Agosta Liko is the founder and Chief Executive Officer (CEO) of Pesapal which is synonymous with processing card and mobile money payments for online and in-person payments.
Pesapal is one of the fastest-growing point-of-sale (PoS) providers in the region with a presence in Kenya, Tanzania and Uganda. According to media reports, the company has a valuation of over $1 billion (Ksh121 billion).
During an interview with The Standard, Liko revealed that Pesapal has 30,000 merchants whose clientele is mainly banks. By the end of September 2022, there were 49,786 PoS machines according to data from the Central Bank of Kenya (CBK) meaning, for every ten PoS machines in Kenya, six belong to Pesapal.
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Though the sector is dwarfed by mobile money payments, Liko believes that it has immense growth potential.
He notes that unlike other startups that aggressively seek expansion capital, Pesapal chose to steadily grow its revenue while expanding.
“Our problem is that we take time. We look at the problems we can fix. And we have been playing the long games as Pesapal or as a business,” says Liko.
Liko co-founded the company alongside his old college mate Onesmus Kagwanja. The two met as students at Moi University when Liko was a first-year student and Kagwanja was a fifth-year senior.
Two years later, Liko was in need of an attachment and contacted Kagwanja who gave him the opportunity at a company called Turnkey. Agosta notes that he was a “terrible” programmer.
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During an interview with the Standard, he revealed that he failed his exams at Moi University “supremely” and later relocated to the US where he lived for seven years. When he returned, he sought Kagwanja and together they started a software company.
Liko, in an interview with Moses Kemibaro, the CEO of Dotsavvy, stated that the 2007 post-election violence in Kenya, followed by the global financial crisis created a necessity for what would be their first company.
A number of companies in East Africa were struggling and the two founded a travel company to capitalise on the region’s popularity as a tourism hub. The company website allowed tourists to research about Kenya or East Africa, find a holiday package, buy the package and then visit.
“The idea was to build a product that could sell even if the offices were closed; To keep earning money. So, we built a travel network so that anyone who wanted to tour East Africa would search for their travel option,” Liko noted.
He added that the biggest challenge they faced as a company was having a proper payment gateway to process transactions on the platform. They used several payment platforms but many of them shut down and they had to find a way in which clients would pay them directly. However, after a year, the company had only processed three transactions.
Their big break came in 2010 when they landed a deal with Access Kenya to develop a website to sell tickets. This led to the founding of Ticketsasa.com, a leading ticketing platform for events, flights, and holiday packages.
“We built Ticket.pesapal.com; our first client was Access Kenya; we sold 156 tickets. That was pretty successful, and we thought the future was ticketing. So Ticket.Pesapal.com became what is Pesapal today,” he said.
This laid the foundation for Pesapal, one of the fastest-growing PoS providers in East Africa.
In 2011, Pesapal inked a deal with Rupu, an E-commerce platform where small and medium businesses market their goods and services. After two months, they signed another deal with Zuku.
“Zuku opened doors for Pesapal. It helped us build a whole team, processes, settlement, and risk. They made it easy to get into a new country and make a setup.”
Despite making moves in the industry, Liko noted that funding did not come easy, revealing that from 2010, it took them 10 years to secure a bank loan.
Unlike other start-ups, Pesapal kept off venture capitalists, instead, decided to steadily grow its revenue and expand organically.
“We might not have the fanciest office in Nairobi, but we have the best technology. Why? Because we know how to hire talented people and how to work with them for a very long time.”
Liko maintained that the company adopted a strategic investment model; to earn first and keep costs low.
“We try to maintain profitability. We do not have tons and tons of investor money to tell us to go into forty markets and we will figure out the profit later,” says Liko.
The company currently has over 300 employees spread across East Africa. Liko notes that the company is targeting a workforce that can process over 250,000 high-volume transactions per day.
“No one is going to buy vegetables from mama mboga using a PoS, that is a low-volume business.
“That means you can’t go to merchants and be given a stupid price where you are making losses,” says Liko.
Pesapal has demonstrated resilience over the years. Operating in the financial services sector ultimately means that you have to work closely with the stakeholders in the industry. The government, through the Central Bank, has been a key stakeholder in its respective markets. It has provided a set of rules and regulations that ensures merchants’ money in our ecosystem is safe.
To ensure it plays the watchdog role effectively, the central bank requires PSP companies to apply for a license. Today Pesapal is regulated by the Central Bank of Kenya, Bank of Uganda, and Bank of Tanzania.
Liko and Kagwanja also own Ticket Sasa and other products like reserve pots which will help hotels to automate their booking.