Tijani: Nigeria Needs Innovative Solutions to Serve the Unbanked

Co-founder of Toju, Mr. Sodiq Tijani speaks on how Toju will serve the unbanked customers and offer financial services to the last mile user through a fusion of trusted informal financial service practices and technology. Emma Okonji presents the excerpts:

Your passion for technology appears high, given your background. Tell us more about the passion and your journey into the tech space?

My love for technology started at a young age, and I have always been fascinated by the endless possibilities it presents. My journey into the tech space began during my undergraduate days when there was a nationwide lecturer’s industrial action that kept us out of the classroom for six months. 

This was when I started learning the basics of web development from a friend and continued when school reopened. While in my third year in the university, I had already started earning money as a freelance web developer and also organising training sessions for interested students on web development.

After graduation, I founded a startup named “workbook.ng.” Workbook was a marketplace for artisans and potential clients to transact in a safe environment using an escrow function. Like many first-time founders, the startup did not do as well as I would have imagined. Reflecting on the failures, opened my eyes to the world of product management. Despite starting my career in tech as a freelance web developer, I gradually transitioned into product management, where I discovered the importance of using technology to solve real-world problems at scale.

According to a report by GSMA, sub-Saharan Africa has the highest percentage of mobile connections compared to other regions, with 456 million unique mobile subscribers in 2020. This presents an opportunity for entrepreneurs to leverage technology to provide solutions that cater to the unique needs of Africans. I have since been working on developing innovative solutions that address challenges faced by underserved communities in Africa.

As a leading talent in the product space, what advice will you give aspiring product mangers?

As an experienced product manager and entrepreneur, my advice to aspiring product managers would be to always stay curious, be a continuous learner, and stay focused on solving real customer challenges.

The product management space is constantly evolving, and it’s important to stay up to date with the latest trends, technologies, and best practices. This means actively seeking out new information, attending industry events, and connecting with other professionals in the field.

At the same time, it’s important to remain focused on the customer and their needs. Understanding their pain points, desires, and behaviours should be at the forefront of every decision a product manager makes. This requires listening intently to customer feedback, conducting market research, and collaborating closely with cross-functional teams to deliver a product that truly meets customer needs.

Another important aspect of being a successful product manager is being able to communicate effectively with stakeholders at all levels. This includes being able to articulate the vision and goals of the product, as well as communicate updates and progress along the way. Building strong relationships with stakeholders, including customers, team members, and executives, is critical to the success of any product.

What informed your decision to build financial infrastructure for Africa’s informal sector since the sector is largely uncoordinated?

The informal sector is a critical part of Africa’s economy, accounting for a significant percentage of the continent’s Gross Domestic Product (GDP). According to a report by the International Labour Organization (ILO), the informal sector accounts for over 85 per cent of total employment in sub-Saharan Africa. However, the lack of access to financial services remains a significant barrier to growth in this sector. 

The informal sector is largely uncoordinated, as you rightly pointed out, and this presents an opportunity for innovative solutions to bridge the gap between the formal and informal economies. With Toju, we’re leveraging technology to digitize informal financial service practices and provide financial services for the underserved. We recognized the potential of this sector and the need to build financial infrastructure that caters to its unique needs. 
According to the World Bank, only 34 per cent of adults in sub-Saharan Africa have access to formal financial services. Our goal is to provide financial services that are affordable, accessible, and easy to use for the underserved.

Since Toju was inspired by your team, what are the results so far?

Toju has achieved remarkable strides in its mission to digitize informal financial services, and we are continuously seeking ways to enhance and broaden our offerings. Our company has developed a unique credit-scoring engine that utilizes data from informal financial transactions to provide savings, investment, and credit services to individuals who are often deemed unbankable. To date, our platform has served over 30,000 users, and we have established partnerships with significant players in the financial industry.

Toju focuses on cash economy when Nigeria and the rest of the world are moving towards cashless economy. Is this not a contradiction?

Toju is not opposed to a cashless economy, but it is about providing financial services for people who are excluded from the formal financial system. Yes the world is indeed moving towards a cashless economy, but we recognise that the reality is that a significant percentage of the population still relies on cash for their daily transactions.

According to a 2022 report by McKinsey, cash transactions still account for 90 per cent of transactions in Africa and the Nigeria Inter-Bank Settlement System (NIBBS) reported that cash withdrawals from Automated Teller Machines (ATMs) in Nigeria stood at N3.19 trillion ($8.2 billion) in Q3 2021, indicating the continued relevance of cash in Nigeria. While we recognise the benefits of a cashless economy, we also understand the realities of the informal sector, where cash remains the dominant form of payment. 

According to the International Monetary Fund (IMF), cash usage in sub-Saharan Africa is expected to remain high. We believe it is essential to bridge the gap between cash and cashless economies to provide financial services that cater to the needs of the underserved.

How is the CBN’s Naira redesign policy affecting the sector you offer services, considering the fact that your solution is about banking the unbanked?
The effects of the CBN’s Naira redesign policy on the economy have been widely documented, particularly during its implementation phase. However, the shortage of new banknotes is impacting small, medium, and large businesses in both the formal and informal sectors. The agricultural, manufacturing, and trade sectors are experiencing the most severe effects of the policy’s impact. These sectors, which contribute significantly to the GDP, are largely informal or located in rural areas. Since the scarcity of new naira notes began, there has been a 20 per cent drop in sales of consumer goods and a 30 per cent drop in the manufacturing sector, according to the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA). 

Despite the policy’s negative effects, we remain optimistic about our goal of serving as the bank for the unbanked. The scarcity of new naira notes has forced us to focus on overcoming the cultural challenges associated with trusting formal financial services, which can drive adoption of digital payments and increase financial inclusion. 

According to Enhancing Financial Innovation & Access (EFInA), only 36.8 per cent of Nigeria’s adult population has access to formal financial services, and policies like the naira redesign can help enhance financial inclusion. We welcome such policies and will continue to work with key players in the industry to build financial infrastructure that caters to the needs of the underserved.

Why are people still skeptical about leveraging online platforms for their savings and investment drives, even when your solution encourages savings and investment?

There is still a significant trust deficit when it comes to online savings and investment platforms in Africa. Many people are skeptical because of past experiences with fraudulent schemes. At Toju, we are addressing this by building a transparent and reliable platform that people can trust. We’re also investing in customer education to help people understand the benefits of using our platform.

The skepticism around using online platforms for savings and investments is not unique to Africa, but rather a global issue due to a lack of trust in formal financial services, especially in the informal economy. Toju recognizes this challenge and is using a combination of technology and human touch to address it. We’re digitizing existing informal savings practices and leveraging the trust already established by our users’ informal financial service agents. We’ve implemented robust security measures to ensure that our users’ funds are safe and secure, and we provide financial education to help them make informed decisions about their savings and investment drives.

Besides fintech, is there another sector in Africa that has the potential for business?

Agriculture is a sector with significant potential for business in Africa. The continent has vast arable land and favorable climatic conditions for farming, yet agriculture is still largely underdeveloped. There is a need for innovative solutions to help farmers access finance, inputs, and markets, and this presents an opportunity for entrepreneurs to create value.

The healthcare sector in Africa is another sectoe that has significant potential for business. The sector faces numerous challenges, including inadequate infrastructure, a shortage of skilled healthcare professionals, and limited access to healthcare services in rural areas. There is an opportunity for entrepreneurs to leverage technology to address these challenges and improve healthcare outcomes in the continent.

Having worked with YouCloud Play, Broot Consulting, and Roundpeg Tech, before developing Toju, how will you describe the experience before the introduction of Toju into the financial market space?

In addition to my current role at Toju, I have gained valuable experience working for various technology firms such as YouCloudPay, Broot Consulting, and Roundpeg Tech. My responsibilities in these companies ranged from product development and management to data analysis.

While at RoundPeg Technologies, which I also founded, I had the opportunity to work on various IT projects of different scales. This experience allowed me to collaborate with a diverse team from 12 different countries to deliver software and IoT-based projects. It was a truly amazing and eye-opening experience.
My time at Broot Consulting was also an amazing experience as I was able to advise and interface with some of the biggest firms in Nigeria across various sectors, including finance, oil and gas, technology, health, and education, both in the public and private institutions. As the primary digital product consultant, I spearheaded the advisory for Broot’s clients on technology adoption into their processes and businesses.

Leading product development and serving as the country manager for Nigeria was an experience I will always cherish. While working on existing products or other company’s products is one thing, my time at YouCloud gave me much more experience similar to that of a founder. I was instrumental in the development of the product from concept to product, and then growing adoption in Africa starting from Nigeria. Working on a product for a payment giant like YouCloud was a rare opportunity.

What are your surprises about entrepreneurship drive so far?

The most surprising thing about entrepreneurship for me is how much of it is about perseverance. It is easy to give up when faced with challenges, but successful entrepreneurs keep pushing, even when the odds seem insurmountable. It takes a lot of hard work, dedication, and perseverance. However, seeing the impact of our work on the lives of the underserved makes it all worth it. I have also learned that building a successful business requires a team effort. No one person can do it alone.

What can be done to strengthen e-payment in the informal sector?

Strengthening e-payment in the informal sector requires collaboration between key players in the financial industry and the government. There is a need for policies that incentivize the adoption of digital payments and provide support for the development of financial services that cater to the peculiarities of this segment of the economy.

Please tell us more about yourself

I am a tech entrepreneur and digital product leader passionate about building innovative solutions to solve pressing social problems. I am the co-founder of Toju, a fintech startup that is digitizing informal financial service practices to provide financial services for the underserved. 

I am also a product management expert, advising and consulting for many startups on best product strategies and market positioning, with experience in leading the development and expansion of business management solutions for small retail and food businesses in Africa.

According to a report by the World Bank, only 43 per cent of adults in sub-Saharan Africa have access to formal financial services, with the remaining 57 per cent being underserved. This underscores the importance of our work at Toju in addressing the financial inclusion gap in Africa.