EXCLUSIVE: “Young and Restless” – Tayo Oviosu, Paga ‘The Fintech Magazine’

Nigeria is experiencing a youth bulge and Tayo Oviosu, Founder and CEO of financial platform Paga, sees that as an opportunity for fintech to shape the birth of a digital nation

“The way people should think about Nigeria is ‘India’.”

That’s how Tayo Oviosu, founder and CEO of home-grown payment and financial services platform Paga, sums up the mind-boggling potential business opportunity in a country with one of the youngest populations on earth; one forecast to almost double, by 2050, to more than 400 million people, making it the third most populous, too.

That spectacular growth brings with it spectacular potential for companies like Paga to make a real difference, because Nigeria is facing a complex set of challenges. Not least of those is that, of the estimated 80 million adults of working age, one in three is unemployed. And, while about half of people have mobile phones, according to Pew Research Center, only a third of those are smartphones – which is a major issue if you are trying (as Nigeria’s government most certainly is) to move people away from using physical cash, to digital payments.

On top of that, 60 per cent of citizens have no access to financial services at all – they are truly unbanked, with all the limitations that places on individual and national prosperity. In 2009, Oviosu set out to address, directly and indirectly, every one of those issues and more with Paga. And, if payments technology is a litmus test for a country’s financial maturity, and an indication of its socio-economic status, then Paga’s journey points to big and positive changes for Nigeria in the years ahead.

Paga’s core aim is to make it simple for people to digitally access and use money in a country where cash was, and indeed remains, dominant, despite a concerted government effort to persuade communities to adopt digital – to the extent that, in September last year, Nigeria became one of the few countries to introduce a central bank digital currency (CBDC). The e-Naira operates alongside the fiat Naira and can be used in the same way – you just can’t hold it in your hand and it can’t accrue interest. Right now, though, with existing e-payments penetration standing at only 0.4 cards per inhabitant, and the fact that the only way to load an eNaira wallet is from an existing bank account, it’s hard to see how most ordinary people could use it.

A decade ago, Oviosu was asking himself a similar question: how do you get a mass market, that is not digitally-enabled and still using cash, onto a digital platform?’

“The answer, for me, was to leverage a network of agents – mom-and-pop shops, pharmacies, grocery stores, in the local communities. Let them become the bridge from cash to digital,” he says.

What Paga offered was a hybrid cash/digital pathway; it found a way to meet people where they were (quite literally) and move both consumers and SMEs gradually to digital financial services.

“Paga is a hybrid payments system that merges offline and online,” explains Oviosu. “And that’s because, in Africa today, digital-only platforms don’t scale across the continent, as smartphone penetration is still super-low, at 12 per cent in Nigeria. Cash, is still very much king, and the banks are too slow to innovate. So we’ve built a network of agents across the country. We currently have almost 60,000 points of presence, multiple places where people can go to get services. That’s one big aspect of how we solve the cash problem.”

Paga also offered customers access to its services through their handsets, even if they didn’t have a smartphone – with a phone line, menu-driven system and a shortcode – and through email and the myPaga payments app for those that did. The result is that it now has 19 million users across its platform and that number is increasing fast. Paga no longer considers itself a standalone paytech: rather, it’s now taking a lead role in the development of Nigeria’s financial infrastructure through a strategy of partnership working that’s creating a self-sustaining ecosystem.

It’s thrown a paytech pebble in the pond and the ripples, it hopes, will have far-reaching consequences. For example, recognising that small and medium-sized businesses are a vital driver for the country’s economic growth through job creation in both urban and rural areas, last year Paga formed a partnership with SME specialist digital platform Doroki and global payments giant Visa. Doroki’s Business Connect and Grow platform is now hosted on Paga’s payments infrastructure as a platform-as-a-service venture, providing a host of digital tools to help businesses develop, as well as enabling the collection of payments from various providers, including Paga, using mobile point of sale (mPOS) technology and an app.

Oviosu admits that the concept of embedded finance, as provided by the Doroki platform, is very much in its infancy in Nigeria, where SME usage of even a well-established digital tool like Excel remains almost non-existent. But therein lie some of the huge opportunities to help SMEs run both more efficiently and profitably, thus stimulating economic growth, he says.

Setting out his stall, Oviosu explains: “People are using pen and paper to track their sales, so there’s such a long road for us to even digitise them before we can make their purchasing, the management of their business, their inventory and their access to finance, more efficient through embedded finance, embedded sales and supply chain.”

Indeed, Paga, which expanded its essential services last year to Ethiopia, where many of its development team are already based, will add more digital financial services to its product suite soon.

“Access to loans and credit is so lacking in the market, there’s a massive opportunity to provide that,” says Oviosu. “There’s another company we’re actively engaged with, which is building a digital bank just for the logistics sector, entirely on our rails. I love that: different product, different focus. And that is where I think there is a lot of opportunity down the line for us: to continue to scale and offer services into a variety of players. What we have built is an open platform – we believe very strongly in partnerships. We really mean it when we say we want anyone and everyone, even people who are seemingly competitors to us, to use our platform.

“We can’t do everything and we’re not going to try to, so we pick and choose the things we do, but there are so many other use cases for our infrastructure. We are not worried about innovation or competition. We think that’s good. And the reality is that it’s a market where there is already a lot of cooperation. There are players that, on the surface, might look like competitors to Paga, but actually we’re working with each other on so many things.”

There’s certainly no shortage of homegrown partners for it to choose from. According to Central Bank of Nigeria, $700million was invested into the country’s payment system alone by Nigerian founders between 2015-2020. Another African-born entrepreneur, Zimbabwean Strive Masiyiwa, is also contributing to the digital shift. His London-based Cassava Technologies subsidiary, Africa Data Centres (ADC), opened a 10MW data centre in Nigeria’s capital, Lagos, in November 2021, the first of four it has earmarked to build in the country as part of a pan-African network of hubs to help companies hyperscale. The Nigerian government is also optimistic that, by the end of 2022, it will lead the continent’s 5G race.

Oviosu welcomes the investment in building a fintech infrastructure for Africa.

“Five years from now, we will see a large number of Nigerians being banked and having access to financial services on digital platforms. I think Paga will be one of the main platforms consumers will be using and Doroki will be one of the main platforms for small/medium businesses. But there’s so much to do to solve Africa’s financial infrastructure problem, we cannot do it alone,” he says. “Nigeria is a big market. It’s a really big country. It has the size, capacity and future scale that people saw in India decades ago. Where India is today, we can get there.”

This article was published in The Fintech Magazine #23, Page 15-16