Singapore’s family-run Tolaram Group made much of its US$1.8 billion (SUS$2.5 billion) fortune in cereals, noodles and infrastructure in Africa. Now, it’s planning to use its global reach and local relationships to move into digital banking there.
The group has a blueprint of sorts from another business it owns – PT Bank Amar Indonesia. Bank Amar is largely a digital institution, with loans and deposits for consumers handled over mobile phones. The publicly listed group has loaned almost US$300 million to around 300,000 customers and expects advances to increase more than 50% this year.
Africa shares some of the same characteristics. Non-traditional players without the legacy costs of established lenders are setting up digital banks to serve millions of smartphone-savvy customers. In 2018, the World Bank estimated as many as 95 million unbanked adults in Sub-Saharan Africa received cash payments for agricultural products, and about 65 million saved money using semi-formal methods.
“We have access to thousands of distributors in these markets and that can also have a knock-on effect on our business,” a statement by Tolaram’s Mergers and Acquisitions Team-lead, Kunal Adnani, reads. Further commenting on the new move he said, “the more credit we can give them, the more they can increase volumes.”
The company’s digital banking concept was inspired by its paper-mill operations in tech-forward Estonia. In Kunal’s words, what the company is “looking to do is take the same technology, the same systems, and the same learning into African markets” where they have gained much presence on other products.
Tolaram’s proposed entry would be contending with digital banking giants like ALAT by WEMA Bank and Standard Chartered Bank plc in Africa. Also, the company would be competing with other traditional banks and fintech firms, a lot of which in recent times have introduced several digital banking channels and products to offer basic financial services to people.
Tolaram Group is an industrial conglomerate with a portfolio covering multiple sectors including fast-moving consumer goods, energy, real estate, textiles, and financial services. Headquartered in Singapore, it was founded in the 1940s as a textile company but entered Africa through real estate and consumer goods in the 1970s. The group is the manufacturer of the Indomie and Minimie noodles in Nigeria.