Bento Africa: Influencing the monthly spend culture of Nigerians

Credits:

Music by Mixaund – mixaund.bandcamp.com

Upbeat Corporate – JP Bianchini https://jpbianchini.com

FULL TRANSCRIPT

Narrator: For many companies, hiring can be one of the most daunting tasks. 

Ebun Okubanjo and Chidozie Okonkwo, serial entrepreneurs who run Fitness Central, a chain of wellness and fitness centres in Lagos, Nigeria know this all to well

In one particular incident, they were interviewing candidates to head their fitness centre. A particular applicant had an excellent resume with various qualifications and degrees but at the end of quite an underwhelming interview, the founders were left startled.

Ebun Okubanjo: “My co-founder said, ‘dude, his degrees are probably fake’.”

Narrator: That’s Ebun Okubanjo, Co-founder and CEO of Bento.

Ebun Okubanjo: “I was like, ‘how can you have fake degrees?’, I was naive. And he was like, ‘dude, there’s a market for it’. So I thought to myself, ‘if someone is faking a degree to get a job as a head of fitness, then people must be out there faking degrees to get jobs as accountants, as nurses, as lawyers and a whole bunch of stuff’.”

Narrator: On this episode of Built in Africa, we take a look at how Nigerian payroll software startup, Bento is working to influence the monthly spend culture of Nigerians.

The interview experience inspired Ebun and Chidozie to launch Verifi.ng, an HR platform originally built to help companies in Nigeria verify the credentials of potential employees.

Ebun Okubanjo: “We started it off as a hobby. The idea was to help employers verify degrees. So, everytime you get a CV, we plug in to all the schools and we would use the matriculation number to let you know if that degree or certificate is real”.

Narrator: But they hit a roadblock. Most of the schools they approached did not have reliable data

Ebun Okubanjo: “Now, while we were working with the schools, we decided to make a company out of it. We asked ourselves, ‘ beyond education, what else do you need to do if you are onboarding a new employee?’ Often times, employers would do work history verification

Narrator: But then again, verifying employee’s work history can be a challenge. Many employees have found ways to game the system by using friends and family to pose as past employers. 

So how do you solve a problem like this? fake past employers?

Ebun Okubanjo: “Salaries! That’s it, it’s salaries! The day they started paying you and the day they stopped paying you is how we do employment verification. Unless you worked for free. And very quickly, we realised that salary data was out there and it existed in a way that was fragmented, didn’t make sense, wasn’t coherent, we couldn’t use it for employment verification and we couldn’t use it for anything else

So we now realised that we had to go all the way back. So we can’t clean up the data at the schools, because that’s just a mess. But we felt that we can clean up salary data, not historical but from this particular moment going forward”

Narrator: This was back in 2016, Since then, Verifi.ng has signed up businesses cutting across different sectors including Mavin Records, Hotels.ng, Lost in Lagos, Bamboo, Branch and even Techpoint Africa, helping them to pay salaries, taxes, pensions, and health insurance for their employees.

In 2020, Verifi.ng was renamed to Bento Africa. Ebun explains the reasoning behind this.

Ebun Okubanjo: “Well, as the story and the focus of the company changed, where it now became that salaries itself was this multi-faceted, rich point of convergence where a lot of things happened, and that it was going to be our focus, the name no longer matched. And since the vision changed, the name had to change. And for us, when we look at salaries, we see the intersection of private funds and where it meets statutory deductions from the government, where it meets pension payments, healthcare payments, taxes, perhaps garnishments and definitely salaries. 

So because it fit into all these tiny little boxes, the name Bento came about and what we want to do is expand those boxes to go beyond just pensions, healthcare, taxes to now expanding it so it can cover more of life, what we consume and how we consume it.”

Narrator: But what does “what we consume and how we consume” mean? 

Say an average employee in the US and Nigeria earns about $60,000 a year. They both need to buy a $40,000-car, a $1,000-iPhone while living in a $12,000 yearly apartment with $5,000 worth of food, healthcare, and household services.

For the employee in the US who basically lives on a credit system, this isn’t much of a problem. 

Ebun Okubanjo: “Depending on my age, depending on my education, lenders and service providers in America can look at me and say, ‘this guy makes $5,000 a month, he wants to buy a $40,000-car but he doesn’t have $40,000 now. But if he pays $500 a month for the next 6 years, he can pay it off. Well, we think he’s going to be employed over the next 6 years. So we are going to sell him the car at a 7% interest’. 

I’m happy to get the $40,000-car now and pay $500 every month. That’s an incentive for me to keep a job because I know if I don’t keep my job, I can’t make my car payments, they’ll come and repossess the car and the next time I try to buy a car, someone won’t sell me a car, right?”

Narrator: But it’s different for employees in Nigeria. They might need to borrow money to maintain this lifestyle because most vital services in this country are paid for annually. The $40,000-car must be paid for immediately, same with the $1,000-iPhone, and the $5,000-apartment.

This is what Bento wants to offer Nigerian employees: the opportunity to pay for services on a monthly basis. 

Ebun Okubanjo: “We are saying, can we use this tool to make the lives of employees almost similar to the lives of their Western counterparts”?

Narrator: When the company still went by the name Verifi.ng, employees could already access healthcare services and salary advance from third-party providers, Hygeia, and Zedvance respectively. But with its rebranding, Bento now enables monthly payments for rent, electricity, and school fees services.

How does it achieve this? By partnering with niche startups playing in these spaces – Schoolable, Kwaba and Buypower

Schoolable provides stakeholders of K-12 schools access to credit. In essence, they help parents pay the bulk tuition of their children while they pay back every month with interest. Kwaba allows for flexible rent payment options for rent seekers between 6 to 12 months. 

BuyPower, on the other hand, helps Nigerians to make seamless utility bill payments on demand.

Ebun Okubanjo: “Buypower was not necessarily in that but they saw the potential.”

Narrator: Via end-to-end API integrations with these platforms, employees who use the Bento app can access Schoolable, Kwaba, and BuyPower services, in addition to requesting salary advances and accessing healthcare services.

Ebun Okubanjo: “More than that, of course you can still do the salary advances, but essentially you can log in and the same way you would take a salary advance, is almost the same way you would access Schoolable, Kwaba and BuyPower. The only thing is that we will send you into their universe for that initial collection but subsequently, if your school fees is 15k that has to be deducted every month, you don’t have to do anything. When you get paid, we’ll just deduct the 15k, send it to Schoolable for you. If it’s your rent, if it’s 40k, we’ll just deduct the 40k. 

Now the thing that you get from this is that because of the deduction at source, we’re solving a big problem.”

Narrator: So, for instance, if you earn ₦100,000 (about $209.60) per month and you subscribe to cumulatively pay ₦50,000 – about $104.80 – monthly via Bento, at the end of each month, that amount is deducted and sent to the service providers immediately, subtly eliminating the chance to make late payments. 

Ebun Okubanjo: “Can we in the process of protecting people protect lenders? Protect people who offer goods and services? We think so.”

Narrator: More importantly, Bento is able to offer lower rates to employees 

Ebun Okubanjo: “Because our rates are limited to employee resignation, employee termination, or business insolvency, which are not things that happen on a rather frequent basis, we are able to work with the lenders that fund Schoolable, Kwaba and say, ‘hey, these loans are cheaper, this risk is less. So rather than taking 6%, can you take 4%?’ And as we continue to perform, and they see the numbers, we believe that this credit risk will continue to drop.” 

Narrator: Like Ebun, the founders of Schoolable, Kwaba, and BuyPower have lauded the partnership as being beneficial to all parties involved.

For Obinna Molokwu, founder of Kwaba, the way rent is being paid in the country is fundamentally flawed. 

With millions of Nigerians living in rented apartments and spending a great deal of their income on rent payment, one cannot overemphasise the importance of how their rent is paid, in this case, yearly.

Having built Kwaba last year to solve this problem, Obinna thinks the partnership will drive Kwaba’s adoption as it will be brought directly to employees’ fingertips.

Obinna Molokwu: “We don’t see any sense why renters should pay their rent yearly when their wages are paid monthly. That’s why we built Kwaba. So, if you are talking about optimising your life as a worker in Nigeria, Bento should literally be your starter pack. So as Kwaba is facilitating payment for one of the most fundamental of human needs, which is housing, it only makes sense to partner with Bento to bring Kwaba to workers’ fingertips. So, moving forward both Kwaba and Bento stand to gain a strategic partnership where both products are properly blended to serve the Nigerian worker. Both platforms have thousands of users that need complimentary services that both Bento and Kwaba have to offer. For us, we see it as a meal deal. Why have Kwaba alone when you can have Kwaba in a Bento? That’s how we see it essentially”

Narrator: That’s Obinna Molokwu of Kwaba

In their own ways, individually and collectively, Bento, Kwaba, BuyPower, and Schoolable are trying to influence the monthly spend culture in Nigeria. However, how well will this catch on with Nigerians?

Ebun thinks it might take some getting used to. Despite the fact that paying rent yearly is a herculean task, most Nigerians will prefer to do that than pay monthly because of how they understand credit risk and interest.

For instance, if Bento was to charge a yearly interest of 14% on a rent of ₦1.5m ($3,144), a user will subsequently pay ₦142,500 ($298.74) each month and ₦1.71m ($3,584.90) at the end of the year. The question on the minds of consumers will then be “why pay ₦1.71 million in 12 months when I can pay ₦1.5 million at once?”

But Ebun remains positive

Ebun Okubanjo: “I believe the future of our economy is inevitably going to be one that is credit-based. And that transition is happening now.”

Thank you for listening to  Built In Africa.

This script was adapted by Heritage Kene-Okafor and edited by Muyiwa Matuluko

Research and interview by Heritage Kene-Okafor

Sound design by Oghenekaro Obrutu

This is a production of Techpoint Africa

I am Heritage Kene-Okafor

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