The relationship between Nigerian mobile payments company, Paga and Ethiopian software development outfit, Apposit began since the former’s inception in 2009.
Tayo Oviosu and Eric Chijioke, CEO and CTO of Pagatech respectively, were looking to partner with a software development company in order to improve their product. But they realised to do that, they would have to build the platform themselves.
“When we started, the plan was to buy a licensed software. We identified a partner and Tayo and Eric went to India for about two weeks so that they could configure the platform to serve Paga. Based on our requirements, they asked the partner what kind of effort was required to deliver what Paga wanted and he said they’d have to rebuild the whole software. We decided to just build it ourselves,” Jay Alabraba, co-founder of Pagatech Limited, the parent company of Paga told Techpoint.
Apparently, Chijioke had also been a co-founder at Apposit alongside Adam Abate and Simon Solomon since 2007. The Ethiopian-based software development company has over 100 clients and specialises in building software-as-a-service (SaaS) platforms for financial services, agriculture, and sales force automation.
Suggested Read: Why Paga’s technology is built and managed in Ethiopia
Thus, it was a straightforward decision for Paga to task Apposit with building and maintaining its payments platform since it already had a technical team in Addis Ababa. As per the terms of the partnership, Apposit dedicated 25 software developers to exclusively work on the Paga platform. Although most of its engineers are still based in Ethiopia, Paga has made strides in establishing a development team in Nigeria.
Interestingly too, Apposit was a seed investor in Paga and also served in an advisory role to the payments company.
Since then, the payments company has gone on to raise $35 million and Oviosu says the company has processed 104 million transactions worth $6.6 billion. During its series B2 round of $10 million in 2018, the company announced that it will expand into other markets within and outside the continent — specifically to Ethiopia, Mexico, and the Philippines.
Paga hopes to complete most of its expansion this year and has shown no signs of slowing down. The payments company hired Ian Cleverley this month as its Group CFO to help with his vast industry experience. Today, it announced its acquisition of Apposit to hasten its expansion into Ethiopia and East Africa.
With this acquisition, Apposit’s 63-man engineering team will be incorporated into Paga as the payments company will start operations in Ethiopia when it obtains a local banking licence. Also, Adam Abate will become the CEO of Paga Ethiopia.
Worthy of note is that mobile money platforms in Ethiopia are owned by the banks as fintech companies can only provide technology services to these banks.
However, the country’s central bank — the National Bank of Ethiopia — is said to be putting up a framework expected to allow fintech companies in the country to offer financial services to customers.
Pending on when this framework is passed into law, Paga might only be able to operate as a financial technology provider to banks in Ethiopia, a different model to what the payments company is accustomed to in Nigeria.
Ethiopia is predominantly a cash-based economy unlike Kenya, which is known for its mobile money market. Therefore, this presents a good opportunity for Paga to gain market share in the East African country and with a total workforce of 530, it will also be interesting to see how Paga completes its expansion into the Philippines and Mexico later this year.
Please take this online self-screening test to help ensure you are safe from the COVID-19 pandemic here.
Nigerian startups raised $377m in 2019, more than twice what they did in 2018. Find out more when you download the full report.