Can Third-Party Providers Lead to New Business Models?

Until recently, Zoona, formerly known as Mobile Transactions could have been considered the best kept secret in Africa. Operating in Zambia on a shoe-string budget, they have been developing their own unique business model for electronic financial services slowly and with little media attention. Now, as of February 2012, this small company has secured investments from three big investors, Omidyar Network, ACCION Frontier Investments, and Sarona Asset Management. All three are banking on the fact that Zoona’s experience and innovative approach to serving a range of consumers situates them to fill crucial gaps in the mobile money transactions and payments market in Africa.

Zoona offers services to both individuals and institutional customers. For individuals, they offer both mobile wallet peer-to-peer transfers and over-the-counter money transfers through their agent network (a mobile wallet with a stored value is available but not compulsory.) For institutions, they are providing e-voucher services to donors, governments and private corporations (including Dunavant, FAO and WFP). They are also testing a variety of bulk payments products, including microfinance loan payments and utility payments. Finally, they are working with Zambian Breweries on supplier payments, often referred to as business-to-business (B2B) payments. These products are at a variety of different stages, with money transfers and e-vouchers reaching the most customers so far. This product mix is extensive, but is not in and of itself enough to distinguish Mobile Transactions from the many other mobile payments start-ups. So the question is what makes Zoona different?
  • Zoona is an independent operator: Readers of the CGAP Technology blog know that the market has developed past a simple MNO-led or bank-led model. Increasingly, the market is facilitating new business models which do not partner exclusively with any one mobile network operator or commercial bank. Zoona is one of these independent companies, due in part to the regulatory environment, which allowed them to become an independent, certified financial transactions company. This allows them to think creatively about their technology and go beyond the mobile phone when developing services. For example, the e-voucher service mentioned previously can by delivered to end-users either through a mobile wallet or via paper scratch-cards. Paper-scratch cards are printed with a unique transaction code that is linked to the recipient’s identity and is redeemable at certain retailers. The paper-based distribution method works better in rural communities in Zambia, where many people do not have a mobile phone but everyone trusts and understands scratch-cards, which are extensively used for mobile airtime top-up. A mobile phone company, on the other hand, is interested in promoting their core business, airtime, and would not have an incentive to offer a service that does not require the end-user to make a transaction via a mobile phone. Of course, there are drawbacks to the independent model, mainly the lack of an existing capital base, brand recognition, or distribution network, all of which are crucial to any branchless banking business. Yet, Zoona has managed to find alternative solutions to provide quality service for people and institutions needing to move cash within Zambia.


  • Zoona relies on independently owned and operated agents: Zoona’s original market-entry strategy looked much like M-Pesa in Kenya, which meant that they recruited and trained existing retail outlets to grow their agent network as quickly as possible. However, they quickly saw that this strategy was not sufficient to drive customer acquisition. The retail outlets weren’t motivated to act as sales people for a company with little brand recognition or to push a new product that few Zambians understood. As a result, Zoona decided to recruit, train, and set-up their own “Champion Agents”. Champion agents operate in much the same way as franchises do: each store is independently owned and operated by a trained individual who receives marketing and commercial support from Zoona. This model has driven brand recognition and has provided Zoona with a backbone of core agents who are devoted entirely to selling their products and services. Although this model is much more expensive than the retail agent model and therefore results in slower agent network growth, the benefits are accrued in the quality of the network, the customer-facing entity of any branchless banking operation.


  • Zoona's products are derived from a service-led approach. Zoona does not experience the low activity rates of many other mobile money operators. Most other operators offer one product, the mobile wallet, and then build value-added services on top in order to drive higher customer use of the m-wallet. Zoona, on the other hand, provides a variety of services (business to business payments, payments to farmers or microfinance loan payments) that respond to a specific customer need, and these services may leverage the mobile wallet, a paper-voucher, or simply an agent-based transaction (for example, the scratch card voucher mentioned previously.) The commonality is in the central Zoona IT platform, where each type of transaction is processed regardless of the delivery channel. The challenge of this approach is scale, which is reliant on the agent network and the agents’ ability to adapt quickly to new services and to serve multiple customers segments. As they deal with these challenges, Zoona is continually growing services through a learning-based approach to product development that allows it to develop services based on Zambia’s market realities, rather than success from other markets.

Zoona’s model is not without its challenges, as any member of the company’s small and dedicated staff will tell you. However, the experience of this independent operator with a service-led approach challenges many of the commonly held assumptions about mobile money implementation, and their patience is starting to pay off. Our guess is that it won’t be a secret for much longer.

Sub-topics: Agent Networks


14 August 2012 Submitted by Anonymous (not verified)

Great comment. Currently, MTZ is partnering with a microfinance institution in Zambia, Harmos, to provide a more convenient way for loan clients to receive disbursements and to make repayments, and they will likely expand this service to other MFIs. Commercial banks have been less interested – it depends on what a bank sees as their target market as to whether they would be interested in a last mile solution. Another way that MTZL could partner with banks is on government cash transfers programs, such as the ones that CGAP recently wrote about.

14 August 2012 Submitted by Anonymous (not verified)

Interesting case, we’ll look out for hearing more from MTZ in future. You don’t mention anything about opportunities for MTZ to provide services to banks. This could provide customers with a wider range of services and offer a nice last mile solution to banks, so I wonder why. Are banks not interested or is this model aiming to compete with banks?

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