AYO GHANA: “We exist to make customers lives better”

Ghana remains, for many, one of Africa’s ongoing success stories. Years of relatively consistent economic growth and a strong movement towards political stability through the adoption of a democratic multiparty system has allowed the country to thrive. Now boasting strong, modern industry sectors, Ghana is a partner for the rest of the world. However, the onset of the Covid-19 pandemic has left major scars on the country with the economy contracting by 3.2% in the second quarter of 2020 and 1% in the third, according to the World Bank. This saw Ghana slide into recession for the first time in 38 years.

Quickly, many people were worried about being unable to work, being admitted to hospital, contracting the virus, and drumming up big bills should extensive treatment be required. Insurance, not traditionally popular across the country’s more than 30 million people, quickly became more attractive. But, as is the case across the continent, the barriers to entry remained. Cost, availability, suitability, and understanding remain foremost brakes on the drive of insurance penetration across Africa. Thankfully, technology is changing that.

Francis Gota, CEO of aYo Intermediaries Ghana Limited tells Enterprise Africa that this microinsurance provider is offering short-term health and life products, directly through the phone of a user. Utilising the mighty MTN subscriber base of around 23 million people, aYo Ghana has precise access to a customer base that can buy products in minutes, with a few clicks.

“The aYo business started operating in Uganda and Ghana came onboard in 2017. We launched our first product, Send with Care – which leverages on mobile money transactions to give insurance cover to both the sender and recipient,” he says.

“Recharge with Care is a very important product and allows you to gain insurance cover by paying with your airtime. I remember when we launched and on the first day we had 243 people sign up; we generated about GH₵130 Ghana in premiums. Today, we are looking at about 10,000 people signing up daily and we are looking at premiums reaching almost GH₵5 million monthly. The business has grown tremendously in a short period of time.”

GHANA GROWTH

Currently active in Uganda, Ghana, Zambia, and most recently Côte d’Ivoire, aYo is a product of MTN and has enjoyed very strong growth, building its base by offering low cost, easy to manage, quick to pay out insurance cover, delivered through cell phone and mobile network infrastructure.

As discussed with aYo Holdings CEO Marius Botha in Enterprise Africa’s April 2021 edition, the business is answering a need on the continent by utilising a distribution method that was previously unexplored by the industry; and the growth potential is phenomenal. 

“14 million is a great milestone but still a small drop in the ocean. Our ambition and vision is to really become a unicorn and target 50 million or 100 million customers on the platform and that would be powerful, making us the largest insurer in Africa,” he said.

Francis Gota is equally enthusiastic and optimistic about future opportunities, with Ghana set to play a key role in the company’s strategy.

“Recharge with Care is now over 5 million customers which we are very happy with in a space of less than four years,” he says.

“In terms of claims, we’ve paid nearly GH₵6 million. That excites me as the vision of the business is to create a future where everyone uses insurance, not just high-cost insurance for those who can afford it. We leverage technology to offer vital, sensible, and easy-to-use insurance to the low-end and medium segment who think that insurance is only for rich guys and who are excluded from financial systems. It excites me that claims are growing, and people are truly benefiting from the insurance solution.”

INCLUSION IMPROVEMENT

There is no question that the aYo solution is helping to drive not only participation in the industry in Ghana, but financial inclusion where it is sorely needed.

“Looking at the National Insurance Commission (NIC) reports for 2019, gross written premiums in Ghana are measured by the contribution of premiums to GDP. In Ghana, insurance penetration is less than 2%. The government, through the NIC, is now trying to lift this figure,” details Gota.

Demonstrating the disruptive nature of the business, aYo is already a sizeable player in the market. “Looking at the top ten companies, if aYo Ghana was a traditional insurance company, with the premiums that we generate (around GH₵20 million in 2019), we would have been among the top ten life insurance companies.

“That shows how we are competing with the traditional insurance firms. Looking at micro insurers, there are three key players: aYo, BIMA and MicroEnsure. In 2019, we generated GH₵20 million in premiums. MicroEnsure which has been around for about 10 years generated GH₵7.5 million. BIMA, which started operating in 2010, generated around GH₵40 million in 2019. It just shows how we are growing in the industry,” says Gota.

Before the onset of the pandemic, the insurance market in Africa was expected to grow at compound annual growth rates of 7% per annum between 2020 and 2025 – faster than North America, Europe and Asia. Obviously, the Covid crisis has impacted growth figures but, according to Mckinsey & Company, the African insurance market’s immaturity points to significant scope for growth, with levels of insurance penetration in Africa, half  of the world average measured as a percentage of GDP, and premiums per capita are 11-fold lower than the world average. Agents and brokers are still the main distribution channels, an area where aYo will challenge.

“The way we deliver our solutions is digital and contactless,” says Gota. “We make it very easy for customers to sign up and use our solution, and in terms of disruption in the insurance industry, aYo Ghana is a key player now and we are expecting a lot of people to come on board.

“For me, insuretech is the way to go,” he adds. “Making it easy for people to buy insurance policies, making it easy for them to use it, making it easy for them to claim – that is where we have our competitive advantage and that is where we will be staying. If you leverage technology, you bring down your costs. For microinsurance to be profitable, you must make sure you scale quickly and drive down your operational costs – that is where technology plays a critical role. Internally, your claim cost has to reduce because you need to quickly verify claims at a cheaper cost. We intend to stay in the aYo way of operating but, we are not only using technology to offer products to the low and mid income markets; we also want to offer solutions to higher income customers where most of the traditional companies are operating.”

This, combined with other initiatives, will allow aYo to continue its rapid growth trajectory as the company looks to further expand within the MTN subscriber base. New products will soon be added to the Recharge with Care and Send with Care product offerings, as Gota explains.

“We are looking to launch new products, we have started working on ideas and by the end of the year we would like to launch a new product that is tailor made to suit customer feedback. The design is influenced by the feedback we get from customers on our existing products. Recharge with Care, which provides GH₵120 hospital admission cover and hospital cost benefit for each additional night you spend in hospital, is a very popular product. We also have Life Cover, which provides death benefits up to GH₵6000 and covers the insured as well as another family member for free. In Ghana, the family system is strong, and customers were demanding that we extend the cover to other family members. Our new product will be about extending cover for family members; extending hospital cover to children or other members.”

As a group, by June 2021, aYo had passed the 12 million customer mark, showing clearly that its ideas and methods are well-suited to the markets in which it operates. After launching in Côte d’Ivoire in August, aYo can expect fast and powerful growth through the second half of 2021.

PASSIONATE AND LEARNING

As telcos look to diversify, and control market share in a potentially cashless future Africa, more financial services offerings will emerge. Mobile money transactions increased by 23% in 2020, reaching $490 billion – larger than the total GDP of Nigeria. The movement of funds, increasingly digital as a result of the pandemic, plays into the hands of the powerhouse telcos. Fortunately for aYo in Ghana, the company has the experience and know how that will be difficult for others to match.

“We are always learning and improving on things,” says Gota. “As a business, we are passionate about that. If we want to provide a future where everyone can have access to  insurance and uses insurance, then the experience has to be top notch and hassle free, so that is one of the areas  we will continue improving on.

Last year alone, we did GH₵44 million in gross written premiums during the Covid period. When customer experience is top notch, we are giving customers value for money; and customers always want more, so we see many opportunities to grow with our customers.”

There is an inevitable upcoming struggle between Africa’s mobile money providers, each desperate to pull out small extras from each customer. By offering financial services products – following a tried and tested path taken in China – the telcos could add colossal figures to their books. At aYo, the focus remains on the provision of affordable and accessible insurance cover for all.  

“We exist to make customers lives better,” concludes Gota. “We are here to ensure customers have resilience to risk so they can go about their activities with peace of mind. This is what we are always looking to highlight. When customers are happy, our financial performance will be good. We are customer-centric and we deliver value.”