As part of a series of conversations with the 2024 Class of the Maurice R. Greenberg World Fellows Program, Abla Abdulkadir, Sarah Jeddy, and Owen Haywood of the YRIS Interviews and Events team sat down to interview the founder and Group CEO of Affinity Africa, Dr. Tarek Mouganie. Affinity Africa is a digital bank that specializes in providing banking services to underbanked populations in Africa, as well as lending for small businesses and micro-enterprises that otherwise struggle to access credit.
Mouganie discussed his journey from childhood in Ghana to the founding of Affinity Africa, during which time he obtained a PhD in physics from Cambridge and worked for eight years as a director at a hedge fund. Mouganie has sought to apply his financial experience towards his goal of African socioeconomic development by focusing Affinity Africa’s efforts on providing banking services that are more readily accessible in Africa. During the interview, Mouganie also shared his love for science, triathlons, and Afrobeats, as well as his advice for students looking to the start of their careers: “not to take things too seriously.” Mouganie’s desire to apply his talents to make a positive impact on the area of socioeconomic development shines through as an example for any student looking to make a difference in their career.
You can listen to the full interview linked above, or read selected quotes from our discussion with Dr. Tarek Mouganie below. All quotes have been edited for length and clarity.
Abla Abdulkadir: Could you go into depth on what Affinity Africa is, your role at the company, and what led you to found it? I am also interested in how your scientific background and interest in exploration and design shaped your ideas for Affinity Africa.
Tarek Mouganie: I was sort of obsessed with this idea of investing in Africa and the knock-on socioeconomic implications. After spending all this time at this hedge fund, I decided to get up one day and I quit my job, thanks to my mom. She was the catalyst. She said I was intolerable working for this fund, “What have they done to you, quit your job and come back home.” I quit my job, moved back to Ghana, and started focusing on this idea of getting investments into the continent, and in particular, supporting small businesses. I became obsessed with that idea. After trying to figure out how to build a fund that would invest in African startups and African small businesses, I then had this sort of aha moment. I had all this guilt of, like, eight years working for a hedge fund. “What did I do? Why did I waste my time, my life? Why was I there for so long?” And then I kind of paused, and I thought to myself, “I understand banking because of these eight years.” All the pieces just clicked, you know? And I was like, that’s what I’m gonna do. I’m gonna start a bank. And that was it.
The first thing that I did, getting back to your question on informed design, is I tried to figure out why banking has failed Africa. Just to throw out the statistics, looking at Sub-Saharan Africa in particular, only 42% of adults have a bank account. It’s crazy. I mean, the start of your financial freedom, financial journey is to actually be included in financial services. Even worse than that, less than 10% of businesses have access to credit. How can you grow without a loan? You have an idea. You want to start a business. You might be able to survive on the revenue that you generate in the cash flow, but to unlock your full potential, you need access to credit.
I realized that banking was invented and developed in the Global North, right? So it assumes, like all of us here who have a bank account in a country from the Global North, it assumes you’re formalized. It assumes you have a formal ID, you have an address, and you can prove that you have the address, too. You probably are formally employed and getting a check or at university, and you have to show that. So as a result, those are the three kinds of documentation that you need to actually go into a bank here in the US and actually open an account. Well, guess what? The majority of Africans, 87% of Africans, don’t have that information. So we had to try and understand, using informed design, how we could reinvent banking for the masses.
And it wasn’t easy. We had a lot of stages of iteration…We actually only launched in January this year with a product in the market that we’re happy with. In March, we put out a product that we’re super happy with, and since then, we’ve actually onboarded 40,000 customers – and almost 10,000 accounts in the last six weeks alone. So it’s going like gangbusters. 62% of our customers are women, which is awesome. And almost 90% of our customers were opening their first ever bank account, which is pretty cool.
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Sarah Jeddy: What makes small businesses so important for economic development?
Tarek Mouganie: I often use the comparison between OECD countries and countries in Sub-Saharan Africa. So small businesses and micro enterprises are the drivers of social and economic growth. It’s crazy, you know. In the US and UK, they are actually 99.9% of registered businesses and they employ over 60% of the population. We have a highly informal sector in Ghana and in Africa in general. By creating companies that employ in the formal sector you actually unlock that potential. It’s crucial because there’s a huge opportunity in our part of the world. By 2050 one out of four people will be African, and one out of three young people will live in Africa as well. The Global North is shrinking. The global majority is growing, and Africa has a huge potential to unlock its human capital so job creation needs to follow through as well too. That’s the first thing I wanted to say.
The second thing is, if you take a look at OECD countries the tax-to-GDP ratio is around 36%. If you take a look at countries in Sub-Saharan Africa, it’s 18% – and if you take a look at countries like Ghana, Nigeria, and any of the countries that have extractive economies like Angola, South Africa, it’s as low as 6%. Our governments make money from extractives. They sell extractives. For example, if you have a chocolate bar, the cocoa probably comes from Ghana. Gold, oil are other examples. But what’s very important is diversifying that revenue for governments. Our taxpayer base is very, very, very narrow, so part of additional revenue is generated by generating and supporting small businesses. They are the drivers of revenue for the government. We’re talking corporate tax, we’re talking income tax, we’re talking VAT [value-added tax], we’re talking everything that is collected through those small businesses.
The other thing that’s super important about this tax, the thing that I’m kind of obsessed with, which forms the majority of that OECD 36% tax-to-GDP ratio that I talked about, is that it creates accountability between civilians and their governments. If I buy a bottle of water and I’m poor, I’m rich, I’m paying the same amount of VAT. It’s indirect and it’s regressive, right? But if I’m earning an income or I’m a small business owner and I pay tax, there is a fiscal contract between me and my government. I’m paying money to you, for you, to provide you with a service that doesn’t really exist in that part of the world, because of the hugely informal sector. So if we see an element of formalization, and I don’t know what that looks like, and I’m not here to villainize the informal sector, you know, or romanticize them, but they’re a huge part of our economy. But over time, if we see an element, basically, of formalization and an increase in the taxpayer base, and an increase in direct taxation as well, too. I would like to think that there would be more civilian accountability to leaders in the continent as a result.
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Owen Haywood: How have you worked to bridge your diverse array of interests and experiences throughout your career?
Tarek Mouganie: I guess my life and my career only makes sense now looking backwards and trying to connect the dots – I think Steve Jobs said that, right? But in the middle of it all, I wasn’t really thinking. I knew I wanted to work in investment management. It was actually a friend from university that said, “Oh, I work for this company. Why don’t you consider joining?” And I thought, “hey, sounds great. I’ll give it a shot.” You know, what’s the worst that could happen? I would fail. I would move on with my life. And then when I left, the idea of starting a bank was out of coincidence, because I’d spent all this time, even though it wasn’t intentional, working in financial services, investing in banks, and understanding banking strategy. I think it only makes sense looking backwards at it.
The only kind of advice that I can give is not to take things too seriously. I’ve had a lot of students reach out to me here [to network], which is somewhat disappointing. Like 20 years ago, when I did my undergrad degree, everyone would go into investment banking and work for like a consultancy firm. I thought those days were over. surely there are other options out there, you know. And I’m not saying that there’s anything wrong with being an investment banker or, you know, or working for a consultancy firm. I did in the past, too. But don’t be afraid to make mistakes in the early stages of your career. You have chances to mess up and correct them later in your career, and when you make a mistake earlier, it’s a lot less grave than it is in the later stages of career.
But what I wanted to say is stay curious, don’t lose that. Think to yourself, “What is your North Star?” If you want to fix health care, if you want to fix inclusion, if you want to work in the field of climate justice or whatever, why do you care about that? Which part of the value chain do you care about as well, too? And how do you start thinking through how to get to a situation where you think you can maximize your impact. Whether it’s working for a consultancy firm, fine, as long as you’re aware of that and getting the right skill set. Whether it’s working for an established startup where you get a ton of exposure because you want to be an entrepreneur yourself, or whether it’s working for a corporation that has a department in there that looks at sustainability, is also another option. Just make sure that you have all the options laid out to stay curious and always question everything.on, if you want to work in the field of climate justice or whatever, why do you care about that? Which part of the value chain do you care about as well, too? And how do you start thinking through how to get to a situation where you think you can maximize your impact. Whether it’s working for a consultancy firm, fine, as long as you’re aware of that and getting the right skill set. Whether it’s working for an established startup where you get a ton of exposure because you want to be an entrepreneur yourself, or whether it’s working for a corporation that has a department in there that looks at sustainability, is also another option. Just make sure that you have all the options laid out to stay curious and always question everything.
Image courtesy of the Yale Jackson School of Global Affairs
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