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NIGERIANS IN DIASPORA TIPS ON STARTING A RECHARGE VOUCHER BUSINESS IN NIGERIA WHILE LIVING ABROAD.
by Shikenan Staff Writer: Abimbola Kuti   on Mon, April 30, 2012  - 5 COMMENTS
 
Nigerians in Diaspora tips on Starting a Recharge Voucher Business in Nigeria while living Abroad.

If you are a Nigerian abroad looking for a business to invest in back home, then the recharge voucher printing business might be the one for you. However, since you will not be in Nigeria, you will need to find a trusted relative or friend to help you manage it (Good luck with that!).

Most Nigerians want to start a business back home in order to have another source of income so that when they are being asked to send money they can easily use the income from that business. Furthermore, they want to use the profits of the business to start building their dream home in Nigeria. A recharge business seems to fit that bill and does not require intensive capital.

 

Although, this has been a business that has been around for a long time, it is still a business that is guaranteed to yield some good returns. Before now it used to be a mine field for big Super-Dealers, but over time, recharge card printing has been made available for people with small start-up capital.
 

What you need to understand:

The difference between a voucher and a recharge card

Vouchers are printed papers that have PINs on them. The prices of these PINs vary and are purchased online from the networks (if you are purchasing very large quantity) or you can buy them from the super-dealers. The vouchers are often priced starting at 100 -200 Naira. On the other hand, recharge cards are solely printed by the networks and starts from 200 Naira.
 

Who are the Super -Dealers?
The super-dealers are the companies that deal directly with the networks. These companies buy recharge PINs, recharge cards and SIM packs. They are often referred to as super-dealers. It is from these super-dealers that people with small businesses buy from.
 

Who are the Operators?
These are the mobile service providers that are currently available in Nigeria:

GSM Providers:

  • MTN
  • Airtel
  • Glo
  • Etisalat
  • Zoom (which is available in very few cities)

 


CDMA or Fixed Wireless Providers:

  • Multilinks
  • Visafone
  • Starcomms
  • Oduatel


Where Would You Fit In?
As a potential seller of recharge cards, you need to determine where you will fit in in the scheme of things. Where you will fit in depends largely on your start-up capital. But if you are planning to open a sales outlet, you need to quickly establish yourself as a recharge card seller as the competition could be very stiff.

Since most of the prices for the recharge card are fixed, you can only gain a competitive advantage by offering good customer service and employing sales people to market the recharge cards for you.

The customers you are targeting are those people that sell recharge cards around you. These are the road-side recharge card sellers, the ones in the shops, and the vendors that sell in traffic hold-ups. You have to look for people that will buy the vouchers from you on time so that you can quickly stock up after the sale.

By extension, your customers also include anyone that uses GSM/CDMA phones. With this, you can also become a retailer (especially if you have a shop). The advantage of this is that you get to increase your profit margin but you will be selling at a slower pace verses selling in bulk to vendors and shops

Being abroad means you have to rely on someone else to help you with setting up the business. Below are some actionable steps that should be taken:
 

1. Find a trusted person

2. Decide on how revenue will be shared

3. Decide if you will lease a shop for the person or if they would have to go out and sell it on their own

4. Do your own research (ask your friends & relatives what they have heard about the recharge card business)

5. Now give your trusted relative or friend a list of items you want them to research on

a. Who are the dealers?

b. Where to buy the vouchers from in wholesale?

c. What is the wholesale & retail price?

d. How hard it is to get into the business in the location where they live?

e. How much will everything cost to start?

f. What equipments are needed?

g. What are the MUST equipments and the ones you can postpone to buy later on?
 

A list is suggested because many people abroad, start a business blindly without asking the proper questions. Everybody at home always say bring it, it will sell; you will make millions if you start this business right now. However, when you start to ask questions, you begin to see how easily you can become a pauper listening to them.

Getting Started:

Below are some things that needs to be done in order to start the business

  • Getting a Dealer: The first step that should be taken is to look for a major dealer or partner and do research on how much they charge on their vouchers. You need to know if they have all the major networks and how the PINs will be released.
     

Some of the dealers now have websites so you can easily Google them, and don’t necessarily have to visit their physical office to get information. The internet now makes it easy to compare prices and get the best rate in the market.
 

  • Register with a Dealer: After you decide on the dealer you want, the next step is to register with one. The registration is free. The dealer has to know you by name or by some sort of identification that only you will be using in order to make the transaction easy and fast. This will also enable them to have you in their database for record-keeping purposes.

You have to also know if the dealer expects you to be online all the time or just when you want to purchase the voucher PINs. As stated earlier, some of these dealers operate in different ways and you have to determine which one suits you best.
 

  • Get The Software: The purpose of the software is for you to be able to have an interface in which you will be printing the recharge vouchers from. This software could be downloaded free or the major dealer could ask for a token. It all depends on the dealer and its services.
     
  • Pay for Your Voucher PINs: The next step is to pay for the first batch of the vouchers. This also depends on the payment method the dealer has in place. For some dealers, they require you to pay into their account and text your payment details. For some others, they have online pay portal and you can make the purchase with your Debit and Credit Card. Basically, these are the things you should look out for when choosing your dealers. The minimum amount of PINS you can buy is 100 because they come in 100 batches.
     
  • Get Computer and Printers: The next step is to get all the necessary equipment on ground, which usually is a laptop or desktop computer depending on the initial capital. A printer is definitely needed, that is the only way the voucher can be printed
     
  • Orange Box: If you cannot afford a computer system or printer, there is a tool called "Orange Box" which is an alternative to a computer and printer. Some of the major dealers might give this to you so that you will be able to print the recharge vouchers until you can afford to buy a printer and computer.

    Bulk Printing:  To make the job easier many sellers hire a professional printer to print the papers for the vouchers according to their denominations, and the color of the network. For instance, yellow is for MTN and red is for Airtel. All that is left for the seller to do after that is to print the pins on the papers.

     

Others Things You Need To Know:

  • Be Security Conscious: You need to keep your password and username (you use this in downloading the PINs) from falling into the wrong hands.
     
  • Have A Marketing Strategy: In Nigeria everybody does the same thing and everybody copies & paste. In order to have a competitive advantage, your marketing has to be targeted and based on the location where you are and the people who you are serving. You can employ young chaps that will help you market the vouchers. Another idea is to sell the vouchers at a slightly reduced price in order to beat your competitors.
     
  • Your Start-up Capital: With little as 9,500Naira (for 100 Pins of 100 denominations) you can start the business.
     
  • Confirm Before You Pay: Please ensure that the dealer has the requested PINs you are paying for before you make the payment.
     

The Future of Recharge Business in Nigeria:

This is something to keep in the back of your mind when starting out in this business. According to this recent article the recharge business in Nigeria might soon see a slowdown in business.  “The Central Bank of Nigeria (CBN) has licensed 16 mobile money operators to render mobile banking, payment and associated services using agent networks, and using the mobile phone as a means of authentication.” Furthermore, “different channels of distributing recharge cards will change to mostly e-transfers and e-payments, thereby eliminating the airtime distribution chain.  Read more of the article here
 

More Resources:

  1. http://www.businessdayonline.com/NG/index.php/news/76-hot-topic/35939-recharge-card-business-threatened-by-mobile-payments
     
  2. http://www.nigerianbestforum.com/index.php?topic=144921.0
     
  3. http://www.mobilenigeria.com/viewtopic.php?id=219
     
  4. http://www.nigeriacommunicationsweek.com.ng/news/mobile-payments-threaten-n1bn-per-day-recharge-card-business

 

Now is your turn to let us know if you have any further advice for anyone who ones to start a recharge business in Nigeria.

 

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