Kenyan mobile startup Mobile Decisioning popularly known as MODE has firmly established itself as Africa's emergency prepaid airtime payments firm, with plans to expand its business from Kenya to the rest of the world.
The company, which describes itself as a ‘nano credit firm’, was formed in 2010 and partnered with African telcos such as MTN and Airtel. MODE offers small loans from US 20 cents to maximum amounts of $20.
ITWeb Africa assistant editor Simnikiwe Mzekandaba spoke to co-founder and chief executive officer Julian Kyula about MODE's success and future plans for the business.
SIMNIKIWE MZEKANDABA: Julian when was MODE launched?
JULIAN KYULA: We launched in 2010 around April – the first transaction was around August of 2010 through Airtel Kenya but we started preparations around April of 2010.
SIMNIKIWE MZEKANDABA: And just to explain to our readers what service does MODE actually provide?
JULIAN KYULA: We provide nano financing in nanoseconds. What we do is we are plugged in to most of the phone networks and banking platforms to be able to then provide people with minimum amounts of advances, cash advances and airtime advances. At the moment we started with airtime but we have since moved onto a lot more in terms of facilities or utilities so you can look at airtime, power, water and television even nano insurance. We have started to be able to provide more nano services to people across the world.
SIMNIKIWE MZEKANDABA: So MODE is a global service and not just applicable to someone based in Kenya?
JULIAN KYULA: We provide every single place through the mobile phone and we try to provide these small advances through the mobile phone. So anybody with a mobile phone in any country that we start to operate in will probably start to use the service after a certain criteria. Our aim is to make sure that those that don’t necessarily have banks or banking relationships or even if they do are able to access minimum amounts of cash that they will need at one point or another. It can happen at any one point an amount is there to make sure you can access nano finance of anything between 20 US cents and $20 because at any one point any one of us may need that for anything.
SIMNIKIWE MZEKANDABA: What made you decide to you launch MODE?
JULIAN KYULA: I used to work for a group out in the US that was involved in a lot of credit profiling, data analysis and running algorithms for different large organisations there. So when I came back to Kenya my aim was to push for credit bureaus a legislation I wanted to come and see if I can implement the same across the whole of Africa. At first the process was a success but unfortunately for me it didn’t really do what I had in mind.
As soon as I realised and understood the 85% of the people have access to mobile phones and 50% have access to bank loans it was clear that people especially for the emerging markets prefer to use their mobile phones to do transactions even if it’s for minimum amounts and from there I understood that mobile phones was the better option for us to look at how transactions can be carried out.
SIMNIKIWE MZEKANDABA: Which telcos did you then decide to work with? Are you working with all telcos or are there specific ones?
JULIAN KYULA: When we started, we did start with contracts from two major network operators. Our MODEl when we started was to work with specific telcos – but what we have done now because of the growth of our service is work with various telcos.
SIMNIKIWE MZEKANDABA: How has the response been like?
JULIAN KYULA: When we started we were specifically offering airtime but now people are looking at us as a tool – we have very interesting stats around usage and continued usage of MODE. The response has been very good infact from the ground we don’t even charge interest – we just charge a onetime fee which can be paid back with 24 hours or in instalments.
We are looking at increasing the amount from $20 to $50. What we are doing now is that we are able to shift global thinking around convenience.
SIMNIKIWE MZEKANDABA: How many people are using MODE?
JULIAN KYULA: We have 105 million customers right now and are looking to have 200 million by the end of this year and half a billion by next year.
The world is starting to accept that this is not just an African solution as Asian countries are also starting to say “ok this is something our country would want and must have this nano cash service.”
We started off as an African solution provider but now we are a global nano credit provider. There is a lot going on in the business right now we have had to shift gears in our strategic thinking.
SIMNIKIWE MZEKANDABA: And how big is the team?
JULIAN KYULA: We’re a total of 105 and we have another 45 joining the group before the end of this year.
SIMNIKIWE MZEKANDABA: Do you only have offices in Kenya?
JULIAN KYULA: No we have offices in Nigeria, London, Cameroon, and we have offices in Uganda so we’ve got offices in seven countries right now and we also have offices in Mumbai and Delhi and we’ve got offices that we are looking at on New York.
By the end of the year we should have offices in about 15 countries.
SIMNIKIWE MZEKANDABA: Did you experience any hurdles along the way, how was that starting process for you?
JULIAN KYULA: It was very tough. We learnt some very major lessons, and as I mentioned this wasn’t the first business I started so understanding in hindsight the process of starting a business was important. The toughest part for us was getting capital in the beginning. Africa is a very capital driven market and it’s none existent. In East Africa what we found is that there isn’t a lot of understanding from the banking sector, so it was very hard trying to raise capital for a global business.
So the biggest challenge was one trying to raise capital, number two was trying to find the right skills. We went to India and we went to the U.S trying to build these platforms and all this time they were right under our noses. We found some amazing people across Africa that would be able to build the platforms and be able to connect to telcos engines and be competent enough to work with the telcos engines.
We were very lucky to find the people that were able to develop this platform. Skill was at some point one of those challenges. The other challenge was that when we started getting out of the continent is that most of the world was quite sceptical about an African product we had to make sure that we are well aware of our stuff and be able to answer all their doubtful questions.
You’ve got to make sure that you customise yourself for the region that you are in and be very smart in business. One other thing is that we are young and people would start to question are you really capable of carrying out such a business, we were lucky to demystify those concerns through large companies we were already working with and were able to demonstrate our capability and data security storage facilities.
SIMNIKIWE MZEKANDABA: Having started the business and going through those hurdles, did you even think it would be successful?
JULIAN KYULA: We dreamt about it but we never envisaged the possibility of it being used by 105 million people. And we are now in the middle of discussions with a funder which could be the largest investment in Africa. And we never imagined that the business would’ve grown this far. We are still excited at the prospect of further growth may be reaching two billion people. We are excited about the possibility of staying innovative and we must understand what could take us out of business.
SIMNIKIWE MZEKANDABA: Looking at the industry of technology startups in Africa and the importance of mobile phones on the continent, how important is mobile in Africa?
JULIAN KYULA: We’re looking at about 700 million mobile phones in Africa which are expected to cross over the billion mark by 2014/2015 this means that the evolution of the mobile phone in Africa is faster than in any other continent. Everyone knows that this is only the beginning which means in another couple of years there will be over 100% mobile penetration across the continent and it will happen whether we like it or not.
In Africa not everyone will be able to afford a laptop so the best option for them is to get a phone that will be able to do the same things that a laptop or tablet can do. And even if they have a computer that is provided by the company they think “I still have a phone I can take home with me because it’s my gadget.” People are starting to communicate more and more with the mobile phone so we know and understand that there is a shift in communication devices and there is no doubt that there is a huge market for mobile devices in Africa. And that will also be the best labour force market in the world. It’s even clear for us as MODE that we start this in the right continent.
SIMNIKIWE MZEKANDABA: I’ m sure that you have big plans for the future, could you share those with us?
JULIAN KYULA: Right now we feel that there is still a lot to do in Africa we have brought our services across the different markets across Africa so we’re looking at increasing our presence in those markets within the next twelve months.
Also having opened our Mumbai and Delhi offices we are very focused with the Indian market, we are focused with the Middle East market in providing certain solutions there within the next twelve months also. We are also looking at Bangladesh and the Philippines. In the next twelve months I’ll be in a much better position to answer that question fully.
SIMNIKIWE MZEKANDABA: How is MODE’s service different from other nano service providers?
JULIAN KYULA: Our global focus and key focus is to provide nano finance in nanoseconds, we are focused a lot around airtime credit. We are looking at shifting the thinking around micro financing. We know that MODE is the global leader in nano financing so that understanding that we are going to be there at some part of the world to make sure that people can access quick money that they need. We believe that we are among the first to do this on this scale.
SIMNIKIWE MZEKANDABA: Would you encourage entrepreneurs to get involved in the technology startup space?
JULIAN KYULA: I believe that there has never been a better time to be an entrepreneur in Africa. It will be tough and I don’t think that’s different to anywhere else in the world that’s just a global phenomenon. Being an entrepreneur anywhere in the world is tough. You’ve got to have the strong will.
I encourage those Africans in the diaspora to really look at Africa and see that this is the next global frontier. One, entrepreneurs must position themselves, two they must find great partners you want to have the right partnerships especially at the beginning. Find people that believe in your dream and people that believe in you. People don’t invest in ideas people invest in people, so you’ve got to have the passion for what it is that you want to build. The money will find you, the question is will you be ready for it. And if you fail you need to dust yourself off and get back in the game and stay consistent there is great potential for the continent.
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