Tanzania 2014 | TELECOMS & IT | B2B: ZOOP

TBY talks to Manzi Rwegasira & Paolo Rigutto, CEOs & Co-founders of Zoop, on the creation of the company, the management of risk, and the future of technology in education and banking.

Manzi Rwegasira
CEO & Co-founder
Paolo Rigutto
CEO & Co-founder

What was the impetus for creating Zoop?

MANZI RWEGASIRA There has been a growth in indigenous IT talent here over the past four years, so I knew that if I founded a company, I could hire locally much cheaper than in the UK, or anywhere else. And so we started to assemble our own team to focus on mobile technology. Mobile phones are very important in Africa, and mobile money presents a number of opportunities for education, mobile payments, health, agriculture, and many others sectors. We put our heads together to brainstorm and decided to focus on mobile payments. After a tough journey, we set up a billing system that helps schools manage their payments, although this system could serve any type of organization. We currently have 12 schools using this system, but we will need over 200 in order to generate decent returns. This is an ambitious goal and one that we are tackling with our aggressive marketing campaign. We are distributing flyers, staging a press conference, and later plan to conduct interviews in order to get our name out and educate the market.

PAOLO RIGUTTO While I had never been to Tanzania before, Manzi sold it to me very well and the more we worked on our plan and the product, the more excited I became. I recently spoke to someone who said that once you go to Africa, you can leave, but you will leave a part of your heart behind. After visiting the first time, I definitely felt that way, and I think there is a huge gap in the market for Manzi and I to apply what we learnt in London locally, working with a team capable of growing in step with the innovation occurring in Tanzania and East Africa.

What impact do you expect mobile money to have on the schools themselves?

MR Those that use it are very positive because of the time saving factor. By going to a branch, you can easily lose two or three hours on a simple transaction. We also offer the ability to see payment history and get confirmation every time a payment is made through us. This also makes life easier. Accounting is improved because schools can see who owes what before school starts. Even with the receipt, the accountant will later have to go to the bank and check the records in order to see if the money has arrived. Therefore, it represents both cash-flow management and time management. There is also internet banking, but schools have not fully embraced it, and we believe mobile money to be better, because payment is confirmed within a couple of minutes. We have set this up such that when customers log in they can see payments and receive an SMS notification to see who paid, when they paid, and how much they paid. The SMS component, which we provide for free, has been particularly popular among our clients. Again, those using this service are convinced and happy, but converting others takes effort. There are still large pockets of people who are skeptical about mobile money.

Do you see mobile money as an alternative to formal banking in a country like Tanzania, which has low levels of banking penetration?

MR I believe that mobile money is a complement to the banks. Banks have traditionally found it unprofitable to operate in rural Tanzania, as the cost of opening up a branch was about TZS700 million, or $500,000, while putting an ATM in place costs about $60,000. Companies that do it need a generator, machine, and satellite connection, along with a guard. That's a big expense. Two phenomena are happening here. One is mobile money, which allows people to send their money via mobile phone. The other is agency banking, which allows third parties to team up with banks, so customers can deal with groceries, and deposit or withdraw cash, for example. This is really expected to go a long way over the next few years toward developing the banking sector and helping people carry out their transactions.

PR Mobile money can facilitate many of the distribution issues that are currently faced by banks. That said, I am skeptical of the ability for mobile money to transform into mobile banking largely because the profit from any mobile banking product would have to be split between the banks and the telephone operators, and I am not sure that either is inclined to go down that route. There is also a question of stability and competition in the mobile money arena. With two big players in the mobile money market, the question is whether consumers can trust either not to raise prices or show monopolistic tendencies? And will mobile money providers be able to guarantee consistent performance over years, if not decades? I see a large role for the savings and loan groups and new entrants into the market in making sure that volatility doesn't bring further trouble to the financial services market in Tanzania.

What is your ultimate goal for Zoop?

MR At heart, we are a technology company. Once we complete our marketing campaign, we hope to increase the number of schools that employ our system to 200. We are also set to enter a funding round before providing content. We are working to obtain an e-reader type of tablet that we could retail in Tanzania with a very narrow margin. For example, we are considering a solar-powered tablet that we could retail for around $60, and to disseminate content via satellite rather than an internet connection. At this point, schools would be hesitant to adopt this plan, but parents may come on board. We could have 200 or 300 tablets to launch the concept, especially were solar tablets to be used. The idea would be to keep the cost of the hardware low and generate revenue in part from advertising, but mainly through content, including educational content. In terms of financing, we are looking at the finance and IT sectors. Ideally, we would like to invest “smart" money, meaning that we attract people who can provide funds and also insight and knowledge in this area.

PR We believe that our billing system can be used across industries, and so will look at deploying it in other areas where customers are hindered by the need to use banks, or where companies struggle in tracking their expenses and can use our tools to not only service their clients better, but also to reduce their costs and increase revenue. Similarly, we believe that there is still a lot that can be done in the educational sphere, and that schools need all the help they can get.