The company once known as Net1 has just posted its first full-year profit and is telling the market to expect adjusted earnings to compound at more than 40% a year. Executive chairman Ali Mazanderani, who says he has helped build seven multibillion-dollar fintechs from Brazil to Europe, told Alec Hogg why he believes South Africa's big banks are structurally unable to win the township economy, and why local capital has been too cautious to back the challengers. He also set out what the pending Bank Zero deal would do to Lesaka's debt, why nine in ten South African merchants still don't take card payments, and why he accepted a pay deal that only works if the share price does..Listen here.Edited transcript of the interview.Alec Hogg (00:02) Well, four years ago, just the other day it feels like, Net1 was a grants payment scandal with a Nasdaq listing. Today, what's now called Lesaka has just posted its first full-year profit. That was for the year to end June. It's cut debt, and it is promising 40% annual earnings growth. There are some little niggles, like its own auditor saying that the controls still aren't working. We'll find out more about that in a moment.As part of our focus on informal sector beneficiaries, after talking to GG Alcock, we had a look at where the best opportunities were for the Ricardo Rand portfolio. We found that a couple of them had already been fully priced, but Lesaka was offering excellent value. So Lesaka is back in the Ricardo Rand portfolio. And it's as much a story about the man driving it as it is about the company itself. So we're really happy to have executive chairman Ali Mazanderani with us.Ali, I won't say you're media shy, but you certainly aren't out there pounding the media environment. So it's really good to be talking to you. But I want to find out a bit more about you. Born in Texas, raised in rural South Africa: how does that happen?Ali Mazanderani (01:37) My father came here on holiday and he loved the country. He fell in love really with the quality of life and the quality of people, and he moved the family. There was no other particular reason. So South Africa became home and we were raised here.Alec Hogg (02:00) So where did you actually grow up?Ali Mazanderani (02:02) In the Lowveld.Alec Hogg (02:04) In the Lowveld, okay. And when you were there, because it's relevant now, what did the local shop, the local cafe, look like to you?Ali Mazanderani (02:16) Firstly, it was quite far away. I grew up on a farm, so it was quite a long bicycle ride. It was a local convenience store. I think it was Portuguese owned: a small butchery and some simple groceries. There was certainly no Woolworths within the area.Alec Hogg (02:43) I'm thinking of parallels with the market that Lesaka serves now.Ali Mazanderani (02:49) Certainly the area I grew up in would be the type of area that Lesaka would target. It's not a deep rural area, but it's an area that has a limited population, and it has underserviced communities and businesses.Alec Hogg (03:13) And your surname, Mazanderani, is a Persian name. Is there an Iranian connection?Ali Mazanderani (03:17) It is a Persian name. My father's heritage is originally Persian. My father's background is Iraqi; he was born in Iraq. But like many people from Iraq, he was of mixed Arab and Persian ancestry.Alec Hogg (03:35) Okay, and the stuff that's going on in the Middle East, you presumably don't have an opinion, or at least not for this conversation.Ali Mazanderani (03:44) I have the good fortune of not having to be in the middle of it. I think when you're an American with Middle Eastern parentage, it's usually best not to provide too many opinions on these things. The only thing I would say is that I am proud of my cultural heritage, but I don't really have any association. I've never been there, so it's very diluted.Alec Hogg (04:12) Getting back to South Africa, you were at FNB in Johannesburg around 2008. Did you learn much there, working for a big bank, that you can use against them now?Ali Mazanderani (04:23) I think it was because of my time at FNB that I'm doing what I'm doing. I made a very deliberate decision. I did my undergraduate here, but I left South Africa to go to university in the UK. And after a couple of years of working in London, I wanted to be back here. So I came back and I made the deliberate decision to focus on financial services, really because I had a passion for financial inclusion. I studied development economics.I was very fortunate to get a relatively senior role, given my age at the time, in the bank. So I had a very good helicopter view and access to the senior executives. And it became acutely clear to me that with the wave of digitisation that was going to happen, not just in South Africa or Africa but around the world, the incumbent banks were very, very poorly placed to take advantage of it. It was sitting in meetings at FNB that that realisation dawned, around some of the structural challenges they would have, even with the best intentions and the best people. That formed the basis for my private equity career. It was a deliberate decision.Initially, much of that career was spent in other parts of the world, because the opportunity was enormous there, whether it be India or Brazil or the Middle East. But what I'm doing in South Africa is a direct continuation of the realisations I had at FNB more than 15 years ago.Alec Hogg (05:55) You did mention Brazil. What's Brazil got right in this area that South Africa perhaps hasn't? I use Brazil because we have a homegrown example: the chief executive of our biggest homegrown company is Brazilian. The whole Naspers/Prosus group is now driven by somebody who also played in the same kind of area that you are.Ali Mazanderani (06:21) Yes, there are a lot of parallels between Brazil and South Africa. I often say that South Africa is between a quarter and a fifth of the size, but the dynamics are quite familiar. I did find it very comfortable working there. I was very fortunate that I had good partners there as well, and we built a multibillion-dollar business together.If you ask what they got right from a fintech perspective, it's that there was much more of a tendency to invest in the future than to protect the past. I do think that South African capital has a tendency to think that past is prologue, and to try to reinforce what is, rather than recognising the bend in the road, the technology innovation that's going to come, and allocating capital accordingly. So the businesses that I invested in in Brazil faced far less scepticism around the opportunity, and capital flowed more freely to them. As a consequence, they succeeded enormously.When I first invested in Brazil, the market looked very similar to the South African market today. The financial services industry was dominated by four or five big banks. They had very high ROEs; they were very profitable businesses. There was no Nubank to speak of, there was no StoneCo, there was no PagSeguro. The Mercado Libre business was in its infancy, Banco Inter was in its infancy.(08:12) If I fast forward to today, the market cap of the fintech insurgents that basically didn't exist 10 to 15 years ago is now more than half of the market cap of those big four banks. If you make the equivalent comparison in South Africa, the big banks in this country have a combined market cap of north of $100 billion. The entirety of the fintech ecosystem, if you're generous, may come to a couple of billion dollars. So there's a very, very clear gap between where Brazil went and where we went.Every market evolution is a function of really three things: the opportunity that exists, the team that is executing that opportunity, and the capital that is provided to do so. I would say that South Africa is not short of the talent pool, and it's also not short of the opportunity set. So for me, one of the missing criteria has been the conviction capital.Alec Hogg (09:06) Is it coming?Ali Mazanderani (09:08) I think it does come. But one of the benefits of the Lesaka story is that I was cognisant of the dynamics in South Africa. So the way that we're building the business is that we're building it profitably. It's actually quite irregular to have a growth equity fintech insurgent that is avowedly taking a profitable path. That certainly was not the case for the business that I invested in in Brazil, for example. At the time I invested in it, it was loss making.And it's partly because I don't think that the market considers payments or fintech businesses as infrastructure businesses. You'd have a different conversation if you were saying, I'm investing in a railroad or I'm investing in a power plant, in terms of how you would adjudicate the valuations. They are equating it more to a retail environment, which is completely not the way the unit economics work. Once you have defrayed your fixed costs, once you've built that infrastructure, your marginal returns tend to be very high, so you don't have a linear gross profit contribution. But we're fortunate that in the Lesaka construct we could thread that.So do I think that capital will be more ambitious in South Africa's digitisation evolution? Yes, I do. But do I think it's going to be on the frontier? No. I think there are a lot of structural reasons why people will tend to be more defensive in their South African portfolios than they might be in other countries.Alec Hogg (10:48) Ali, what are those? You've actually hit on something that affected me when I started my little media company. I had to be profitable from virtually day one. At the time that I listed, I was told to spend for success, and then the dot-com boom came along and it was exactly the same thing. The share price just plummeted, even though you were investing in the future. And you learned quickly that the only way shareholders would stop bugging you was if you actually spent less than you got in. As you've explained, that's not a global approach. Why do you think it is that we in South Africa require different parameters for what should be fast-growing, well-capitalised companies?Ali Mazanderani (11:41) I think there's a combination of reasons, candidly. One of the reasons is linked intimately to the history of the country. I think there is a more defensive mindset. People wish to try to protect what is, more than try to create more exciting realities.I think there is also a feature of the industry as a whole, where it was very heavily driven by a specific profession. You get investment communities that are more driven by accountants, you get investment communities that are more driven by lawyers, and you get investment communities that are more driven by entrepreneurs. The South African environment, I think, had a very heavy accounting influence associated with it, so it tends to be more about where things are.I also think the asset management industry's compensation structure is less promote-based, less carry-based, less performance-based and more AUM-based than in a lot of other markets, which creates that dynamic. And I think there hasn't been a critical mass of technology success stories. The historical bedrock of the JSE was more traditional consumer, retail, industrial or mining businesses. So the community as a whole was less familiar with the dynamics associated with success in technology companies.I do think that is evolving, to be honest. There are a lot of smart investors in the country. Opportunities will emerge, and you do see (13:37) success stories breaking out in businesses that earn the right to point to a story and have the conviction that people can follow and give tolerance to. But I think the right has to be earned. I didn't join the story with the expectation that we were, if you like, going to get a pass on that.That's why I was quite happy to evolve the Lesaka business in a listed environment, because I felt that you can also grow the conviction. We are addressing it in public. People can see exactly what we're doing as we're evolving. And we have an even higher cadence of reporting than most businesses in the country because we're Nasdaq listed, so we report quarterly. It's now maybe 16 quarters, I think, that we've successfully achieved our profitability guidance. And if you do that over a number of years, people will increasingly believe in the projections that you're providing. That credibility then reinforces the sentiment of growth equity investing.But we don't expect to change the nature of capital allocation here. What I would say is that having the dual listing is helpful, because it also provides us access to US investors who are much more familiar with that kind of story. Ultimately, I think many of South Africa's great success stories have been funded initially by foreign capital. I'm not sure that's going to change quickly.Alec Hogg (15:19) Indeed. We were drawn back to Lesaka by GG Alcock and a conversation I had with him in our studio very recently, where he explained that the informal sector is continuing to grow, and grow strongly, and that one of the key players there is the fintech company that dominates the informal sector, which is you guys. For someone who's never heard of you before, and someone who's never even been into a township, which many investors from the first world of South Africa may well be in the position of, explain what your value proposition is.Ali Mazanderani (16:04) We have three pillars to our business: a consumer business, a merchant business and an enterprise business. In the consumer business, we have north of two million active customers. The evolution of that business was basically providing a transactional account for social grant recipients, but we've now moved beyond just that perimeter.What differentiates us from a traditional service provider, a traditional bank or a retailer operating in that space, is the Lesaka payoff line, which is "where you are". [Lesaka's brand line is "Where You Are, We Are".] Most of our employees are frontline. We have 4,000 employees in the company, and our distribution is differentiated. We actually go out to townships, to peri-urban and rural areas, to the town halls, to the churches, to the community centres, and we onboard customers where they are. We do it digitally: there'll be a tablet that will onboard them, and we issue them with a transactional account on a card there and then, which they can activate.So we save them the distance, we save them the cost of transportation in this country, which can be prohibitive for a lot of these people, and we remove the friction in their lives. The cost of friction when you are a disregarded customer in a rural part of this country is enormous. So it's very important to me that the process is also one that's filled with dignity, respect for the individual and care. I was speaking to the person who runs that business last night. He told me that sometimes people come into the branches just to say hello.Our branch network is largely a service network, not a sales network. It's where they can come if they need help, whereas our sales network is largely direct and it's human. So we are a digital business, but with a human engagement. (18:07) I think last month the data showed that more than 100,000 human interactions occurred on a single day. I don't know what financial services provider, or any business in this country, has that equivalent cadence of engagement.The thing that is very telling about that product, though, is that we do it very profitably. Our consumer business has three products. It has the transactional account. It has an unsecured lending product that no other bank will provide to that segment, and in absolute value terms we probably process more loans at our peaks than any financial.Ali Mazanderani (19:21) So because of the cross-sell, our unit economics are also best in class. If you follow the last five years of that consumer business, you would have found a business that was losing maybe a billion rand a year, to one that will be generating not far off that this year. It's an enormous swing, and that's because we're above the inflection point of the fixed cost.You'll also find a business that, in that segment, is growing its market share more than any other player. In absolute value terms, we onboard more customers in the lowest LSM segments now than any of the banks in this country. And it's because the value proposition really works. So that's our consumer proposition in a nutshell. We are disrupting distribution, we are doing so very profitably, and we are doing so where I think we still have a long way to go.The candid truth is that no other financial services provider is providing our customers with the same products that we're providing, which means our unit economics are far better. We don't just have a transactional relationship with that customer; we have a relationship across multiple products that we can defray our fixed costs over. So that's the one arena.The other arena is our merchant business, where we have 120,000 merchants. The largest type of merchant, if you like, would be a spaza, a local convenience store. There's been a lot of talk around the digitisation of that segment, but there are a few candid realities in South Africa that are really telling. (21:18) This is the SARB’s own data. You have almost the entirety of the adult population in this country banked, including in the rural and peri-urban areas, where we are growing our business by switching people out from existing incumbents. Whereas close to 90% of all merchants in this country don't accept a digital payment. They don't accept a card payment, they don't accept a mobile money payment.So you don't have a chicken-and-egg problem. You have a situation in which, once a month, people will travel into town and withdraw all the cash they have, not necessarily because they're going to spend it immediately, but because the cost of the transport is prohibitive, and because within their local ecosystem they don't have enough places where they can pay electronically. That has an enormous societal cost. It increases crime, and the inefficiencies of cash. The estimate is that taking cash out of the equation can reduce crime by up to 10% in a local area. And digitising increases the GDP growth of a country, depending on the dynamics of the country, by between 1% and 4%.So there are huge positive externalities from doing it, but no incumbent has really succeeded in digitising that environment, because today almost 60% of all transactions in South Africa are still in cash. Obviously that's not the case in Sandton, so it's dominant in the rural economy.So what did we have to do to change that? We had to do a few things. The first thing is that the initial relationship with those customers was not an "I will charge you to accept a digital payment" relationship, which is the product called merchant acquiring. It was: let us provide a point of sale to you that you can use to sell services to your customers. So it's a profit relationship with that customer. Those services were initially prepaid airtime; it moved on to prepaid electricity, to data services, and to any number of other intangible services, including bill payment services, for whatever that customer may need to do. It could be to pay municipal fees; it could be to pay for their funeral insurance. So you created this ecosystem of connectivity where the spaza (23:37) could provide an intangible service to their customer.But once they have the platform and you're generating a payback from that, you can add merchant acquiring, the acceptance of a Visa and a Mastercard transaction, so that the customer doesn't need to withdraw cash from an ATM or from a supermarket in town.However, you quickly realise a couple of things. One of the things you realise is that for them to accept a Visa or Mastercard payment in a spaza environment, it's no good if they can't use that digital store of value to pay for the things they need to pay for, like their suppliers. If they get it in their account and then they have to withdraw the money to pay their suppliers, it ruins the ecosystem. So what we had to do was create a connected environment through suppliers: contracting with FMCG companies, if you're selling drinks or crisps or milk or bread, and digitising the supply chain, such that it benefits the FMCG business, because they have less leakage and there's less risk for their drivers on their rounds. But it also keeps that ecosystem going and mutually reinforcing.That's a very powerful moat, because you're not selling an acquiring product, and you're not selling a supplier payments product, and you're not selling what we call VAS or ADP as a product. You're selling a collection of them. In the larger environments, we will also provide a cash vault, where we allow that shop or wholesaler to deposit cash and have immediate access to it through their account, by taking a risk share. The availability of money is obviously a key friction in a community that has limited access.Once you have that ecosystem together, the provisioning of credit is far easier, because you have data, you have the relationship on the acquiring, you have the relationship with the cash, and you're not selling a single product that you have to defray all your fixed costs over.People often look at us and assume we're competing with a business. (25:56) In most instances we're not competing with a business; we're actually competing with multiple businesses on product. The success of our business is going to be whether we effectively service and engage with that customer across those many products in a manner that is transparent, simple and meets their needs, rather than whether we are better than a competitor at delivering a single product.Every single one of those products should have reducing margin as the market matures. I think that will be good for society and good for the customer. But if you're selling a relationship with multiple products, you're able to provide better value. So value becomes the defining characteristic of long-run success, rather than price.That was really the thesis I applied around the world. This is the eighth platform that I've been intimately involved in building. The previous seven are all multibillion-dollar businesses. It didn't matter whether I was doing it in India or Brazil or Europe. The European business I was the founder of, so I built it from scratch [Teya, formerly SaltPay]. It was the same logic.People assume, if they are thinking of it from a banking mindset or a retailer mindset, that what you need to do is provide the cheapest priced product. But ask yourself the question: who are the winners in digitising commerce in any of the jurisdictions that have evolved materially? You'll find that it was almost never the cheapest provider. If I go to the US and look at the SMB acceptance space, I can tell you with certainty that Block, or Square, is far more expensive than its competitors. I can tell you that Stripe is more expensive than its competitors. I can tell you that Shopify is more expensive than its competitors. I can even tell you that Adyen, a European payments company in enterprise acceptance, is more expensive than a lot of its competitors. It's because they're providing a differentiated proposition and better value, and that is their moat.Ultimately, our ability to execute on that will define whether we succeed in the merchant business. In the consumer business, we've been at it for longer. We've had the opportunity to evolve that process, so I think we are clearly in a good place there. (28:19) In the merchant business, we still have a few quarters to go to evolve that offering, because we bought businesses and are putting them together, which again is a playbook I've used in multiple other geographies.The wonderful thing when you have both of these is that you can create a mutually reinforcing ecosystem, where those consumers who are engaging with those merchants (28:47) provide value for both. Because ultimately the merchants want to reduce cash, which is expensive for them, and ultimately the consumers want the convenience.Alec Hogg (28:57) It's a wonderful story, and as I started doing more of my research into it, that became very apparent. But Bank Zero: you've now got a banking licence. How does that fit into the ecosystem?Ali Mazanderani (29:11) We are still waiting for the Prudential Authority to provide the approval on that, but we are hopeful that it will happen within this calendar year. The banking licence fits in in a few ways. The one way, obviously, is that from a balance sheet perspective it transforms our business. As a business, we currently take bank lines at north of 10% interest in order to fund our credit to our consumers and to our merchants. Meanwhile, our consumers and our merchants effectively have very material deposits, but those deposits are currently sitting with our bank sponsors.So if we have the ability to take that credit book and effectively put it into the bank and fund it with the bank's deposits, we firstly materially reduce our gross debt. In the last investor presentation, we basically alluded to the fact that we expect to have effectively no net debt within a couple of years post the transaction. And we also materially improve our P&L by reducing our cost of funding. Today we spend more than R400 million a year on bank interest. So it's a non-trivial charge, and we're profitable despite that.Alec Hogg (30:40) How are you profitable, though? Everything you've told me suggests it's been a big job building the ecosystem, and you're still doing it on the merchant side. I get it now why you bought the bank, and I think it's easy to understand. But how are you able to turn a profit and still grow so fast?Ali Mazanderani (31:04) I think it's because the opportunity we have is very difficult for incumbents to address. There are three main competitive advantages.The first one I've alluded to before, which is the distribution differential. If you are able to build a proposition from scratch, you build the proposition that you think will make most sense for your customers. Very few of the incumbents engaged with their customers with the expectation that they would go out to service them. It doesn't matter whether you're a bank or a retailer: you're asking them to come to you. Even when they tout their advantage as a big distribution footprint, when you have thousands of feet on the street you're never going to have a smaller distribution footprint than a retailer or a bank, because your people can visit multiple locations on any given day or in any given month. It's a different model. It requires a different muscle, a different capability, a different logistical expertise.The second big advantage is that we are building in this generation. Technology dates, and it dates quite quickly, and you always have an opportunity to build more effective platforms if you're, I guess, later to the party. I think that mindset is also an important one. Businesses can reinvent themselves, but it's quite hard to do so when you've got existing ways of working. We've had the opportunity to build technology that's fit for purpose, and I think that results in a much lower cost and a much more digital operational capability set.The third one is perhaps the most important. It's the insight I got from my time at FNB; if there was one clear insight I developed, it was this. As an incumbent, you can develop the capability to build a new distribution arena. You can develop the ability to be more technology oriented. (33:30) But if you make your money in a certain way, the probability is that the people who make that money are going to be the decision-making parties within that bank or that retailer. So what usually happens is that new businesses are iterated out from how things operate today. There's incremental evolution.But if you look at a problem with a fresh set of eyes and say, okay, I'm not going to base this on how things are, this is not a path-dependent exercise, I'm going to say what should be and work back from that narrative, then you can entirely disrupt a business model, and you may make money in a completely different way from how that money was traditionally made.As a simple example, you may find a situation in which a business makes money from its mortgage book, and the SMB parties that need money are using mortgages to fund their operating businesses. It's not in the bank's interests to work on a cash flow management basis. There could be multiple other examples of this misalignment of interests. Another good one is the transactional fee addiction that South African banks have, where very high interchange generates a material amount of the profit pool. So they're very reticent to evolve that interchange, the cost of making a digital payment. But the reality is that the economy would benefit hugely from that digitisation. It's just that another part of the bank might benefit; they may benefit from the consequence of the flood.So because you have this structural misalignment of interests, they tend to be very slow to cannibalise what exists today. It's a very brave executive with a very long time horizon who says, I'm going to take a 20% bloodbath, (35:26) I'm going to try to convince sceptical investors who are defence-minded in the South African environment that this is going to be good for their long-term future, and makes that call. That structural impediment was the reason why fintech businesses won. It didn't matter which geography it was in. It was because the incumbents had limits to their capacity to cannibalise the way things are done today in order to build for what should be.Alec Hogg (35:57) All of that makes a lot of sense. Where are you now, though? If you look at your other experiences around the world, and as you say this is your eighth build, as it were, how long is it, for shareholders and potential shareholders, before the penny might start dropping that this is a long-term business with enormous future potential?Ali Mazanderani (36:32) I think it's not a question of when the penny will drop. I think the penny is already dropping. I don't think there are many businesses you could invest in on the JSE today that have got 200% EPS growth adjusted EPS growth and north of 40% adjusted EBITDA growth. So despite the fact that we're doing it profitably at a relatively low scale, we're clearly winning in places. I'd say we're not winning in every place.The acceleration point, when it's painfully apparent, will happen in different places, but we're not talking about a decade. We're not even talking about five years. My perspective is that we are very much at the inflection point of that evolution. And candidly, that's one of the reasons I came back to South Africa. I do think timing is very important in these things.There's nothing unique about the ecosystem here, but there are certain stakeholders and certain frictions that can delay the trajectory of travel. They have the capacity to put friction on velocity, but cash is not going to make a comeback. Society will digitise, and more technology-oriented businesses that disrupt existing business models and distribution will be the ultimate winners. For me, the bet is not whether that happens over five years or not. I think the market will look profoundly different.And by the way, I don't think Lesaka will be the only winner. I would be shocked if we were the only winner, because I actually expect the opportunity to be big enough to accommodate at least two to three platforms in the market. For me, the main question is whether we are one of those two to three. I think we've got a head start in many respects.We're telling the market that we should grow our adjusted EPS at a compound 40% or so over the next three years as a base. What I would say is that I don't think that's a three-year story. I think that's a generational story. So to answer your question of how long you have to wait: (38:56) obviously the compounding effect becomes a lot more prevalent over time, so it is an investment that will benefit the patient. But I don't think you have to be patient, because we're already in a place where we're basically saying that within a couple of years, should the Bank Zero acquisition complete, and should we deliver on our guidance, which we've been delivering on over the last 18 months, we will basically have no net debt as a business. And we will be generating very material free cash. It's implausible in that construct that you're not going to have a very different outcome.Because we will only have one of three uses of that capital. We will either use it to buy back shares, or we will use it to make acquisitions. And we've said we will only make acquisitions that are accretive from an earnings perspective, so that creates a discipline associated with it. So you'd like to think that within a two-year horizon that could have a material impact.I would also say that my personal incentive structure here is (40:21) overwhelmingly out-of-the-money options. That's an incentive structure which also has a timeline associated with it. So I'm certainly of the view that we can create fantastic outcomes within that time horizon. Otherwise it would have been a foolish thing for me to accept.Alec Hogg (40:39) Yes, I've noticed that, and in fact a lot of your recent SENS announcements point to that as well: this is a very incentivised team, but not one that's just being paid for hanging around. You've got to deliver.Just to close off with: when GG Alcock spoke to us, he said that in his estimation the township economy, or the kasi economy as he calls it, is about a trillion rand. That's a huge size. How big a percentage of that is digitised at the moment, just to get a sense of that 40% generational growth projection?Ali Mazanderani (41:22) Ninety percent of all merchants do not accept a digital payment. If you reflect on that, this is still a cash economy. We know that in South Africa, 57% of all transactions happen in cash. If you're walking around in any of the major metropoles, that figure feels implausible to you, because everywhere there's a terminal. I don't know how many of your readers or listeners even engage with cash anymore. So for the average in the country to be 57%, you have to assume that in those environments it's certainly north of 90%. In those environments, there's north of R80 billion; I think it's close to R90 billion worth of cash circulating at any given time in the system.Alec Hogg (42:21) If you look at your experiences in Brazil, India and Egypt, when they were at this point, how long did it take them to get from 90% non-digital to, say, 50%?Ali Mazanderani (42:37) It was a few years. It happens slowly and then very quickly. Once the critical mass of the ecosystem is created, the logic is obvious: it's cheaper, safer, more efficient, and all stakeholders should ultimately benefit, apart from potentially bad actors. So it happens very quickly.To give you a sense of what that can mean: when I invested in the Brazilian business, we invested $50 million. It was not a profitable business; it was a relatively small business. Within a circa five-year horizon, the return on that was close to a billion dollars. So the inflection point happens very fast.Similarly, by the way, for the Egyptian business that I was very involved and invested in, the e-payments business called Fawry. A lot of people would have told me, well, Brazil is one thing, but what about Africa? Fawry is worth more than a billion dollars today, listed on the Egyptian stock exchange. Really only the biggest banks in the country have a larger market cap as financial services businesses. And there again, the evolution was very quick.Alec Hogg (44:00) Ali, thank you for your time today and for taking us through the Lesaka story. I think our tribe are going to feel a lot more comfortable now about its inclusion in our portfolios, and there'll certainly be a lot of people watching the story with a more informed set of eyes. Thanks again to GG Alcock for reminding us that Lesaka was continuing to grow at a time when it didn't appear so on the share price. But as you say, that inflection point, if it's there, could give us a very exciting future as shareholders, and we look forward to that ride.Ali Mazanderani is the executive chairman of Lesaka. I'm Alec Hogg from BizNews..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.