Global Courant 2023-04-11 14:00:00
Coura Sène tends to be media shy, so when she agreed to be interviewed, we jumped at the chance. Wave is a success story in digital payments. We meet Sène at his West African headquarters, a rocket-shaped building that seems to be hurtling toward the sky. Five years after entering the Senegalese market, Wave has dethroned incumbent operator Orange Money – managed by French telecommunications group Orange – and pushed the latter to cut its transaction rates by nearly 80%.
Wave, an app-based payment solution, raised $200 million in September 2021. It has now expanded to three other West African Economic and Monetary Union (WAEMU) countries – Ivory Coast, Burkina Faso and Mali – as well as Uganda and Gambia.
But it is the operation in Senegal that acted as a catalyst for regional growth and provided the blueprint for the current business model. As Sène, who is seen as one of Africa’s rising stars among the fintech community, outlines in this interview, the country is on track to become an increasingly cashless society, thanks to the promising future of mobile money.
African Business: Wave was originally based in East Africa, a leading area in mobile money. Why are you interested in the West African market?
Coura Sène: The two co-founders of Wave, Drew Durbin and Lincoln Quirk, are Americans. They first created Sendwave in 2011, as a mobile application that allows the East African diaspora in the US, Canada or England to send money directly to their loved ones, using technology, at a lower cost.
When they moved to Senegal, they wanted to do the same: enable international money transfers. But they couldn’t find partners to set up this service. At the same time, they realized that an inclusive mobile money service, similar to what M-Pesa did in Kenya, was missing in West Africa. This is what drove them to move into this niche.
Today, at least 75% of Senegalese adults have a Wave account that they use on a daily or monthly basis, representing just over six million users. As we’ve improved our product and expanded our reach, it has led to more competition and actually more choice for the customer. We’ve seen the competition lower its transaction prices and overhaul its interface. Today at Wave we have more than ten million users in the six countries where we operate: Senegal, Ivory Coast, Burkina Faso, Mali, Uganda and Gambia. And these numbers are constantly growing.
You have become the market leader in less than five years. To what do you attribute this success?
We have a simple offering: affordable mobile financial services, tailored to the needs of individuals and businesses. Our services help people send and receive money, pay bills, and make purchases securely.
We started operations in February 2018 in Senegal, in collaboration with Nigeria-based bank UBA, and then with a second partner bank, Ecobank. Last April, we obtained a direct license from the BCEAO (the central bank of the WAEMU countries), which allows us to work without intermediaries. We now want to extend this license to the other WAEMU countries.
But to answer your question more specifically, when we entered the Senegalese market, we sought to understand customer needs in digital financial services, which allowed us to design the most inclusive financial product that exists in the mobile money environment. We’ve designed a simplified customer journey – and the technology we use allows us to be effective in terms of customer service and complaint handling, all of which help build trust.
We have also developed a product that allows us to be extremely competitive from a cost point of view. Deposits and withdrawals are free. The fee for wire transfers is only 1%. Our priority is to create a product that is affordable and tailored to a wide range of customers, both in rural communities and urban centers, both higher educated and lower educated groups, young people and technology savvy people. as well as those who are not. In short, we wanted to increase financial inclusion and make banking services accessible to everyone.
You deploy agents in the field to convince merchants, formally or informally, of the benefits of mobile money. How exactly does this work?
We have teams of young people going into the field to teach customers how to use Wave. They go to the market with vendors, artisans and casual shopkeepers to describe the product. Nowadays, many everyday products and services can be purchased via a QR code.
In Senegal, less than 25% of the population is banker. How do mobile money services like Wave improve financial inclusion?
According to BCEAO figures, Senegal’s broader banking rate has increased from 39.6% in 2020 to 42.4% in 2021, thanks to mobile money services such as Wave. I would like to point out that the number of people with a sofa is constantly increasing. The number within the traditional banking sector has been stagnant for twenty years.
You should know that in Senegal some people are not even registered (with an identity card), which excludes them from everything. Others do not have a fixed income and therefore cannot have a bank account. Mobile money applications make it possible to include them in the system.
Peanut sellers or taxi drivers can now track their transactions and even better estimate their turnover. In itself, it is our task to digitize the informal. Everyone benefits from this, including the government, which can collect tax on digital transactions.
How many transactions did you process on the Senegalese market last year?
In 2022, the application recorded 12 billion transactions in Senegal. We are present in the informal and formal markets, such as retail. In 2021, we signed a partnership with the French supermarket group Auchan, which has about 40 outlets in the country. For them, Wave has played an important role in reducing the share of cash payments, something they also wanted to achieve. Our entry into the market has allowed us to develop mobile money transactions significantly.
How do you plan to develop further?
In the short term, we are working on diversifying our financial products. We started paying bills. Paying your water or electricity bill used to be a real headache: you had to queue for hours at your local utility company. You can now do it from your phone.
Today we also want to develop in the transport sector. For example, customers will soon be able to pay for their TER (train) tickets via Wave. I believe that mobile payment plays an essential role in urban mobility, one of Dakar’s biggest problems.
We also continue to develop in retail and we would like to continue to grow in the value chain up to the suppliers. We want to make the African market more dynamic by digitizing the payment system as much as possible. Our competitor is cash. Its use is harmful to everyone, be it small casual players or the state.
What’s next? In the next five or ten years?
We would like to move to second-generation products such as savings or access to credit, financial products that are not available to people without a bank account. For example, a fish seller in the market needs to grow her business and buy supplies. How can we give her access to funding?
We recently entered into a partnership with the Délégation Générale à l’Entrepreneuriat Rapide des Femmes et des Jeunes (DER/FJ). The beneficiaries were able to receive funding through the Wave application. We want to grow these kinds of initiatives.
Do you plan to collaborate more with banks in the future?
We can mediate for banks in providing loans, because they are currently authorized to provide loans. Tomorrow we can also be the conduit for the distribution of government-issued bonds and securities, which is a way to save money – today most of the population does not have access to them.
So the idea is not to replace the banks in the long run?
On the contrary, the banks see us as complementary. They operate within a strict regulatory framework. Our vision is to be an intermediary, enabling them to reach people without a bank.
Some people think that your model is not profitable. How do you respond to the skeptics?
Like any new business, there is an investment plan – meaning we lose money when we start operations. But we were able to convince the BCEAO to grant us an e-money license because our model is viable. Today, Wave employs 850 people in Senegal, with a network of 13,000 agents; we built all this up in five years.
West Africa is currently experiencing a revolution in the mobile money sector. Our long-term vision is that our customers prefer our products over cash.
Read more about Senegal’s booming economy in our Senegal Dossier.