CASE STUDY

Zoona, a low-cost mobile payments system provider in Zambia, joined the Business Call to Action in 2012 with the goal of enabling financial inclusion for the poor and unbanked.

Zoona’s goals• Build a network of 3,000

micro and small entrepreneur (MSE) agents, distributors, and retailers across Zambia by the end of 2015

• Enable transaction and financial services to 1 million end users per month by the end of 2015

• Increase the value of payments to USD 100 million per month in Zambia by the end of 2015

Zoona: Building a mobile money ecosystem in Zambia

Business ModelZambia is a country with low population density and high poverty rates. Due to low bank penetration outside of metropolitan areas and the cost of banking services, over 80 per cent of adults in Zambia do not have bank accounts. On the other hand, 76 per cent of adults in Zambia own a mobile phone, a dramatic increase from 28 per cent in 2005. Access to mobile phones is also relatively high in the poorer segments with over half of rural farmers as well as 46 per cent of the very poor owning a mobile phone.

Recognizing a business opportunity, Zoona (pronounced Z-oh-na, which means ‘It’s real’ in Nyanja, one of Zambia’s major languages) launched in 2009 to serve the unbanked in Zambia. Zoona started with a money transfer service using a network of micro and small enterprise agents to offer instant, over-the-counter money transfers within Zambia to primarily unbanked consumers.

Initiative Description

Zoona has since diversified to other payment types, including consumer bill payments, mobile wallet cash deposits and withdrawals, Business-to-Business (B2B) supplier payments, and Business-to-Consumer (B2C) bulk payments.

We at Zoona believe in the potential of small business entrepreneurs and want to help them grow. By combining real-time payment products with innovative working capital financing support, our customers can impact the lives of millions of low income consumers who rely on them for payment solutions.Mike Quinn, CEO of Zoona

How it WorksZoona’s Business Call to Action commitment includes scaling up its network of micro and small enterprise agents, distributors, and retailers, which will allow the company to serve a growing number of individual and institutional clients over time.

At present, Zoona’s MSE customers process in excess of 200,000 transactions valued at USD 15 million per month.

Zoona agents receive money transfers in cash from individuals, for example, who specify the person to receive the transfer. The recipient is sent an SMS verification which can be redeemed in cash by the nearest agent. End consumers benefit from access to a safe, convenient and fast financial service. In addition, Zoona has launched a partnership with Airtel Money, the country’s dominant mobile network operator, where end consumers will be able to come to Zoona agents to register for Airtel Money mobile wallet accounts and perform cash-in/cash-out transactions.

Zoona has also established a partnership with Zambian Breweries (subsidiary of SABMiller), which uses the Zoona platform to manage all of the payments to their micro and small

sized distributors electronically. These MSMs include local kiosk owners, who historically have paid for their stock in cash. The Zoona service allows these small entrepreneurs to pay for their stock in real time through their mobile phones, saving them the time of a trip to the bank, and Zambian Breweries benefits from faster, more secure payments.

Zoona offers working capital finance solutions to both agents and distributors, providing them with up-front loans that can be paid back over time, along with short-term financing facilities that allow them to purchase more stock and grow their businesses. Through connecting corporate suppliers with their local distributors and supporting the distributors with working capital finance, Zoona hopes to add value to the entire network while increasing the number of mobile payment transactions made through the Zoona platform.

Zoona charges a transaction fee that is tiered depending on the size and type of the transaction. Agents also receive a commission for their service. Zoona’s fees are competitively priced to reach the mass market, as its technology and operational model are designed to be low cost.

Zoona’s mission is to help businesses grow by being the best in the world at helping corporate suppliers and micro and small entrepreneurs (MSEs) transact in emerging markets. The company’s core customers include micro and small enterprise agents, distributors, and retailers that provide the critical link between Zoona’s corporate partners and their mass market consumers.

For example, Zoona has partnered with both Airtel Money and Zambian Breweries (subsidiary of SABMiller) in Zambia to provide payment and financing services to their distribution channels for the provision of mobile money and beverages respectively.

Innovations

that improve lives

Business ImpactOn a monthly basis, the Zoona platform transfers 200,000 transactions valued at USD 14 million, serving almost as many end consumers. Zoona’s profits are expected to grow with the number of transactions that are made through the Zoona platform.

The success of Zoona’s B2C/B2B business model attracted USD 5 million in private investment in February 2012. This has supported a larger team, improved functionality of the platform and led to accelerated plans to expand into new African markets.

Zoona expects its future growth to come primarily from developing institutional partnerships with companies like Bharti Airtel, an Indian multinational telecommunications services company with services in Zambia and 20 other countries across Africa and Asia Pacific. Zoona partnered with Airtel in 2013 to provide cash-in/cash-out services to Airtel customers that have registered for Airtel Money mobile wallets. Further, Zoona is working with Zambian Breweries, a subsidiary of SAB Miller, which use Zoona’s services to send and receive electronic payments from their micro and small enterprise distributors. Development ImpactResearch on low-income economies like Zambia suggests that a heavy reliance on cash-based transactions can impose a number of costs on customers, vendors, and banks, with a particular burden on the poor. Zoona’s service offering allows low-income customers to quickly and securely send and receive cash, pay bills, pay for their shopping or receive their wages using agents in convenient locations, without having to travel long distances.

For companies, the ability to transact directly with base of the pyramid customers through informal distribution networks reduces the cost of offering products to this market, thus increasing

their commercial viability. For instance, Zambian Breweries is able to receive mobile payments without handling cash, which enables them to reach more end consumers at less cost and risk.

Zoona’s mobile payments initiative will also result in job creation, as over 5,000 agent positions are expected to be created by the end of 2015.

These jobs provide a steady source of income to those people who may have faced difficulties in pursuing a career in the formal sector. Towards this goal, the company has partnered with Kiva—an online lending platform—to provide microfinance to Zoona agents, providing them with the initial working capital needed to open their own Zoona kiosk. Agents are expected to earn an average of USD 50 per day by the end of 2013 from commission on transactions.

Results Achieved

Key Success FactorsAgent training and supportZoona agents are required to go through a rigorous training program that includes a specific focus on building entrepreneurial skills in order to be certified to work as an official agent. A challenge in building a robust agent network is in ensuring a minimum level of liquidity.

Zoona agents must maintain a minimum level of cash at all times so that customers who request ‘withdrawals’ are easily able to obtain cash. However, in order to maintain a minimum level of cash, Zoona agents must also be able to reach enough clients who want to transfer money and provide enough ‘deposits’.

Zoona’s partnership with Kiva helps to alleviate this challenge, allowing agents to open up transaction booths with enough money on hand to process transactions.

PartnershipsZoona has successfully landed major partnerships that have strengthened their position in the Zambian market. Through partnerships with corporations that use Zoona’s service to make and receive payments from their distributors and employees—like Zambian Breweries—Zoona increases the number of transactions taking place through its platform and embeds its service into the business models of growing companies.

Through partnering with Airtel Money, Zoona has increased the potential reach of its service to all of Airtel Money’s customers in Zambia, with the potential to expand into other markets. Finally, Zoona’s partnership with Kiva ensures that Zoona agents have the financial support needed to start and grow their businesses. These institutional partnerships are expected to help Zoona to expand significantly over the next few years, allowing the company to reach more low-income communities in Zambia and other African markets.

Contact the Business Call to ActionE: secretariat@businesscalltoaction.org T: +1 212 906 5695www.BusinessCalltoAction.org

This case study was written by Sara Enright for the Business Call to Action.

Zoona’s business model has the potential to scale across Africa, transforming economies by fueling greater economic participation and commercial activity. Through its Business Call to Action commitment, the company seeks to build a network of 3,000 MSE agents, distributors, and retailers by the end of 2015 who will collectively reach over 1 million end consumers per month. The company has plans to expand beyond Zambia with its vision of creating Cashless Growing Businesses everywhere.

Next Steps and Spin Off Effects