Cellulant sets sights on continental expansion

Cellulant raises the stakes with a mission to boost its valuation into the billions.


Interview: Ken Njoroge, CEO, Cellulant. Last year, pan-African digital payments platform Cellulant raised $47.5m in Series C funding. Its CEO says his mission is now to catapult the firm’s valuation into the billions, as Tom Collins reports 

In 2018, pan-African digital payments service provider Cellulant kicked off African tech’s most successful year for funding by raising $47.5m from a consortium of investors led by Rise Fund, a global investment fund driven by California-based private equity firm TPG Capital.

Later that year South African fintech Jumo raised $64.5m, bringing startup funding across the continent to an annual record of $334.5m – 71.5% up from the year before, according to Disrupt Africa.

Speaking to African Business in Nairobi, Ken Njoroge, Cellulant co-founder and group CEO, sets his sights on continental expansion as he insists that the “pull effect” of the large fundraising – together with the company’s fundamentals – paves the way for a bright future.

“What we are seeing is that the $47.5m had a tremendous pull effect into the ecosystem and into our business,” he says.

“When somebody raises that kind of money the cheques will only get bigger going forward. A whole load of serious emerging market investors in China, India and Southeast Asia are now looking at the continent.

“I’m certain that we will raise another the size of the last; maybe 10 times the size, maybe in 24 to 26 months. It basically gives us tremendous fuel to accelerate the growth of the business.”

Huge market

Since scribbling Cellulant’s business model on a napkin in 2002, Njoroge and Nigerian co-founder Bolaji Akinboro have overseen steady growth.

Cellulant’s digital payments ecosystem, Mula, which allows businesses and individuals to send and receive payments across any platform, connects 95 banks across 34 countries in Africa – providing access for a total of around 133m customers.

With 300m people currently having access to bank accounts across Africa, Njoroge says that Cellulant has scope to target millions more.

“The payments market is huge in Africa. In terms of value, we estimate it’s anywhere between $25bn and $35bn.

“There is room for three to four billion-dollar businesses; a handful of hundred million-dollar businesses; and lots of ten to thirty million-dollar businesses.”

Selling a 44% stake in the company last year at $47.5m brought Cellulant’s valuation to approximately $100m.

The Kenyan CEO says the mission now is to catapult the firm’s valuation into the billions – a “unicorn” status that very few homegrown startups have achieved.

Following the successful closure of the Series C round, Cellulant will now move to raise greater sums of money at a quicker pace to consolidate its expansion across the continent.

In five to seven years, Njoroge says the company should be heading towards an IPO, but that “there is still another four hard years of business building before we start actively thinking about that.”

Growth strategy 

Expanding Mula to reach the rest of its potential customers is a key strategy for growth and will consume a large portion of the capital raised.

Partnering with more banks, opening new offices, hiring new staff and increasing marketing spend will all also play a key role.

At the same time, around 440 people are actively employed in software development across all operations. The most substantial move away from the payments business thus far has been towards an agricultural e-wallet product called Agrikore. The idea is to automate and centralise all parts of the agriculture supply chain from farmer to factory.

The blockchain-based platform enables payments, provides a digital marketplace for buyers and sellers, manages the flow of goods and services and profiles the identity of all stakeholders across the chain. Essen­tially, it operates as an e-commerce platform with added value for agriculture players.

Since launching in Nigeria two years ago, more than 17m customers have signed up – many without former access to financial services. The focus now is on local market consolidation and expansion into other parts of Africa.

“We are thinking we can replicate that model in Kenya, Tanzania, Ghana, Ethiopia and Mozambique,” Njoroge says. “We are looking at bringing it to Kenya later this year.”

With Africa’s agricultural sector expected to gross $1 trillion by 2030, Cellulant is looking to capture significant market share in the years to come.

Real gains

Elsewhere, Cellulant is partnering with Facebook to deliver online shopping products. Through the use of experimental technology, users of the social media platform can try on products such as lipstick thanks to a virtual reality experience that mimics the cosmetic’s real-life application through a camera lens.

With a large research and development team always looking for new opportunities, Njoroge argues this is exactly the kind of area where real gains can be made. For him, the next wave of innovations across the continent will focus less on the technology itself and more on finding and scaling practical applications for it.

“What you would typically call the next big thing is actually going to be pretty boring stuff,” he comments. “Maybe it’s powered by lots of exciting technologies like cryptocurrency and blockchain, but the questions are what are you building and what are you building it for?”

With Europe’s equivalent company TransferWise recently named that region’s most valuable fintech, the subsector has potential.

Though facing stiff competition on all sides from fintechs, telecoms, social media and banking, Njoroge says the challenge keeps him and his co-founder motivated.

Ambitious targets

Working out of Nairobi and Lagos, the pair have eyes on expansion into other local markets. While sceptics point to the continent’s low internet penetration rates and strong competition in a crowded sector, the firm is no stranger to setting itself wildly ambitious targets.

In five to seven years the Kenyan CEO wants Cellulant’s coverage across all products to reach around 700m in Africa – over half the continent’s total population.

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