Tarek Mouganie is the founder and driving force behind Affinity Africa, a full-fledged digitally-driven financial institution. It provides banking products to the underserved and unbanked population in Ghana, with plans to move across the continent.
Tarek is a proud and passionate fourth-generation Ghanaian. His great grandfather moved from Lebanon to Ghana in the 1920s via Italy, then Senegal. His family have been born and bred in Ghana ever since.
Tarek and Affinity Africa’s story is the third in our series on Africa’s Hidden Gems – amplifying the voices of African entrepreneurs who are leading the charge in tackling some of the continent’s most pressing sustainability challenges.
I have known Tarek for over a decade. From the moment we met – at an Asa concert– I was struck by his vision, passion and determination to break barriers and empower individuals to be the best they can. He is a man with a planet-size intellect but one of the most down-to-earth, generous and accessible human beings I have the pleasure of calling a friend and a brother.
Igniting Purpose: Tarek's Journey Back to Ghana and the conception of Affinity Africa
Tarek's story begins with the incredible women in his life. Raised by his resilient and determined mother and grandmother, he inherited their spirited nature, refusal to back down and unwavering belief in never accepting “no” for an answer.
Having moved to the UK at the age of 12, he ended up with an undergraduate degree in Materials Engineering from Imperial College and a PhD in Physics from Cambridge University. Yes! He is Dr Tarek Mouganie. After a stint as an academic, he went on to work for the second largest hedge fund in the world. When the financial crisis hit in 2008, Tarek was one of three analysts in a team of 40 who was not fired. Instead, he was offered to stay and become a specialist in investing in banks – one of the biggest themes during the crisis.
But about a decade ago, at what some might consider the peak in his financial career, Tarek felt a compelling desire to return home to Ghana. He woke up one day and said, “I don't really feel like I have a purpose.” The notion of setting up something meaningful gnawed at him, fuelled by a sense of guilt for being away from his roots.
Upon his return to Ghana, Tarek worked in various entrepreneurial roles - as a beekeeper, at a tech incubator, for an affordable housing fund, for a microfinance institution, for an ICT provider and as a consultant to a payday lender and bank. His stints at these businesses accumulated in a eureka moment: “What these individuals need – who are setting up these amazing, incredible businesses that have social impact – is access to finance. And it has to be affordable long-term financing.”
His involvement with a small bee-keeping business that produced honey not only confirmed his thinking but led to a solution. The business owner had plans to grow the business, including a cooperative of about 1,200 women. All he needed was a filtration system to remove wax from honey so that the honey could meet the standards for export to the EU. The system cost $20,000, but there was no way the owner could have raised the finance through traditional means. So, Tarek made the investment, and the business became the first EU certified honey exporter in sub-Saharan Africa.
As Tarek says quite passionately, these entrepreneurs are the backbone of every economy, and therefore enabling them to grow has wide-reaching implications.
After this experience, he concluded, “Why don't I just start a bank that genuinely supports micro, small and medium enterprises and the entrepreneurs behind them?
And so, Affinity Africa was born.
The Need - Financial Inclusion in Africa
Approximately 60% of the African adult population is unbanked and less than 10% of small businesses have access to credit. This means that at least every other person on the continent does not have a bank account, and, even those that do, they may not have access to a full range of financial services. Over 90% of small businesses do not have access to affordable long-term credit to enable them to grow their business or shorter-term loan facilities for working capital.
This exclusion disproportionately affects already marginalised and vulnerable groups, including women, smallholder farmers, and micro-, small, and me dium-sized enterprises (MSMEs). For them, opening and maintaining a bank account is fraught with barriers to accessibility – the inconvenience of the location of bank branches, long waiting queues and daunting bureaucratic processes. This is compounded by the challenge of not being able to afford the fees for banking services.
However, as Tarek recognised, affordability isn't just about the price of the financial services, it is also about the cost of time. If a farmer, trader or market woman needs to leave their business to travel to and back from a bank, which is often miles away, there is usually no one else reliable enough to look after “the shop” whilst they are away. This could mean a whole day without business and much needed income, aggravating their already stressed and fragile financial circumstances.
The consequences of financial exclusion are therefore far-reaching, hindering people's ability to earn income, protect themselves during crises and build financial resilience.
The significance of financial inclusion in Africa cannot be overstated. Affordable and user-friendly financial services enable families and small business owners to generate income, manage cash flow fluctuations, seize opportunities and lift themselves out of poverty. By breaking down the barriers to access and affordability, countries can foster an environment that fuels entrepreneurship, empowers individuals, and drives job creation – unleashing the continent’s immense potential.
Financial inclusion is not just an essential infrastructure but a transformative force that propels economic growth and improves the financial well-being of communities across Africa. I would dare to say that it is a human right.
Providing the majority with accessible and affordable finance.
One of the key pillars of Affinity's mission is to empower entrepreneurs, as catalysts for systemic change and economic growth. Tarek acknowledges, with much appreciation, the immense contribution of the mobile money system to financial inclusion. It has made financial services accessible by providing an electronic wallet of money on phones without needing a bank account. It has also been a platform for financial and tech literacy education across Africa.
Tarek and his team at Affinity have taken the mobile money concept a step further. With this, they not only solve the challenge of accessibility using technology but also the one of affordability.
Affinity provides full-fledged banking services covering current accounts, savings accounts and investment products. It also offers personal loans, those suited to small and medium-sized enterprises, and microloans.
Based on a proprietary tech platform suitable for both digital natives as well as users of non-smartphones, the team has developed tailored financial products and services to meet the unique needs of their customers. The result is a product which eliminates the traditional barriers and challenges they often face when it comes to banking.
Since the idea's inception, the Affinity team continues to spend a significant amount of time on research. As a result, they understand the pain points of their prospective and current customers and design products to solve them.
For example, they realised that up to 90% of women in their customer demography did not trust digital financial services because “it wasn't real”. For them, if they are not in control of their money and money goes out of their hands, it means there is no money to educate their kids or to put food on the table. So, they need to have the assurance that they can lay their hands on their money whenever they need to. Affinity designed a digital customer journey that takes far less time than the existing channels to top up their account or make a transfer. As a result, since the platform was launched, over 50% of Affinity’s customers are women – the successful implementation of an intentional plan.
When it comes to accessibility, as Tarek puts it, “the bank comes to you, the customer”, through online (apps) and offline digital channels (agents and USSD app). Affinity’s agents go on a two kilometre walk each day, visiting their customers to help with savings, transactions and loans.
And as a “by the way”, Affinity Hubs –upcycled and shipping containers - are where agents meet and are managed. This is in addition to their digital platform. I was very pleased to learn these Hubs are eco-friendly and patented!
To overcome the challenges of affordability, unlike traditional banks, Affinity does not levy bank charges on its customers. There are no monthly fees and no transaction costs, other than what is required by law. In addition, they provide interest on all accounts. But what is truly impressive and shows a commitment to their mission and ethos is Affinity’s interest rate on loans.
The interest rates on loans provided by traditional commercial banks are between 3% and 4% a month. Those provided to SMEs via digital lenders charge between 7% to 16% a month. Affinity currently lends at 4% a month, with plans to reduce this to around 2.5% as the business grows. It is one of the cheapest lenders to SMEs in Ghana.
The benefit of having lower interest rates is that Affinity can provide longer loan terms to its customers. Remember the now EU-certified beekeeper? This means they can afford to buy equipment, invest in infrastructure, and hire and retain the right people to grow their businesses. As Tarek explains, “It is no longer just about working capital. It becomes about growth capital. You can invest in your business. You can buy that delivery truck you need to grow your business”.
After eight months of being in operation, Affinity has 25,000 accounts, 87% of which are MSMEs, and, as we mentioned earlier, over 50% are women. And this was achieved with no spending on marketing, simply by word of mouth and trust.
As much as he is the founder behind Affinity, Tarek is quick not to take all the credit. He has a team of 90 people (including agents) and attributes Affinity’s success to date and their success in the future to them. “It’s been incredible!” he enthuses.
Affinity has had and has its challenges. For example, the current macroeconomic environment makes life difficult for all businesses. Secondly, finding suitable tech partners to work with on issues like identity and KYC (Know Your Client) checks is challenging. Finally, finding investors with an informed, rather than perceived, view of risks in Africa to invest in the business.
The bigger picture and what next?
Tarek has an indisputable passion for entrepreneurs. His bigger passion, however, is for the continent that has raised him, his parents and his grandparents and was a welcoming home to his great grandparents.
There are many businesses across Africa with the potential to scale up and out if only they had the financial means to do so. Tarek sees beyond the immediate and direct benefits of financial inclusion. As he points out, “In 2017, the population of sub-Saharan Africa was 1.1bn, with 60% under the age of 24 and it is predicted to rise to 2.3bn by 2050. On a continent with high unemployment and poverty, job creation is vital. If nothing changes, it is expected that 86% of the world’s poor will live in SSA.”
Tarek firmly believes that “with the continuing economic and fiscal crisis on the continent, aggravated by external shocks, we need to build a strong stable base of employment and a strong stable base of government income and revenue through taxation.” And as he says, “The people that do that, and the revenue streams that do that anywhere in the world are actually SMEs”. So, for example, 47% of the UK’s government revenue UK comes from SMEs. Think about it. It's corporate tax, VAT they might pay, income tax for the employees”.
I am left with the firm sense that Affinity is a bank with a vision and on a mission. I have no doubt that you will too.
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Rosalind Kainyah MBE with Helen Stickler. Rosalind is an authority on Sustainability and responsible business with over 30 years of combined legal, international, executive and board level experience. She is a passionate about supporting African business operate sustainably and profitably and an Ambassador for Sustainability in Africa to the rest of the world. Helen is the Co-Founder of Triplo ESG, a Sustainability advice platform that empowers small businesses.