German Vegarra, is the former Africa Regional Head and Associate Director of International Finance Corporation’s (IFC) Manufacturing, Agribusiness, and Services Department. Part of World Bank’s private sector arm, German supported private sector growth, innovation, and job creation in Africa, Asia, and the Americas.
Following on from our initial conversation earlier in the year, we sat down to discuss what first led him to join the team and what the future holds for Kwanji going forward.
How did you discover Kwanji and what led you to join the team?
Through a good friend of mine, Henning von Spreckelsen. We both went to school together in Switzerland and we remained friends, always staying in contact. I remember it was last year, we were talking and he told me that he was investing in a foreign exchange company.
I take it this was something that quickly captured your attention?
Yes, I remember saying, ‘I think there is a great opportunity for innovators to break the monopolies of banks in the emerging markets.’
So from the outset, you saw there was a need to challenge incumbent banks?
I think banks basically have a monopoly on foreign exchange in the emerging markets. When you have a monopoly, you can choose your price, right? So, it’s very pricey for businesses to work through banks. I don’t want to say anything wrong about banks, it’s just a fact of the main supply, right? If you don’t have a competitive product, then banks can continue charging as much as they want.
Was it this foreknowledge that made you investigate further?
That’s what initiated the conversation. Henning gave me a call early this year and he told me about that he had just met, Leslie and William of Kwanji. Henning asked what I thought and I said: “it sounds very interesting.” I talked to a few people within IFC, just to check the sector and had everything checked. It is a sector with enormous opportunity. You need a few players to disrupt the market. I think what I liked about Kwanji was the profile of the entrepreneurs.
So you were quickly impressed by the team behind Kwanji then?
I think they are very, I hate to use the word, very religious about Kwanji. They believe in the company, they believe in the product. I think what’s important is you have belief in your product and are very focused, that’s what I appreciated. That’s how I got involved. I’m delighted to be involved. I see this sector has enormous potential, not only in foreign exchange but if you think the linkages that these pieces have, including trade finance, for example, that’s also an enormous industry to grow in Africa and other parts of the world. That’s really how it all started.
As you rightly stated, there is a high demand for that kind of business in the emerging markets. But we are curious to get your insight about how you see Kwanji developing in the forthcoming years?
I think where the market is most ready for us is a region like Africa. There’s an opportunity to really establish an operator in the emerging markets. And if you think of our emerging markets, Africa is a more logical one and logistically – it’s also closer to where the team is and also to me.
What about Latin America, coming from that particular region, do you see it as being a top priority area in need FX disruption?
Yes. I would put Africa and Latin America as top priorities, I would put Latin America perhaps slightly further, because of regulatory pressures. There’s also countries in Asia. In China, I see great opportunity to become a player in the Renminbi market. The Renminbi market today is in its infancy. It needs some potential players to become anchors of Renminbi.
Could you further expand on the role Kwanji could play in China?
By getting the lines from operators in China to allow us to actually do Renminbi in all the African or Asian currencies. That’s our future. That’s what I truly believe as nobody’s playing that role today and Kwanji, could easily play that role.
Despite the undoubted potential, will focusing on less well-established currency & trading flows not be somewhat of a long and difficult process?
It’s not really hard. There is actually a good flow. You are just happy to see the growth of this economy. I think in terms of value for us, there is now greater potential in Africa, Latin America and Asia, than in regions tied to traditional currencies.