Startups have sought to use technology to digitize processes in Africa’s B2B e-commerce and retail space over the past couple of years. While many focus on moving products and providing credit, issues around cash overdependency haven’t been tackled at scale.
Here’s why this is a critical problem. When traditional distributors move goods from manufacturers and suppliers to retailers, they collect cash through a network of agents. These agents, from different parts, then proceed to make lump-sum payments into a central bank account.
For the most part, there is a lot of fraud behind the scenes because of inefficiencies in manual reconciliation processes on the distributors’ end. The logical thing to do would be to hire an accountant, but in the FMCG space, where margins are incredibly slim, that’s not on the cards for distributors.
So, in a nutshell, payments in the FMCG sector — primarily cash-based — is marred by inefficient processes which cost time, resources and customers. Duplo, a Lagos-based fintech, is attempting to tackle these inefficiencies by digitizing payment flows for B2B companies, starting with those in this industry.
A former Product Yele Oyekola, a former product lead at Carbon, started Duplo based on his experience as an economic policy officer for the UN in Africa, where touring different countries opened his eyes to how people and businesses were heavily reliant on cash.
“We are trying to make cash obsolete in Africa where lots of businesses in the distribution space heavily transact in cash for obvious reasons,” said the chief executive officer to TechCrunch in an interview.
“So, we’re focused on distributors, merchants and aggregators to stop the use of cash in this value chain because everyone knows how expensive cash is and how difficult it is to move with issues around theft and fraud.”
With Duplo, distributors can create unique virtual accounts for retailers and agents to make real-time payments or bank transfers, while the platform helps to reconcile their books automatically.
But in the FMCG industry, there’s isn’t a one-size-fits-all approach. Making bank transfers can be expensive for some retailers and agents; instead, they visit mobile money agents to perform transactions.
Duplo doesn’t have any issues with that, as retailers can still make transactions to these same virtual accounts via the mobile money agents; reconciliation is carried out after that.
Duplo charges a 1% fee for every transaction performed on its platform. And depending on their size, businesses also pay between ₦100 (~$0.20) to ₦1,000 (~$2.00) to create virtual accounts.
Besides providing tools that enable B2B companies to digitize their payment flows, there’s a no-code tool for them to optimize trade with their business customers, vendors and suppliers. The platform also helps these companies to generate or pay invoices, offer credit to their business customers and a dashboard to attribute payment flows to a particular customer, retailer or location.
“The way we see our value prop is we help businesses automate, embed and launch payment products. So basically, inflows or outflows, automatic reconciliations for businesses and embedding payments into marketplaces. And then we also have businesses that want to provide BNPL services to smaller businesses,” said Oyekola, who co-founded Duplo with Tunde Akinnuwa in September 2021.
Akinnuwa is the company’s CPO who, before Duplo, led lending and consumer payments at JumiaPay. Emeka Okwuagwu is Duplo CTO; he was an engineering manager at ARCA Payments and has experience building fintech products for banks.
The company, which launched its pilot three months ago, said customers reported cost savings of more than 12% within that period. Duplo has also grown 60% month-month to serve 20+ enterprise businesses. Currently, it has processed over $380,000; however, Duplo has plans to reach $40 million in annualized TPV by the end of Q2, said the CEO.
Last November, Duplo got into Y Combinator and is taking part in the accelerator’s current winter batch. The YC-backed startup has also raised a $1.3 million pre-seed round led by early-stage pan-African VC firm Oui Capital to further its growth. A mix of local and international investors such as MyAsia VC, Y Combinator, Flutterwave CEO Olugbenga “GB” Agboola and Mono CEO Abdul Hassan participated.
“We’re excited to support Yele, Tunde, Emeka and the rest of the team at Duplo as they look to build a scalable B2B payments platform for the African market,” said Peter Oriaifo, principal at Oui Capital, in a statement sent to TechCrunch. “We believe that with the proliferation of commerce in Africa, there’s an emerging need for solutions such as Duplo’s that help abstract away complexities around payments.”
Duplo will spend most of this investment on improving its product, tech and sales as well as move into other sectors asides from FMCG retail to businesses in travel, farming, B2B marketplaces, alcohol and beverages.
“There’s just a tonne of potential opportunity for us as a business that we can tap into very soon,” said Oyekola. “And while we’re currently focusing on the retail space over the next three months, we’re speaking to businesses in other sectors also to help them automate their entire payments through our APIs.”