Popular With Migrants: Spotlight On South Africa’s Hello Group

By Dana Sanchez Published: October 26, 2015, 12:55 pm
Hello GroupNadir and Ahmed Shaazim Khamissa won the Medium Business Enterprise and Innovator of the Year Award for their company, Hello Mobile, at the 2015 Sanlam/Business Partners Entrepreneur of the Year awards. Photo: rosebankkillarneygazette

Wealthy South Africans probably haven’t heard of Hello Group, but its products and services are well known in migrant and marginalized communities when it comes to financial technology and telecommunications services, TechCentral reports.

Hello Group has become a significant player in international phone calls in South Africa and, more recently, in the international money transfer business, quietly building 1.4 million subscribers.

Brothers Nadir and Shaazim Khamissa started the company 10 years ago.

They recently won the Medium Business Enterprise and Innovator of the Year Award for their company, Hello Mobile, at the 2015 Sanlam Business Partners Entrepreneur of the Year awards, the RosebankKillarneyGazette reported in September.

Nadir is an actuary and a former managing director of global equity derivatives trading at Deutsche Bank, based in London, according to TechCentral. One of the projects he worked on for the bank included listing Telkom on the Johannesburg and New York stock exchanges in 2003. Shaazim was studying at the University of Johannesburg when the business was founded. He’s its chief technology officer.

The company’s future lies in the international money transfer business, according to Nadir.

There are an estimated 3.5 million migrant workers in South Africa. Remittances to the developing world are expected to exceed $500 billion in 2015, with $50 billion of that in Africa alone, according to World Bank.

Hello Group was the first company in South Africa to receive an independent money transfer operator licence from the reserve bank, TechCentral reports. The licence allows it to offer the service independently without having to partner with a bank or other financial services institution. The license has extensive rules and regulations. Hello Group has since partnered with some banks and retailers in South Africa.

With headquarters in Gauteng, the company has 300 full-time employees. Inspiration for the company came when the Khamissa brothers realized migrant workers in South Africa were paying huge amounts to speak to their families and friends. Using Internet calling, the brothers thought they could offer consumers international phone rates far lower than Telkom and other mobile operators.

The brothers sank all their savings into the business and almost lost it all when the international callback solution they built failed on payphones the night before launch.

“We lost 90 percent of our life savings,” Nadir told TechCentral. “It felt like the worst day of our lives.”

Determined this wouldn’t end their ambitions in the telecoms market, they took their remaining $2,200, sold their cars and put every last penny into the business.

Concentrating on low-cost international calls routed over mobile instead of payphones, the brothers experienced almost instant success. Demand was “astronomical” almost from the start, Nadir said. “We suddenly had access to anyone with a cellphone.”

Large mobile companies in South Africa weren’t happy with a startup threatening their high-margin international voice business, TechCentral reported. But mobile operator Cell C agreed to partner with the company in 2009.

A year later, the brothers launched what is now their No. 1 consumer brand — Hello Mobile.

Hello Mobile is a SIM card product created with Cell C to give migrant workers the mobile operator’s local call rates coupled with Hello Group’s low-cost international calls.

To get around the high costs of distribution in South Africa, Hello Group went direct to spaza shops and other retailers.

Hello Group handles all its own sales, marketing and distribution and supports consumers in multiple local languages via 45,000 registered street vendors and 13,000 spaza shops in South Africa selling its products, Nadir said.

“We develop our products with our customers — the spaza shops, the street vendors and consumers in the street,” Nadir said. “Our proximity to them is better than anyone in the market and many of our ideas actually come from our customers.”

Nadir said he believes international money transfer will be a game changer for Hello Group. South Africa has among the highest international remittance fees in the world and Hello Group wants to cut the cost of sending money across South Africa’s borders the way it did with international phone calls.

Remittance fees average 14 percent of all money being sent abroad, Nadir said. A new Hello Group product, Hello Paisa, will do it for less than 5 percent and faster than the alternatives — in a matter of seconds or minutes, instead of days — he told TechCentral.

Since its launch in March, Hello Group has signed up 70,000 Hello Paisa customers including 29,000 app downloads on Android for remittances. “People at the base of the pyramid are using our smartphone app in a very material fashion,” he said. Customers with older phones can use it too, and there’s a call center option. The financial technology division of Hello Group has 150 employees.

Hello Group is now licensed in 30 countries with partnerships pending. “Our goal is to bring fintech to the base of the pyramid,” Nadir said. “There’s been a big revolution at the high end of the pyramid, but we haven’t seen this happen in Africa outside of traditional mobile money.”

Hello Group is now opening its own Hello stores which will help it build credibility and trust with a wider consumer base, said chief commercial officer Ahmed Cassim.

The company has had potential buyers, but the founders aren’t in a hurry to sell, TechCentral reported.

“We are entrepreneurs,” said Mohammed Ebrahim, Hello Group’s managing director of telecoms and distribution. “If something were to come along and it put those entrepreneurial spirits down, it’s not worth looking at. But if it were to allow us to grow the business globally, then, possibly, yes.”

 

 

 

 

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