Transitioning between executives in relatively young companies that have been built from the ground up is always a tricky endeavour. Africa’s corporate landscape is full of instances where outgoing executives and board members have picked the wrong candidate for the job and the business begins to suffer.
Cellulant, the Kenya-based payments company active in 35 markets, is hoping that it will be a corporate model to follow rather than a cautionary tale.
From scribbling a business model on a napkin with a co-founder in 2004, Ken Njoroge, the outgoing CEO, has grown the startup into a multi-million dollar business. His decision to step down comes as Cellulant looks towards its next stage of growth after several transitions.
Cellulant started out as a business-to-consumer (B2C) payments business, before pivoting to business-to-business (B2B) software for digital banking and finally settling on its role as a payments company for banks and corporates.
“We knew that we were building a business that was robust enough that you could walk away from, a business that would still continue to generate value,” Njoroge tells African Business. “It became very clear once the strategy and direction had been set for Cellulant 3.0 that the business could benefit from a fresh set of hands, with a different set of skills from mine. I’m a very strategy-orientated guy so it made sense to look for somebody slightly younger with a different tool set that is more operational and execution inclined.”
Akshay Grover joins as Cellulant’s acting CEO from iSON Technologies, an IT company active in Africa and the Middle East, where he served as chief investment officer and held board positions. While on business in Kenya last year, Grover met with senior management figures from Cellulant and was initially hired as chief financial officer. However, from the outset his role was geared towards strategy and operations rather than accounting, as it became understood that he would soon move to replace Njoroge.
In conversation with African Business, Grover says he believes that his experience will help push Cellulant into its next stage of growth.
“To put it in context, Cellulant did gross transaction value of about $1bn last month, and to my mind if we are not growing at three times or four times in 12 months we are not doing justice to the space,” he says. “If we are not growing transaction dollar value by at least 200% each year then I think we are not doing as much as we should.”
Running with the unicorns
Grover sees enormous potential in a space that boasts three out of four of Africa’s unicorns – startup companies valued at over $1bn. The latest success story came from Nigeria’s payments company Flutterwave, which raised $170m in a Series C funding round in March, pushing its value to over $1bn and making it the latest African unicorn.
Payments companies in general have benefited enormously from Covid-19 as customers and corporates were pushed online to make transactions. With less risk than lending and insurance, payments are the low-hanging fruit of financial services.
Cellulant has raised over $70m and expanded massively since its inception over a decade ago, but there is a sense from Njoroge that he would have liked to have seen the business grow faster.
“The biggest question in my mind has always been could we have been bigger and faster at this point,” says the outgoing CEO. “There are moments in time when I think we have lost something between 15 to 18 months due to the crises we have had over the last couple of years.”
One of the darkest moments was the tragic loss of six employees during a terror attack on the DusitD2 hotel and office complex in Nairobi in January 2019. The company has since relocated to another office space in downtown Nairobi.
Looking forward, Grover believes that he has what it takes to turbo drive the business. During his six years at iSON Technologies, he helped to raise $350m and oversaw the acquisition of five companies on the continent. He believes his international experience and connections, with stints in India and Dubai, will open Cellulant up to more diverse pools of capital, and he hopes to raise at least three times the $47.5m that was raised in a Series C round in 2018.
“Most fintech business that are evolving need hundreds of millions of dollars of capital and that’s just the nature of the beast,” he says. “You need very strong capital providers to continuously back you; not once, not twice, but three times and so on.”
Njoroge and Grover, together with a core managerial team of six other people, have already set the strategy for the next few years of the business.
Cellulant toyed with the idea of diversifying away from the core business by launching Agrikore, a payments wallet in the agriculture space. The service was led by the West Africa HQ in Lagos under the stewardship of Cellulant co-founder Bolaji Akinboro, who resigned last year after irregularities came to light in the post-audit results of the platform.
In 2021, the focus will be the core payments business as the firm bids to become a one-stop shop for corporates looking to transact across any region with any currency.
“All these guys are looking for a single platform provider for multiple payment methods and in multiple countries,” says Njoroge. “Nobody wants to be tinkering with regulation and connections. Cellulant has boots on the ground across many markets so it is able to offer these in a single platform, a single API [application programming interface] and a single contract.”
Grover says the company should soon be able to process up to 180 payment methods on its platform ranging from mobile money to internet banking. Cellulant will also expand its legal presence into eight more countries including Egypt, Morocco, Ethiopia, Algeria, Senegal, Democratic Republic of Congo and Gabon.
While a substantial business pivot is off the cards Grover says that Cellulant may soon move into the lending space and begin to offer working capital alongside transaction processing.
Payments companies in Africa have witnessed monumental growth over the past few years, but some factors may hamper the market. Regulators and central banks are beginning to move into the payments space, often processing transactions for zero fees. Linking up with banks and customers, the public platforms are playing in the same space as private companies. Grover, however, believes that the extra activity can only benefit the industry.
“If we look at other markets, when this happens the volume of transaction actually exploded over time by 25 or 30 times, so frankly as a payments business you should be happy when the regulators open the way for more and more interconnection,” he says. “The problem is regulatory overreach when they say you should charge zero for the transactions.”
Njoroge, who still maintains an influential position on the board, will mostly leave this hurdle to his successor. But what’s next for the old boss?
Njoroge says that he is tinkering with the idea of setting up an accelerator and management consultancy to help fledging startups and established companies grow in Africa. “I’m deeply passionate about scaling business because that’s how we bring change in Africa,” he says.