The TtoT framework (Tradition to Tech)

In the past 2 weeks I had 2 to 3 meetings per day with different Ethiopian tech founders. One of the founders of a successful fintech company that has been operation for 15+ year told me:

“You don’t need to come up with a revolutionary idea here. Take something that people already do and make it x5 better with tech”

When people say that in Ethiopia (and African countries in general) loans/credits systems don’t exist, that people do not have insurance or saving mechanism it’s actually false.

For centuries, people have organised themselves in various ways to overcome uncertainty and leverage the power of community. These mechanisms are based on reciprocity and altruism.

For example, in Ethiopia:

💸 Equb (እቁብ)

• Description: Equb is a traditional rotating savings and credit association where a group of people contribute a fixed amount of money regularly, and the pooled amount is given to one member each cycle.

• Potential for Disruption: Digitising the collection and distribution process, providing transparency, and adding financial planning tools could enhance its efficiency and reach.

👭 Iddir (እድር)

• Description: Iddir is a community-based mutual aid association, primarily providing financial and emotional support during emergencies, especially funerals or disease. Members contribute regularly to a collective fund used to assist those in need within the group.

• Potential for Disruption: Creating an online platform for contributions, notifications, and coordination of support activities could streamline operations and expand the support network.

🐮 Kircha (ክርቻ)

• Description: Kircha involves a group pooling money to buy an expensive resource (usually an ox) and sharing it among participants, typically during communal events.

• Potential for Disruption: Digitizing contributions, payments, and logistics can streamline the process, improve transparency, and expand participation.

Those types of organisation exist across different African countries with different names.

Let’s see how some startups are leveraging tech to x5 improve those traditional organisations.

Some startups leveraging the TtoT framework.

1. Hulucares

I had the chance to meet Tam, CEO and Hulucares, at an Insurtech event based in Addis Ababa.

Hulucares is partnering with established insurance companies in Ethiopia to tailor insurance products for underserved communities in Ethiopia, leveraging the traditional Iddir system.

They have a very interesting approach:

1. Target a certain city/zone and integrate health organisations like hospitals or clinics to their Hulucare network.

2. Provide a blockchain based health tracking system to their partners within their network. That is important to avoid fraud.

3. Visit the different villages/cities around and onboard the different Iddirs leaders. They have the power to convince all the members (Iddirs can have 100+ members) to use Hulucares.

   

   They explain it very well on their website.

1. ChipChip

If you arrived here you won’t be disappointed. I really believe that Chipchip is going to become the Pinduoduo of East Africa (and maybe Africa).

For those that don’t know Pinduoduo, as for July 2024 it as a market cap of $175 billion 😉

What Chipchip has done is taking the Kircha mechanism (ordering a good as a group and sharing it to get a better price) and taking it to a hole new level using technology.

Here is how it works:

• The user selects an item that he/she wants to buy (tomatoes, mango etc)

• He/she then has the choice between purchasing it individually, or initiate a group order (30 to 70% cheaper 😳)

• If the user chooses individual purchase, he will just need to choose a delivery method (pickup point or doorstep delivery) and pay

• If the user chooses to initiate a group order (called Team), he should choose the number of people in the team and enter a pickup address (usually his building).

• Other users can then join the team directly through the app.

• Once the team is full, people make the payment and the order is created.

• The group order is then delivered to the team leader selected address.

• The order is then dispatched among the team members.

On the backend ChiChip has several warehouses across Addis Ababa where they receive all the goods.

So why am I so bullish about this company?

1. It arrives at the perfect time; inflation is crazy in Ethiopia and people are struggling to make ends meet. They can save up to 70% with ChipChip 😳

2. ChiChip is expanding a tradition/habit that everybody knows called Kircha.

3. They don’t need to do any marketing. The virality comes from the fact that people invite their friends/family/coworkers to make a group order.

4. They started with goods that people buy every week, and have a vision to grow new verticals (clothes, electronics goods etc).

5. The more people they have, the better prices they can negotiate with transporters and suppliers (farmers).

6. The monetization streams are endless: let suppliers bid to appear to have their product appear on the top page, take commission on transactions, give loans etc.

7. They model is replicable across different African countries.

They’ve officially launched the app 5 months ago and already have +$50K in GMV with literally 0 marketing.

This is insane 🤯