BANKING ON TANZANIA

A BEYOND-SILICON-VALLEY INTERVIEW WITH BENJAMIN FERNANDES

Benjamin Fernandes has a mission to spread easy, offline money management across Tanzania via (NALA), a mobile money application designed to make quick, smart and secure transactions without an internet connection. A graduate of the Stanford University Graduate School of Business and Harvard’s John F. Kennedy School of Government, Benjamin has worked for the Bill and Melinda Gates Foundation and remains a consultant to it. After earning his MBA from Stanford, he returned home, a move widely covered in the Tanzanian press. A former television presenter, he has a high profile as a media star and now as a fintech innovator. Here’s my Q&A with him. In it, you’ll learn about the power of believing in something bigger than a vision or mission.

JOE: Benjamin, it’s great to be with you. Let me start by asking you to provide me with a bit of your background and describe the business climate in Tanzania.

BENJAMIN: My family is originally from southern India (Goa) and moved to Tanzania in the late 1800s. We have been here for over four generations and this is my home. Tanzania is one of the fastest-growing economies in Africa, albeit from a modest base. Over 70 percent of the population of 60 million is younger than 24. Many people go into traditional work like farming because we don't have enough schools or universities, and other work opportunities are limited. If people want jobs here, they need to start thinking entrepreneurially from a young age.

JOE: What are the growth drivers of the economy?

BENJAMIN: Agriculture is the largest force, and mining is probably second. Tanzania has a lot of gemstones, gold, Tanzanite, and diamonds. Tourism is a newer and very interesting cash crop—we get about two million tourists per year.

JOE: What are the cultural impediments to innovation? Is it okay for your son or daughter to grow up to be an entrepreneur? 

BENJAMIN: A lot of people are told to do what their parents do; if your parents farm, you're expected to do that when you get older. It’s also unacceptable to say “no” to or disagree with somebody older than you. When I am in a meeting here, it’s hard for me to respectfully disagree with people. Additionally, parents would rather send their sons to school than their daughters. Many will marry off their daughters, which can lead to a very challenging life for women, particularly in rural areas. Still, people are becoming more open to sending all their children to school, so that’s a bright spot; I’m hopeful that this change will continue.

JOE: Why do Tanzanians and Africans, need their own digital outlet or app capability? There certainly are existing ones, built elsewhere, not by Africans, but for Africans.

BENJAMIN: NALA works in an offline (internet-free) environment, and we're known as being "Africa's first offline payments application." That’s important because Africa has a few unique aspects:

1. There is growth in smartphones, but not everyone has access to an internet connection.
2. Africa is multi-sim / multi account. According to GSMA (a mobile association), the average African has about two sim cards. Each sim card can host another mobile money / bank account.
3. Given the multiple accounts, there’s fragmentation of payments; no tool exists that enables people to access multiple accounts at once.

JOE: How and from whom do you raise money?

BENJAMIN: In Tanzania, we don’t have a strong culture of angel or seed investing; people haven’t seen the benefits of investing into technology (yet). We received $150,000 from Y-Combinator, a massive stamp of approval. NALA is the first Tanzanian company ever to get into YC. I think for a while, US investors, mainly those in Silicon Valley, will be most interested in investing in Africa. Recently, the Chinese have also been spending more time growing and investing in the African continent.

JOE: Tell us where and how you find the talent you need to build the business?

BENJAMIN: Our team at NALA is great, but at five full-time people and six interns, it’s tiny. Building a team here is hard because a lot of people who come to the US for education end up staying in the US. If you can get them to return to Tanzania, they often struggle to find a cultural fit. People here tend to say, upon your return, “Who are you? You weren't here for years. I don’t know you.” When hiring in Tanzania and African markets, it’s probably smart to start with probationary periods so people can prove themselves out before you offer them full time contracts.

JOE: What drove you to do this? You graduated from the Stanford GSB. You could do anything you want.

BENJAMIN: In its application, Stanford asks what matters to you most and why. I wrote that what matters to me most is my faith and love for Tanzania. Faith gives me the understanding that I may not make a billion dollars today, but I could potentially have an impact on a hundred million people, and that’s very important.

I also want to give back. I was sponsored with a Stanford Africa MBA Fellowship, and although everybody tells me I could have earned much more money in Silicon Valley and sent it home, I wanted to give back to Tanzania. By being here, I am close to customers and employees. A lot of hand-holding needs to happen when it comes to money and trust. If you here, then customers and employees, see you, and they trust you more. 

JOE: Have American innovation and entrepreneurship, which are the gold standard, heavily influenced your approach?

BENJAMIN: Yes! Before launching the company, we spent hundreds of hours in the field doing 700 interviews. [Note: read about that here.] Before writing our first line of code, we had to understand different consumer patterns. The field research was a fundamental concept I took away from my time at Stanford. Professors told me to do user interviews, but I didn’t want to do them because the 11-hour time difference meant I had to call people from 10 p.m. to 2 a.m. my time. I couldn't understand why the professors kept emphasizing the importance of user interviews. Then, I did them, and I saw themes, namely:

1. The first generation of mobile money, built ten years ago, was not built for smartphones.
2. Our product has to be able to operate offline.
3. Security is a top priority for users.
4. We offer understanding. People want to understand how to read a financial statement and know how they're spending money. We need to seize the opportunity to make Tanzanians smarter about their spending. 

Now, every Friday, we go out into the field and talk to users. I myself speak to 15 users every week. Because of Stanford, I figured out that user feedback is the most important part of building a business.

JOE: Conversely, is there a lesson for your GSB classmates and others could learn from your experience in Tanzania? 

BENJAMIN: Yes, I think in Tanzania there’s an aspect of faith, of doing something bigger than yourself, of wanting to leave a strong legacy. You can make all the money in the world, but having positive impact is important. People coming from somewhere like Stanford are going to be okay. They’ll always be able to get hired; things are going to be fine for them and their family. They have the luxury to e able to think about taking larger risks, and asking themselves what legacy they want to leave. In Swahili, we have a saying, “Mmoja akifika, wote tumefika, mmoja akishangilia, wote tumeshangilia.” meaning, “If one of us makes it, we all make it, if one of us celebrates, we all celebrate.”

JOE: Thank you, Benjy!

I’d like to leave readers with this one image. Although Africa of course consists of many separate countries and markets─it is not one united market─it still is worth stating that the continent is much larger than many Americans realize. Benjy and NALA have a unique offering in an enormous, growing market.

Joe Mandato is a former leader of a number of technology companies and currently an angel investor, board director, university lecturer, and writer.

Michael Goldberg, a collaborator in this interview series, is a venture capital investor and Assistant Professor of Entrepreneurship in the Department of Design and Innovation at the Weatherhead School of Management, Case Western Reserve University. He developed the Beyond Silicon Valley course, translated into more languages on Coursera than any other course, and he wrote Beyond Silicon Valley: Growing Entrepreneurship in Transitioning Economies.