want. And nobody has been able to counter what people want. There will always be a tipping point where things will happen.

And my hope again, when I look at Africa, again, you know, we don't do this technology for technology. For me, ultimately, we want to create prosperity. We want life to be better. And I think we have an opportunity for this generation in front of us to really flip the table, literally, is to literally rethink about what is the market for an SME in Benin. It cannot be Benin. And if we can not translate across border, it will be limited to Benin. And because the guy who is in Benin and starting this business now, have seen enough of the world, is aware of other markets beyond Benin, you cannot keep him from selling to Benin. So that's where I don't know how it’s going to play out, I don't know which role MFS Africa will play in which regulator, but when you and I sit again here 20 years from now, it will be there. People will be able to transact without limitation.

Justin Norman: Surely you'll have a bigger office by then.

Sayo Folawiyo: Amen.

Dare Okoudjou: I hope so. On a beach... overlooking the ocean.

Justin Norman: That's it for this week's episode of The Flip. Next week, we're back to our regular, narrative episodes, but until then you can get more of your fix of The Flip by following us on social media @theflipafrica, where we share more insights and clips from the entrepreneurs featured in the show.

We also publish a weekly newsletter every Sunday called The Flip Notes, which you can subscribe to on our website,

Thanks as always for listening, and we'll see you next week.