Episode Transcript
Host: You're listening to the Levy Inspiration Grant Program podcast, where we share stories of business students following their entrepreneurial passions to every corner of the world. I'm your host, Tyler Seybold. Through the program, students at the Kellogg School of Management can travel to any country of their choosing to immerse themselves in a particular topic with an eye toward building a business around it. When they return, they sit down with me to reflect on the experience and share what they learned along the way.
[00:00:27] Host: Yanju Folarin is on a mission to bring financial access and inclusion to those that need it most. Through an early career stint in the fintech realm at one of Africa's largest telecom companies, Yanju saw the financial struggles and obstacles faced by everyday people. Eventually, he decided to start exploring solutions himself, starting with mobile money initiatives that help unbanked people access financial services otherwise unavailable to them.
[00:01:03] Host: When preparing for his Levy Inspiration Grant trip, Yanju knew that there was at least one must-see location in each city he visited: the marketplace.
[00:01:13] Yanju: When I'm talking about a market, maybe for an American or someone in the West, I don't know, you, you'll probably be picturing, you know, like a mall. No, I'm talking about, so when I talk about markets in West Africa, I mean, just think about like very dense, filled with people. It's outdoor, I mean, you probably have seen some pictures of like typical market places.
[00:01:32] So this is not an indoor mall, this is an open space. Sometimes, some places have containers, some people have just wooden covers. Some people just have umbrellas. A lot happens in the marketplace, so just realizing like the volume of transaction that happen in those places is really mind-blowing. With the marketplace on his mind, Yanju traveled to Nigeria, Ghana, and Benin to speak with mobile money agents and the people that utilize their services to see what opportunities he could find to help boost financial inclusion in West Africa and help regular people access the financial tools that can help better their lives.
This is his Inspiration Grant story.
[00:02:11] Yanju: My interest in financial inclusion stemmed out of my experience growing up back in Africa, specifically in Lagos, Nigeria. One of the major challenge there is actually that of financial exclusion, and the reason why it's a challenge, actually, is because it also leads to a huge poverty rate that exist within the country.
[00:02:38] Yanju: So in Nigeria, the country has about 200 million population and adult population of about a hundred million. Out of that, about 40% of that a hundred million are financially excluded.
[00:02:51] Yanju: Interestingly, also, MIT released a report in 2008 that stated that mobile money is one of the means by which financial inclusion has been addressed in Kenya. So since the advent of that in Kenya, about 2% of the population have been lifted out of poverty.
[00:03:08] Yanju: So, I mean, that report is one of the reasons why I, I would say I'm really like, interested in the space and passionate about it because I want to be able to contribute to see that, people are empowered, people are lifted out of poverty. And since this has been confirmed and validated as a means of lifting people out of poverty, you know, I really just felt that interest to contribute to it.
[00:03:29] Yanju: And interestingly for me, prior to joining Kellogg, I worked with the largest telecomms company in Africa. I worked within the financial inclusion team within the fintech team, that is driving one of the mobile money initiative.
[00:03:42] However, I realized that big organizations are massive and based on how big they are, it's difficult for them to address some challenges that maybe doesn't seem profitable or the bureaucratic nature of the organization because of how big it is, you know, not nimble enough to be able to move and be innovative as fast as it could.
[00:04:02] Yanju: So I saw challenges that needed to be addressed. However, this large organization.probably just believe that this is too small to address at the moment. I felt like, okay, you know what, if there's a way I can really address this, I would love to because this is a big challenge.
[00:04:16] Yanju: I tagged my trip "West Africa Financial Inclusion" trip. So I embarked on a journey to West Africa, I visited three countries and four cities. First, Nigeria, and in Nigeria I visited Lagos. I mean Lagos is the commercial center, I would say not only in Nigeria, but for Africa.
[00:04:39] Yanju: And I visited Abuja, Abuja is the federal capital of Nigeria. Then afterwards, I also visited Cotonou. Cotonou is the capital city of Republic of Benin. And afterwards I visited Accra in Ghana. Accra is also the economic center of Ghana and the capital of Ghana.
[00:04:57] Yanju: I decided to visit these locations, one because of their presence in the region they are in. West Africa is one of the region that have like the high financial exclusion rates, so the challenge or the problem I'm trying to resolve exists majorly in these countries.
[00:05:15] Yanju: Then also, in terms of location, they are very close to each other in terms of proximity. So for the initiative I have, my intention is to start in Nigeria because I think I have a bit more understanding about the market in Nigeria, but in terms of the proximity to Nigeria where I want to start the idea from, I felt it to be easier for me to be able to scale across to those countries.
[00:05:38] Yanju: One of the assumption that I had, was that one of the biggest challenge that a mobile money agent have was in terms of liquidity management.
[00:05:51] Yanju: So mobile money agents serve people. People come to perform transactions, like they want to send money to banks or other mobile money, or they want to pay for services, they wanna pay for bills like cable, or they wanna pay for power. So they go to mobile money to do all those transactions. So there needs to be like a balance between the cash that the agent have and electronic float, that's money in their mobile money account.
So when I say liquidity management, that's what I'm talking about.
[00:06:19] Yanju: The challenge is that it's either, they are out of cash and so when people come in and say, "Oh, I want to withdraw money," they don't have cash to give, or maybe they're out of electronic float and when people wanna pay for bill or send money, they don't have electronic float. The process of managing that. Is the area where I looked at and it was like, you know what? I think I can help with that.
[00:06:41] Yanju: One key moment that I had that I would say really made this impactful was when I realized that on the average a typical mobile money agent, they visit the bank at least every two hours to either fund their wallet or get cash. That was like mind-blowing for me, because I wouldn't have known this if I had not visited.
[00:07:11] Yanju: My initial thought was deploying a peer-to-peer means of addressing this. I wanted to be sure that this peer-to-peer means is something that will be adopted by the agent, and on this trip, I also realized that they are actually already doing it.
[00:07:27] Yanju: When agents are, for example, their out of cash, they try to call the neighboring agents to them. So like, "Hey James, do you have 500,000 naira that I can get?" Then James is like, "Oh yeah, I have some cash." So Peter sends 500,000 to James' wallet and go to collect cash.
[00:07:45] Yanju: That was the idea I had, so I'm like, "Oh, nice. This exists right now, but it exists in form of call or texts." But what I want to do is create or develop a platform where James has extra 500,000 cash, but he needs that 500,000 into his wallet. Peter here has 500,000 in his wallet, but he needs 500,000 cash. Both of them can go on this platform and say, "Hey, I have 500,000 cash, and I need 500,000 into my wallet," and the other person can also indicate and they can match each other.
[00:08:14] Yanju: That already exists right now in an informal process. However, I think this can be systematically done by creating a platform where it shows you like multiple people that actually have what you want, and you can easily just request and match with them. This trip actually helped me to validate that and I realized that okay, yes, this has been happening. What I want to do with that is go on to actually develop this peer-to-peer solution that would help matching mobile money agents with each other addressing their liquidity management problem.
[00:08:52] Yanju: I also realized that trust would be a big issue for the peer-to-peer idea, because I ask them like, "What if there's a platform where you can see somebody else that have money and you can go meet?"
[00:09:07] Yanju: I interviewed some of them and they're like, "Well, yes, right now I text like my friend, another mobile money agent, that has what I need. However I wanna be sure that, safety is well addressed. Because if, I mean, some random person indicates that they have cash, you probably need to go see them in their store, their small shop.
[00:09:26] Yanju: I mean, you're not sure of what security is or what, I mean, how safe it is because it's, it's money transaction and money transaction in a place like that is a big deal because, this is a place where a lot of people are not financially empowered, so every little amount matters. You wanna be sure that, you know, you are going to see somebody to get cash from the person that they're not planning to steal from you, or they're not planning to just get your money.
[00:09:50] Yanju: So I realized that yeah, trust was a big deal and I never thought of how to address that. So that's one major thing that I'm already starting to think of how to address, on the platform to ensure that the mobile money agents are comfortable to use the platform.
[00:10:03] Yanju: I would say next step for me is to work on the MVP. I have an idea of what can work from day one. Because initially, you know, I was thinking of something complex and all that, but I realized that, there is actually like a simple platform that can be built that can work from day one, and I know how it'll work and I know how like I can take this into the market.
[00:10:39] Yanju: So next step for me is to develop an MVP that will replicate almost exactly what the agents are doing now, just in a simpler form, and launch that into the market.
[00:10:49] Yanju: One important thing I would like people to realizeis that there are some particular regions of the world that are not as privileged as some of us are.
[00:11:00] Yanju: Some people don't have access to basic financial services. Some people don't have access to bank. I mean, it sounds basic, and what that means is that, they only utilize money in form of cash and not having access to financial service. Also, what it means is that you're not able to access credit. This is a big challenge, because this means that they don't get the opportunity that can empower them to build, like, the kind of life that they would love to build.
[00:11:24] Yanju: I think the lesson also is that, there are challenges out there that we can actually help solve, andwe should leverage the knowledge you have, the skills that we have, to help deploy solutions to places that don't have already have these.
[00:11:38] Yanju: And also I, I know there's like a saturation of technological solutions in the Western places. They are actually like fresh markets to go into to deploy the idea you have. We don't need to saturate, you know, the places that already have all the technological advancements.
[00:11:53] Yanju: Let's look at other markets and go deploy ideas and solutions that we have, and there's a big market there that you can actually access.
[00:12:17] Host: The Levy Inspiration Grant program is made possible through the generous support of Larry and Carol Levy and is managed by the Entrepreneurship Program at the Kellogg School of Management at Northwestern University. To learn more about the Levy Inspiration Grant Program, and other ways we support student entrepreneurs, visit our website at kell.gg/entrepreneurship. That's kell.gg/ entrepreneurship. I'm your host, Tyler Seybold. Thanks for listening.
