By February 17, 2020

The Group Behind Indomie, Power Oil & Hypo Is Set To Launch A Digital Bank That Will Upend African Fintech

By February 17, 2020

Does the name Tolaram Group ring a bell? Probably not. But how about stuff like Indomie, Power Oil, Power Pasta, Hypo Bleach, and Dano Milk? Bet at least one of those things rings a bell if you’re from these parts. And you guessed it, Tolaram Group is the company behind all those products.

Now, here’s the picture. Tolaram Group, the family-run Singaporean conglomerate that started out as a textile business in Indonesia in 1948 before eventually entering Africa where it has gone on to make much of its USD 1.8 Bn fortune in cereals, noodles, and infrastructure, is reportedly plotting a move into African fintech.

Having planted its feet firmly in the Fast Moving Consumer Goods (FMCG) space in Africa, Tolaram is now looking to use its global reach and local relationships to move into digital banking on the continent where it would face-off against some of Africa’s burgeoning fintech startups cum digital banks which offer a wide range of financial services.

Fun Fact: One of Tolaram Group’s family members and senior executives, Haresh Aswani, has already made a “purely personal” investment in Kuda; a fast-growing digital bank in Nigeria.

With that in mind, the Group is understood to be eyeing Nigeria, Ghana, South Africa, and Egypt as prime potential targets for its fintech play and it would be hoping its deep pockets and extensive reach give it an edge.

Over the last few years, Africa has been at the centre of some sort of fintech frenzy with fintechs popping up everywhere and funding for African fintech startups coming in from left, right, and centre, comfortably topping every other sector.

With nearly 70 percent of the African population still unbanked while smartphone/internet penetration and youth population are moving northward, there’s a vast sea of opportunity to be cashed in on through the provision of digital financial products/services.

This fact has encouraged the proliferation of fintech solutions on the African continent, and digital banks, though still a relatively new intervention in these parts, are starting to take root. Non-traditional players without the legacy costs of established lenders are setting up digital banks to serve millions of smartphone-savvy customers. 

Tolaram Group now wants to go beyond its FMCG business in Africa which reportedly generated about USD 1 Bn in 2019 to provide digital financial services. Reports have it that the Group is already working out something with Africa-focused digital lender, Tala.

It is understood that Kunal Adnani, who also leads Tolaram’s mergers and acquisitions team, is helping to coordinate the push. According to Bloomberg, the ex-Barclays Plc executive said the inspiration for becoming a digital bank came from an unlikely source — the group’s paper-mill operations in Estonia. Expertise gathered there was taken to Asia and will now be brought to Africa.

“What we’re looking to do is take the same technology, the same systems, and the same learning into African markets where we have a presence, albeit in a very different area,” Adnani said in an interview. “We have access to thousands of distributors in these markets and that can also have a knock-on effect on our business. The more credit we can give them, the more they can increase volumes.”

In Indonesia, Tolaram Group already owns a digital bank known as PT Bank Amar Indonesia, where loans and deposits for consumers are handled over mobile phones. The publicly-listed digital financial institution is said to have loaned almost USD 300 Mn to around 300,000 customers and expects advances to increase more than 50 percent this year.

From the look of things, Tolaram Group is plotting a digital lending splurge while also making a case for a digital bank. It is not yet clear whether the Group’s fintech product will support only deposits and credits or a full suite of digital financial services which is common with digital banks like ALAT, Kuda, and Rubies.

Featured Image Courtesy: The Economist

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