What do a bank, a Fintech startup and the Reserve Bank have in common besides money? They share a strategic vision.
Startup culture is synonymous with speed, execution and innovation. It is solutions such as WhatsApp and EcoCash that have managed to propel the economy in terms of communication and payments respectively. Silicon Valley in California may be the Mecca of these superpower young companies, however Africa, and particularly Zimbabwe, is home to some essential startups required to reduce frictions in the economy and improve the ease at which economic participants may conduct their professional and personal affairs.
One such start-up is Senditoo — a cost-effective and secure way to send money, top-up a mobile phone or pay bills for your loved ones from anywhere in the world. The company was founded in 2014 by Zimbabwean-born Takwana Tyaranini and business partner Ibrahim Soumano upon realising the need to improve the ease in which African diasporans can send remittance payments to their home countries. The company has gone on to serve over 100 countries globally and has secured millions of USD in funding to engender its goal to become the biggest digital payments platform on the continent enabling quick transactions that are greater than current limitations that prevail.
Senditoo partnered with BancABC in 2019 thereby allowing clients to send and receive remittance payments across its network of branches in Zimbabwe. As its first local partner, BancABC clearly ascribed to the FinTech firm’s vision and just two years later, the Reserve Bank of Zimbabwe (RBZ) has approved of its strategic partnership with NMB Bank further expanding its reach nationwide. This seemingly personal victory for Senditoo is not only signalling the possibilities for like-minded entrepreneurs but it is highlighting the extent to which economic participants with varying foundations, beneficiaries and objectives can co-function to develop the Zimbabwean economy through their respective systematic advantages.
Although an opportunity exists for public and private institutions to invest and partner with startups focused on socio-economic problems in Zimbabwe, the activity in this regard remains wanting. Challenges that persist and require additional effort to mitigate the obstructing barriers are:
Lack of communication
The startup ecosystem in Zimbabwe is fragmented thus making it difficult for interested stakeholders to understand the landscape and opportunities that exist. Although most entrepreneurs approach their desired partners, this practice is not optimal to the needs of all parties involved.
A merged database of startup activity would be an adequate solution and its creation may inspire existing innovation hubs and non-profit organisations to colate their databases and improve access to Zimbabwean startup statistics. Whether the creation of a database occurs in the near or far future, willing parties need to make their collaborative intentions public through their social media pages or popular publications such as newspapers.
Public sector is difficult to reach
The cabinet of Zimbabwe houses approximately 22 Ministries which are, on average, difficult to reach for professional purposes. The premise that partnerships need to be based on financial aid may be a deterring factor as a number of state-run institutions have limited funds to meet their key objectives.
However, aside from funding, startups require access to markets and other non-financial resources to grow and increase their exposure. Potential partnerships that state-run entities could explore include sportswear sponsorship for international games by local brands such as faithwear endorsed by the Ministry of Youth, Sport, Arts, and Recreation or nuanced technology-based solutions created by the myriad of developers in the country to solve issues related to transportation, healthcare and tourism. Regardless of the length and scope of such agreements, the government needs all the extra hands and minds it can obtain to improve the state of the country and the best way to do that whilst limiting spend is through working with startups focused on issues pertinent to Ministry goals.
The public sector is rightfully primarily concerned with matters of the state thereby limiting its scope and appreciation of alternative opportunities thereby making it somewhat inaccessible. In some ways similar to the inaccessible public sector, the private sector is just as difficult to penetrate for collaborative projects. The focus on securing big deals hinders its ability to see the value in smaller collaborations that hold promising prospects of success. In contrast, startups thrive on pursuing new ideas and improved methods to serve the needs of their intended market. The underlying factor amongst all these factors is the cultural differences of the institutions involved. The solution is not for all to transform and adopt one for the sake of collaboration.
The desired objectives may be attained through the creation of a smaller team that solely manages the partnership so as to avoid the detraction of core operating objectives.The benefits of this model’s key metrics to evaluate the benefits of these partnerships regardless of their monetary measurement apply to all firms involved as their main objectives (assumably) are to maximise profits and increase stakeholder value.
Increase total available market
A common trait amongst startups is that they usually exist to meet the needs of an underserved market. In this case, Senditoo is not only a remittance payment platform, but it manages to acquire a tiered market including diasporans and local citizens across varying income categories. Access to such data and trust is paramount to securing further business growth. For financial institutions such as local banks and RBZ, trust is highly valued and as such so are opportunities that allow for its attainment.
The volatility of a number of macroeconomic factors such as monetary stimulus, low income levels and the systematic status of firms that are deemed “too big to fail” dissuade established companies from adopting the same levels of risk that a startup, by nature, is open to adopting. Investors of startups are aware that they are high risk vehicles and factor that into their commitments when endorsing ventures such as Senditoo. The public and private sector have significant positive externalities to gain by proactively engaging and collaborating with ventures whose risk profile contrasts their with the security of limited liability as a supporting entity.
Foment job creation
What such partnerships signal and eventually create is the need for additional jobs to ensure that their success persists beyond the foreseeable future. The act of normalising the functions of startups and ensuring their growth to levels that rival age-old corporates is what drives economic and employment growth.
A classic case of this is Econet Wireless, whose startup foundations drove it to grow into a telecommunications conglomerate that employs over 2000 employees across Zimbabwe.
Discover new opportunities
Assuming that existing public and private firms prioritise stability and spend most of their resources on ensuring that the economy is conducive for economic activity, one can deduce that new opportunities are not explored as aggressively as they are in a startup milieu. Dynamic collaborations with startups expose the resource-constrained and/or the strict objective-ridden entities to discover opportunities that may have evaded their radar in their commitment to serve the economy at large.
Public-Private-Startup partnerships hold tremendous potential to drive impact and growth in the economy. Such partnerships can increase project completion rates and improve the solid revenue required by all institutions involved in working closer towards their respective visions.
In light of this information, it is paramount to mention that Zimbabwe still lags behind on accommodating the dynamics surrounding startups, let alone technology startups.
If such agreements are to become pervasive, as they should to foster growth, then the government should seriously consider upgrading legislation regarding competition and cooperation policy. Senditoo is paving the way for upcoming entrepreneurs and this development is exciting for the community and its stakeholders at large. From myself, a well-wisher and startup enthusiast I wish this partnership success in the future. Senditoo, we are (excitedly) watching, no pressure.
Dzinotyiwei is the secretary of the Zimbabwe Economic Society and a start-up enthusiast currently building an online venue hire start-up called YuPlan (www.yuplan.co). These weekly New Perspective articles are co-ordinated by Lovemore Kadenge, an independent consultant and past president of the Zimbabwe Economics Society. — email@example.com or mobile +263 772 382 852.