TECH | STARTUPS
Haters they say will hate, and potatoes will potate.
I have decided to do some potating on Nigeria’s startup space. Starting with a company in a sector I potate; Fintech.
While it’s great to see young Nigerians start companies that offer technology-powered services, an ecosystem that will grow optimally must embrace criticism. If everyone that writes about Nigeria’s technology ecosystem and the startup scene is always praise singing or sitting on the fence, then we are creating a bubble that will certainly burst.
Abeg Technologies is the first company I’d be potating on and it falls within my most potated sector. It’s a young company (about 10 months) and made headlines on the back of a recent sponsorship deal. There’s very little analysis of the company on the internet (as expected).
Stears Business, my most revered Nigerian publication wrote on Abeg on the 2nd of August. Sadly, I didn’t get to read it and see their insights as I don’t have a premium subscription. However, I’d do my potating the best way I can by starting with a very important question.
WHAT EXACTLY IS ABEG DOING?
A friend called them “a giveaway app with superpowers” 😅 For anyone who also got to know the app via Twitter, that might be your opinion as well.
One of the most prevalent issues with technology solutions and many services offered by businesses is the use of Simple English. I have spent time on the websites of several companies and still couldn’t grasp what they are doing. The continued use of buzzwords, technical terms, made worse by media leaves the average consumer wondering what exactly the company is doing and importantly, why they should patronize. I’d attempt a simple explanation of what the Abeg app is doing with two case scenarios.
CASE 1: Take BaryteBankNigeria-BBN; Our fictional bank. With knowledge of your bank account number, I can move money from my account to yours regardless of who and where you are. If it’s a BBN account, there are no charges on the transaction. It’s no news that once an account number is inputted, the USSD or Banking platform will bring out some details; your surname, first and middle name. Interestingly, so will mine at your own end when a credit alert enters.
ENTER ABEG (This is how Future Africa introduces a startup they just funded in their emails and it’s super cool 😎) Abeg users have a Tag (User ID) that can be anything they want and can be changed. I see it as a bank account number that isn’t 11 numbers. For most, they use their nicknames or easy-to-remember words. When transactions are made, only the Tag is required. So, the tag is both the account name and account number. Lest I forget to add, it’s free 💃🏾🕺🏾
Why is this relevant? In the age of Twitter giveaways, many don’t think it’s a good idea to drop their account details under a giveaway thread for a thousand and one reasons. An Abeg tag however is like a Twitter username that you can change to whatever you want making it easy to remember and share yet carrying the power of an account number. Unlike the bank account, I can choose to send money to you anonymously once I have your Abeg tag.
CASE 2: You probably have a purse or a wallet holding your money, IDs and bank cards. I keep money in my school bag though 😜 You put money in your wallet, take money out of it and are in full control of it. Think of the Abeg app as another wallet, purse or pocket (if you keep stuff in your jackets and trousers). The money in these places has to be put there by you and once they’re exhausted, that’s it.
REENTER ABEG: Abeg app is a wallet, a digital one. You probably had to haggle the price for your physical wallet but you don’t pay for this one. You add money to your Abeg wallet and unlike your physical wallet, you can send and receive money to anyone that has an Abeg wallet. I see it as a network of wallets, connected via technology and identified by unique wallet names; tags.
So, to put it all together so far, the Abeg app is a mobile app that has created its own ecosystem for sending and receiving money using wallets and tags that is fun. Although the company claims to be directed solely at young people, I don’t see its functionalities as too complicated for every and any age group. For an initial target market, it is not a bad idea.
While most write-ups would use the term P2P in describing Abeg, it’s only a buzzword associated with modern technology (mostly blockchain-related) and is largely unclear to most. There’s more you should know about what Abeg is doing though.
A BRANCH IN THE BIG TREE
The best description of Fintech I have gotten in recent time was in an article of a newsletter called /tabbing by a certain Fosi. I stumbled on it while trying to understand what Abeg is doing and Fosi’s article on Abeg is really good. In Fosi’s words:
A value proposition of fintech is an unbundled financial service. Where it takes on a single financial service that is usually included in a bank bundle and drill into it in the effort to produce it better.
Liken Financial Services to a broom 😁 It’s usually a combination of many sticks. Fintech companies take a broomstick and work on that single stick. Abeg is doing exactly that. However, as Fosi mentions further in that particular article which you should read here; with more players in Fintech, these companies are beginning to take on more “broomsticks” to stay relevant. Nobody wants to use 5 different apps that do the same thing.
Why is this important? Traditional banks and financial institutions have over time held full control of how consumers are served financial services. The emergence of Fintech has provided alternatives for consumers. Since these companies are taking on singular sticks than the entire broom of financial services, they can explore the many possibilities available with that stick.
The number of products that have been launched by Fintech companies is proof that financial services can still be drilled further to provide more variety for consumers.
This concerns Abeg because, for many, the relevance of Fintech apps is yet to be seen. This is why Nigerian Fintech businesses are constantly offering more “broomsticks”. More sticks help to keep value and Abeg is already taking more sticks. Abeg is already offering loans and joint savings (Àjọ).
PS: Loans on the app are between users, not Abeg offering loans like Opay. The company’s website says more services are on the way. They’re adding more sticks within a short time. We can only hope it doesn’t actually choke.
PIGGYVEST OWNS ABEG
You most likely heard it as a rumour or you are hearing it for the first time. Or you were aware of it happening as an insider that you are 😉. Regardless of your category, it is the truth. Piggyvest owns Abeg. I searched all over the internet after I heard the gist on Whatsapp but there was no news of the acquisition by Techpoint or anybody. Well, the news was hiding in plain sight. In the announcement of Abeg as headline sponsor for BBNaija 2021, Africa Magic on its website says:
Launched in September 2020, Abeg is a peer-to-peer social payment platform that allows users to send, request and receive money quickly, seamlessly pay for goods and services, and transfer money to friends and family free of charge. The mobile app is a product of leading financial technological company, Piggytech Global Limited.
Crunchbase indicates that Piggytech Global Limited is the legal name of the company also known as Piggyvest; the name of its major product. The date of the acquisition and the formalities involved are unknown 🤐 but it appears Piggyvest intends to take the acquisition route that I have always believed was missing in Nigeria’s technology space. They have also recently acquired Savi.ng; a wealth management platform previously owned by VFD Microfinance Bank, as announced on their Medium account. The details of this acquisition are undisclosed as well 😑 TechCabal says that Piggyvest told them there are more acquisitions to come this year. Fingers crossed on that one 🤞🏾
If Abeg is already acquired, how are they still a company? how is the CEO still retaining his role? An acquisition simply equates to under new management/ownership. The existing company continues to operate and offer services like before. The owners are just different.
PS: To own a company, you don’t have to own all of its shares, just the majority.
A SPONSORSHIP TOO EXPENSIVE?
Abeg app was unveiled as the headline sponsor for BBNaija in April 2021. The popular TV show has maintained trend tables in Nigeria consistently. There is no clear and verified information on the exact amount it will cost the company. However, estimates are ranging from ₦750 million to ₦1Billion based on previous editions of the show.
Is it too expensive? Is it worth it? Where did they get the money? How do they plan to profit from this? Are they even generating revenue yet since they’re offering free services? Is the company sustainable?
I’d be writing to bring my findings and more to the fore in my next article.
Clap and leave feedback in the comments, abeg.
Till next time!
UPDATE: you can read the next article here!
