Analysis of Wari’s Existing Business Model A successful mode, however issues are arising and aggressive competitors are circling Product Mix Wari provides to its different markets five major categories of services/products, as summarised in Table 51. Transactions are carried out by means of a digital platform provided by Wari. This platform is multi-channel, interactive, and multi-country, and allows for the interconnection of retail outlets, distributors, financial partners, merchants and Wari. In 2016, the Wari network consists of more than 500,000 direct service points and partners in more than 60 countries. It allows more than one million transactions per day. Table 51: Wari’s Core Product Mix a Product Description Target Market Network Access Criteria Remittance (97.5% of 2016 turnover) Send and received in all WARI points of sales worldwide Valid ID in the country of transaction Wari branded and unbranded POS National limits on minimum and maximum transfers Bill Payment (1.0% of 2016 turnover) Bill payments (water, electricity, school fees, Internet, etc.) instantly and at 24 hours a day /7 days a week Any individual or legal entity Wari branded and unbranded POS Only applicable for bills not overdue Airtime (0.2% of 2016 turnover) Buy mobile airtime via any WARI point of sales Any individual with a mobile phone and valid only in Senegal Wari branded and unbranded POS A valid mobile network service subscription Cards (1.1% of 2016 turnover) Access to all the services provided by WARI through a pin card. Housewives, Merchants, Employees, Retired, Students, E-users, Companies and organizations Wari branded and unbranded POS All the network of commercial banks (ATMs, EPTs…) worldwide where VISA, MASTERCARD ID card ownership
Risks A shift from ad-hoc reaction to risks to a comprehensive risk management framework including hiring of risk management professionals Risks inherent in this business plan were assessed using the framework shown in Figure 111. This framework allows for risks mitigation/management risks to be classified into one of four classifications – (1) strategy, (2) contingency, (3) strategy refinement and (4) non-strategic. Figure 111: Risk Assessment Framework The table below provides a summary of identified risks in the first three classifications, their relative importance and proposed risk mitigation or management strategies. A full risk register will be developed over the next 6 months. Table 111: Risk Assessment Description Classification Mitigation / Management Wari is diversifying its activities through digital banking. Although this activity is expected to improve Wari’s financial performance in the medium term, the transformation exposes the company to strong competition from banks. 2 Maintain existing banking relationships and continue to discuss deepening relationships with these banks. Develop a marketing campaign that increases the likelihood that Wari is the preferred choice for new banking customers. Major mobile network operators are aggressively pursuing mobile money market share and have developed significant international distribution networks and pricing power. This poses the risk that Wari will not be able to extend its market and product footprint rapidly enough to stave off the competition. 1 Wari’s acquisition of Tigo Senegal is part of its mitigation strategy. Additionally, Wari’s planned acquisition of BIMAU bank will allow a rapid roll-out of its digital banking solutions, thereby stepping over the offering of other Major mobile network operators To deliver on its digital banking strategy, Wari will need to recruit a number of skilled specialists over the next few years. Difficulties in recruiting these people risks delaying or undermining implementation of the strategy. 1 Identify human resource requirements early and maintain a database of qualified professionals who may be interested in joining Wari at the appropriate time.
Transferability of cellular network operators licence is yet to be confirmed by ARTP. 2 Continue to lobby ARTP and the Senegal government to ensure licence is transferred. If necessary, develop and implement a public relations campaign in relation to this risk. The Group's potential growth in banking activity in the coming years would expose it to several legal and regulatory constraints (primarily banking regulations and central bank supervision) as well as a significant financial risk (for example, financial solvency and quality of portfolio). 1 Establish a banking risk management working committee to develop a communications strategy for engagement with banking regulators and central banks and formulate relevant financial risk control policy. Over time, form a banking risk management unit headed by an experienced banking risk management professional. Wari has limited experience in maintaining an appropriate capital structure and has typically funded investments either through its own funds or from operating cash flows. This practice will expose the company to a significant financial risk as it ramps up its strategic acquisition program due to the potential for a duration mismatch between capital and investments. 1 Ensure duration matching through strategic capital raising. Consider appropriate financing structure for each significant investment or acquisition. Wari’s planned international expansion increases its exposure to foreign exchange risk. 3 Regularly review existing treasure risk management policy, particularly with respect to currency risk exposure and refine as necessary. Ensure appropriate skilled resources in the group treasure unit.