OZE: Data-driven growth

Small businesses (MSMEs) in Sub-Saharan Africa stay small; 93% never hire an employee (ILO). They don’t have access to the tools, capital, and networks they need to grow. This is a problem because 11M African youth join the job market and 2/3s stay unemployed-or-underemployed. OZÉ solves this problem by providing MSMEs with a habit-forming app that makes it easy to keep financial records. We use that data to provide recommendations, reports and to predict credit-risk to connect MSMEs with affordable loans. An active community of Entrepreneurs and Coaches provide additional support and opportunities. Research from McKinsey & Co found that high-growth MSMEs create on average 2-4 jobs annually. These are exactly the kinds of MSMEs OZÉ supports. In 2019, 97% of OZÉ Entrepreneurs were growing and/or profitable. If we can scale to between 2.7M-5.5M active users, entrepreneurs supported by OZÉ can solve Africa’s youth unemployment crisis.

Small businesses in Africa don’t grow. According to the ILO, 93% of MSMEs in Africa never hire an employee. One cause is that records, if they are kept at-all, are kept in notebooks. The business owner does not know how to turn the data they collect into insights that can drive their actions leading to higher profits. Oftentimes companies do not even know if they are making a profit. And importantly, even if their business somehow manages to survive, they cannot bring their notebooks to the bank to get a loan and so they are cut off from the formal capital markets that could fuel their growth.

Small business stagnation and failure is a critical problem to solve. Small business growth drives economic growth. In particular, in emerging markets, small businesses create 99% of jobs and in Africa account for 90% of all firms. But they are not growing fast enough. Each year, more than 11 million young people enter the labor market in Africa and cannot find employment. We need to help businesses thrive so that they can create the continent’s much needed jobs.

OZÉ is a habit-forming, mobile app that makes it easy for micro-and-small-business owners (MSMEs) to keep financial records. In as little at 3 clicks (even when offline), an entrepreneur can record sales and expenses. They can mark any transaction as unpaid or partially paid and both parties can get a reminder when a payment is coming due. In addition, they can send digital invoices and receipts, book a delivery service, see their performance on a dashboard, and starting next quarter send and receive payments. Every day, an OZÉ Coach sends business tip through the app that helps the entrepreneur build their skills and knowledge to turn the data they are collecting into good business decisions. The combination of the community we create, the tasks built into the app, and nudges helps the entrepreneur to change their behavior from managing based on their gut to managing based on data. 

After three months on the app, the user becomes eligible for credit through one of our banking partners. We are the only app in West Africa that analyzes both small business performance data and behavioral data to assess credit risk and loan affordability using a proprietary machine-learning algorithm. 

We serve micro-and-small-business owners. Specifically, we target smartphone users, working in urban or peri-urban environments with ambitions to grow their business. We primarily serve youth; 65% of our current users are 25-34 years old and 11% are 18-24. The average monthly revenue of our active users is $1300. The vast majority of our users are sole-proprietors. We started in Ghana, but also have active OZÉ Entrepreneurs in Nigeria, Burkina Faso, and Sierra Leone. 

At its most basic level, OZÉ equips these entrepreneurs to make data-driven decisions and access capital. More importantly, it gives them confidence and community. Customers have left us reviews such as, “This is like no other,” “This is a great app, it helps my business to move smoothly...Big thum[b]s ups to team OZÉ. Let’s support our own,” and “App looks great. Their response time is unbelievable. Just got started. Loving it already.”

We were able to build OZÉ to meet the needs of MSMEs because we co-created it with them. Using a design-led process, 36 entrepreneurs were heavily involved in its genesis. We visit customers each month for research and testing and have a Whatsapp group of super-users who give us frequent, honest feedback.

COVID made clear how vulnerable our users are to economic shock; 60% of active users saw their revenue go to zero in March. As entrepreneurs, many of whom are in the informal sector, they could not count on the government or banks to serve their needs. The government's MSME COVID-Relief program is still not operational. Through intensive coaching, tailored business education, and access to patient loans, we were able to help many entrepreneurs adapt their offerings, operations, and communications to make enough money to survive through the COVID period. 

OZÉ is a category creator. We are more than an accounting system. We are more than a point-of-sale. We are more than a credit score. We are more than business education. We are more than a network. By digitizing transaction data, we trace money as it moves through the economy. In the process, we make financial statements. We provide business insights and education. We capture sales histories. We calculate credit risk scores. We help businesses build their networks. We do things differently.

There are three features that make OZÉ uniquely effective. First, we gamify accounting. We leverage the principles of social media to help users build habits around better financial management practices.The app evolves with the business owner, increasing in complexity as they demonstrate mastery driving long-term engagement. 

Second, every OZÉ user has access to a business coach. Eventually, our goal is to build a robo-small-business-advisor who provides business insights and tips to our users through conversation. We also build the relationship between our users and coaches offline through monthly seminars. By combining digital-support with face-to-face education, we help small business owners through their digital transformation. 

Finally, OZÉ connects business to capital. We combine behavioral and performance data to understand how much a business owner can and should borrow. Because our business does not rely on loans to survive (compared to competitors like Tala), we have aligned incentives with our customers. With OZÉ, business owners adopt new management practices, increase their financial performance, and access capital to fuel their growth.

OZE is a mobile-first, software platform. We use smartphones to deliver financial education, tools, and services to youth-led small business owners. The app is designed to be simple and user-friendly so that anyone who can use Whatsapp also has the digital skills that they need to be able to use OZE. We also do not use technical business language in the app. Without any business training, an entrepreneur can learn everything they need through our app or one of our Coaches. We further leverage research from behavioral science to make the app habit-forming through nudges, game-design, incentives, and community. 

Usage of the app generates a rich, proprietary dataset which we are able to analyze using a machine-learning algorithm to understand how much a business owner needs to and can borrow and understand their likelihood of paying back. Unlike traditional bank-based cash-flow lending, OZE “sees” the unbanked, cash-based economy providing right-sized, affordable, no-collateral loans to formerly excluded MSMEs.

OZÉ’s technology is not new. At its core, OZÉ falls at the intersection of a mobile-first business intelligence platform, Quickbooks, and a point-of-sale system. It’s our user experience and gamification that makes how was are using this technology unique. 

The best indication that OZÉworks is that businesses are using it and improving their business performance. Overall, 97% of businesses that used OZÉ for at least 3 quarters in 2019 were growing and/or profitable (77% were growing and 82% were profitable). You can read specific case studies here: https://www.oze.guru/case-studies/. Around 5100 businesses are using OZE consistently to manage their business. 

For our credit algorithm, it’s too early to say if our hypothesis that OZÉ users make better borrowers is correct. We have only made 8 loans and only 3 of those have matured. All 3 were paid back in full with interest. 

You can watch a demo of the OZÉ App here: https://www.youtube.com/watch?v=5YflSJ-XMBc. 

Our theory of change is that small business owners who have access to information, capital, and networks have the ability to grow. Due to the nature of their businesses, it's highly likely that a portion of this growth will be invested into hiring new employees. 

Inputs: The inputs into our model are the OZÉ App, Business Owners, Current and Future Employees, Government Agencies, Financial Institutions, Growth Capita, User-generated Transaction Data, Automated Transactions Data (Paystack, Mobile Money, Bank Data, etc.), Business Coaches, Business Education Content. 

Activities: We will recruit business owners through networks (online and offline) to use the app to collect their transaction data. Through the same app, we will provide mass and bespoke business education and insights. We will communicate the performance of our MSME customers bank to the MSME in a way that is easily understood and actionable. With the MSMEs consent, we will also provide actionable recommendations on credit (how much and at what terms and risk) to banks and connect the MSMEs with other service providers who can improve their performance and strengthen their networks. To support these activities, the OZÉ team will need to develop processes and algorithms to assess business and behavioral data, develop education content, and continuously test the app with current and future users to ensure efficacy. 

Outputs: The output of these activities is that business owners download and use the app, receive tips and insights, contribute to the transaction database and get real-time access to information about their business performance. They will also have a connection to service providers who can help them to grow their business.It will also reduce the cost for banks to lend to MSMEs. 

Outcomes: Based on these outputs, MSMEs will improve their performance and banks will lend more money to the right MSMEs which will lead MSMEs to accelerate their business growth and profitability reinforcing the cycle.

Impact: The impact of this virtuous cycle is that MSMEs will generate profits and retain earnings. This will lead to more stability and hiring to keep up with the growth. This is inclusive economic growth.  

We are currently serving 6000 monthly active users. 12 months from now, we plan to serve 25,000 active small businesses through our platform. Within 5 years, we want 350,000 businesses to be active on the platform across 10 countries. These numbers are the count of businesses that are using OZÉ at least monthly to input sales and expenses, access business tips, and understand their performance. In order to achieve 350,000 active businesses by Year 5, between 600k-700k businesses will have had to registered for the app. To date, 21,000 businesses have registered. 

These businesses may each have 1-10 employees with the majority falling in the 1-5 employee range. One third of this number will benefit from an affordable loan annually. 

OZÉ was built for scale. It was built in response to the fact that most entrepreneurship support organizations were heavily reliant on skilled humans and therefore could not support enough entrepreneurs considering the magnitude of Africa's youth unemployment crisis. As more entrepreneurs use OZÉ, the quality of our insights improve as does our ability to predict credit-risk and connect them to loans that become more and more accessibly priced. With OZÉ, millions of entrepreneurs across Africa have the tools, information, networks, and access to resources that they need to generate their own inclusive growth. At scale, they will also create a powerful community that will be able to shift markets and lobby governments to make policies more conducive to youth-led, small-business success. 

Our goal for the next 12 months is to prove out our credit-risk model so that we can more successfully embed OZÉ into traditional banks which will both expand the quantity of available credit and reduce the cost. At the same time, we are piloting OZÉ in two additional markets (Nigeria and Guinea) to identify how we need to localize our solution and to understand if the impacts that OZÉ has on MSMEs in Ghana can be transferable to other African markets.  

When these two questions are answered, we will scale continently through the channel of banking partners. 

I think there are two primary barriers to achieving this growth.

The first is digital literacy / access to technology. Smartphone penetration is growing rapidly across the continent (currently 25% of the population of SSA, expanding to 38% by 2025 according to GSMA), but people use smartphones less intensely. For example, most of our users have never used software in their business before OZÉ. The app that they use the most is Whatsapp. One interesting finding from our research is that our users did not realize that the three bars at the top of our screen signified a menu that they can open because Whatsapp doesn't have what's called a "hamburger menu" in the design. Features like our dashboard or coaching inbox were behind the menu and never discovered by customers which hurts retention and efficacy of the app. Until people become more comfortable navigating apps, have more room for apps on their phone (more memory), and the cost of data decreases, all smartphone-based solutions will face this challenge. 

The second is regulation. We chose to lend through banks in order to not have to become a bank in each country where we operate. Until this month, we were not a regulated industry, but Ghana's Fintech regulations are changing and we just came under the umbrella of the Bank of Ghana because we interact with Fintechs. Navigating the complexity of changing regulations in each market that we enter will be costly. 

We will overcome the digital literacy and access to technology problem by continuing to work with our customers to co-create features and conduct usability testing. We have a new version of the app coming out this month that has as a design principle that no key features can be hidden behind a menu. The way that users switch between functions now mirrors the use of Whatsapp which they are all already familiar with. We are also in touch with a donor agency to financing the purchase of smartphones for MSMEs so that they can upgrade or get access to their first device. Lending to an MSME to acquire a cellphone is less risky than the type of lending we already help banks to do. After a donor-funded proof of concept, we will be able to scale this program through the private sector. This will not only help MSMEs have access to technology that is critical for their success, but make is possible for more women to use OZÉ as there is gender gap of 20% between women who have access to mobile internet compared to men. 

To solve the regulation issue, we will make sure to budget for the human capital needed to manage the complexity and will be proactive with regulators to make sure that we are helping to shape regulation for the benefits of MSMEs. We are currently working with the regulators in Ghana to be compliant with new regulations. 

Full-time: 12

Summer Interns and Fellows: 5 

Our team combines disciplines and experiences to build a product that is based both on deep contextual understanding and global best practices in technology and design.

Meghan McCormick, CEO & Co-Founder, has spent her entire career focused geographically on African markets and functionally on innovation strategy. She launched Guinea’s first accelerator, Dare to Innovate, and scaled it to be French-speaking Africa’s most active small business accelerator. She holds a degree from the Harvard Kennedy School and MIT Sloan.

Dave Emnett, COO & Co-Founder, is a data and market-analytics specialist. He founded Dare to Innovate’s Benin program and ran the global organization’s financial operations. He previously led marketing for several financial institutions.

Aly Sawadogo, Tech Lead, is a Burkina-born, Ghanaian-raised, US-educated software developer and manager with 13 years of experience. His was previously a Senior Software Engineer at GenKey.

Dr. Albert Essiam, Data & Analytics Lead, is an MIT PhD and Ghana’s preeminent data scientist. He is an experienced risk expert with over 15 years’ experience with Big Data Analytics, Predictive and Catastrophe Risk Modeling, and Stochastic Modeling. Before OZÉ, he worked at Liberty Mutual, Traveler’s Insurance, and McKinsey & Co.

The team is supported by three developers, a QA engineer, a Customer Success Associate, and two Business Development Associate. We also have a strong team of advisors across MIT and Harvard and leading entrepreneurs in the African tech ecosystem. 

OZÉ is a collaborative organization. We work with partners across the private, public, and NGO sectors.

Private Sector Partners: OZÉ works with Paystack to allow our users to send and receive payments. We provide loans through a financial institution, Blue Financial Services. We also have nascent banking partnerships with Fidelity Bank Ghana, FCMB Nigeria, and Republic Bank Ghana. We offer integrate delivery services to our customers through a partnership with Deliveries Ghana, help our customers sell online through a partnership with Jumia, and get them access to pensions through People's Pension Trust. 

Public Sector Partners: In Ghana, we partner with the National Entrepreneurship and Innovation Program as a required management tool for youth-led enterprises which receive financial support from the government. In Nigeria, we have a nascent distribution partnership with the Lagos State Employment Trust Fund. 

NGO Sector Partners: We frequently work with non-profits to make sure that the MSMEs which they support have access to OZÉ. We will be working with WEIG Ghana to support women through the COVID-19 Crisis and are supporting applicants to Ghana's 5K Challenge. We have had research support from and collaboration with BFA. We have been financially supported by The Social Innovation and Change Initiative (SICI) and the Innovation Lab at Harvard and the Legatum Center for Entrepreneurship in Emerging Markets at MIT. SICI is supporting us this summer to have a fellow work specifically on our COVID-Relief efforts which were piloted with funding received from the i-Lab. 

OZÉ provides small-business owners with the tools and resources that they need to thrive. We help them to make more money and either when they realize that using OZÉ will help them to be a more profitable business, or when it does, they can choose to upgrade from a free to a paid subscription. For example, our most basic version of the app is for sole-proprietors. In 2019, 77% of these businesses were growing and 82% were profitable. Some of them started selling online and wanted to upgrade to OZÉ Premium ($2/month) so that they could generate digital receipts complete with a logo and automatically manage their growing accounts receivables. Others hired their first employees and upgraded to OZÉ Pro ($10/ month) so that they could all use OZÉ together. For some, the volumes got so big that they couldn't manage their business on their phones anymore and invested in a computer. These entrepreneurs upgraded to OZÉ Platinum ($20/month) so that their data and their employees' data could sync across both phones and computers. We grow when our customers do. 

We also help our customers access other products and services that can fuel their growth. We vet providers and if we believe that using their services will help our users, we make the connection and collect a fee from the third-party service provider. Banks and payments processors are our primary partners in this endeavor. This helps us keep a robust free version available and all levels of our app affordable. 

As a for-profit social enterprise, our objective is to make enough money to support our operations and growth from our customers. Our business model is designed so that larger enterprise users of our software, such as banks and governments, can subsidies the use of our products by individual micro-entrepreneurs. Until we reach operating profitability, we are financing our operations and growth through a combination of revenue, grants, and investment capital. 

OZÉ makes money in three ways. The first is by selling premium features to small business customers using the app. Our app uses a freemium model. We do not want the ability-to-pay to get in the way of an entrepreneur who wants to use OZÉ to improve their performance. For entrepreneurs who can pay, we offer packages from $2-20 a month depending on the features they want access to and the number of employees in the company. 

The second is through OZÉ Enterprise. Financial institutions and other organizations with support entrepreneurs pay a subscription fee to have access to a dashboard of the real-time health of their portfolio. For organizations that want to use this data to make loans also pay a fee each time a loan is made and repaid. 

Third, we integrate with third-party service providers to make money on commissions. For example, we users can book a dispatch rider directly through our app. By the beginning of Q3 2020, they will be able to make and receive payments.

Youth unemployment is one of Africa's and the world's most pressing issues. The only way that we can solve it is if we equip small business owners to become employers. Right now, only 7% of MSMEs create employment in Africa. This has to change and OZÉ cannot do it alone. We need the brilliant community of Solvers to contribute their efforts, ideas, empathy, resources, and network to make this vision a reality. 

Although our networks and understanding are deepest in Africa, we know that this is not a uniquely African problem. We want to tap into this global community so that we can learn what is working around the world and inspire similar solutions in other markets. 

Of course financial support is always welcome and appreciated. Raising money for a West African market as a female-CEO is no picnic. But as an MIT alumni, I know that for programs supported by the Institute money is just the tip of the iceberg. Around the world, MIT is synonymous with human solutions to intractable problems. The MIT name gets people excited and gives them the bravery to try new approaches. Being an MIT Solver is exactly what we need to 10x our impact in the next 3 years. 

A world-changing solution needs world-class talent. We are committed to hiring in the markets that we work in, but would love to work with MIT to become an attractive employer for students who attend MIT from West Africa and also to partner with MIT students from around the world to join us for short periods of time to up-skill our employees. 

We would love to partner with J-Pal. We already devour the research published by J-Pal. It's informed many aspects of our intervention. We would be deeply grateful for the opportunity to be advised by their researchers on how we can strengthen our solution. We also would love to work with them to develop a strategy to assess our impact and one day work with them to conduct a randomized control trial. 

Additionally, we would like the opportunity to work with the Human Dynamics group at the Media lab. We are interested in the work of visiting scholar Haijing Hao and figuring out how to apply his research to low-data contexts. We know that we can bring more power and creativity to our risk algorithms to give more access and more responsible access to life-changing credit for the MSMEs which use OZÉ. 

When COVID-19 hit, many micro-small-and-medium enterprises (MSME) had to shut their doors or adapt their operations. In order to survive, they needed access to credit. In the US and other developed markets, they turned to credit cards, Fintechs like Paypal, and banks that were backed by the U.S. government. In Ghana, where we work, they are yet to have access in any meaningful way to credit that can help their business. For MSMEs led by women and young people who don't have access to collateral, audited financial statements, and robust savings, they are out-of-luck. Their businesses are likely to fail, many will never be able to restart and will spend many years in a vulnerable economic position. 

Our emerging work at OZÉ is looking at new ways to understand which business owners can be good borrowers based not just on their historical business performance, but on projected future performance and behavioral characteristics. This capability is built on a foundation of AI. We are just scratching the surface of what is possible, but this current crisis has shown us that we have no time to wait. 

Winning this prize would have meaningful impact on our company and customers in two ways. Winning the AI for Humanity Prize will signal to the market that we are working on the cutting edge of AI/ML allowing us to attract talent to a problem in a market that is often overlooked. Second, the cash prize would allow us to invest in AI talent and fund a pilot using new methods of credit assessment. 

At its core, OZE was designed to provide the tools, services, and analytics that are required for success as an entrepreneur to millions of young people across Africa regardless of the size of their business or the sophistication of their education. Youth unemployment will be one of the biggest crises affecting the planet in the coming decades; already 2/3rds of African youth are unemployed or underemployed. This will only get worse as climate refugees flood from the high-labor intensity field of agriculture into cities. OZE equips young people to build careers for themselves and their peers, no matter if they are in the city or the village. While we are animated by our social-mission, we believe that a for-profit business model is required for scale and so we've married our mission with a freemium SaaS model that allows OZE to help entrepreneurs make more money and share the value when they do.