Kose runs two-currency wallets. That is a product decision, and it was not a difficult one, because in Zimbabwe a payments product that only speaks one currency is a payments product that half your market cannot use.
The harder question sat behind it, and I did not have a clean answer for longer than I would like to admit. Not which currencies the product accepts. Which currency the business itself thinks in.
Every venture has one. It is the currency you instinctively use when somebody asks how the month went, the one your mental arithmetic runs in, the one in which a number feels large or small. Most founders have never named it. That is where the damage starts.
Three mismatches, in order of how quietly they kill you
Revenue against cost. You earn in one currency and pay in another. This is the mismatch founders notice, because it shows up as margin evaporating between the sale and the settlement, and it shows up fast.
Capital against revenue. You raise or borrow in one currency and generate in another. This one is slower and much more dangerous. A facility that looked serviceable at one rate becomes a different obligation entirely at another, and nothing about your operations changed. You did the work. The work simply got repriced while you were doing it.
Price against your customer’s mental accounting. The subtlest of the three. Your customer has a functional currency too, and if you price in yours while they think in theirs, every price change reads to them as a decision you made rather than a rate that moved. You will be having an argument about greed when the conversation should have been about arithmetic.
I have been on the wrong side of all three.
Naming it is most of the work
The exercise takes an afternoon and it is worth more than most strategy offsites.
Write down, honestly, which currency each of these lives in: your revenue, your cost base, your salaries, your capital, your pricing, and the number you quote when somebody asks how the business is doing.
If they are not all the same, you are carrying currency risk. That is not automatically a problem, and in this region it is often unavoidable. The problem is carrying it without having decided to.
Then pick your functional currency deliberately and write it down. Everything else becomes a translation with a known cost, rather than a surprise with an unknown one.
For most ventures I have worked with, the right answer is the currency your costs are hardest to move. You can reprice a product faster than you can reprice a lease or a salary. Anchor to the thing that is rigid, and let the flexible things flex.
What this does to your capital conversation
This is where the pillar meets the practice.
An investor evaluating an African venture is pricing currency risk whether or not either of you discusses it. If you have not named your functional currency, they will assume the worst case, because that is the rational thing to assume about an unknown.
A founder who can say, without hesitating, which currency the business thinks in, where the mismatches sit, what they cost in a bad quarter, and what has been done to narrow them, is telling an investor something that no revenue chart tells them. It says the risk has been examined rather than survived.
I have watched two founders with comparable numbers get very different receptions on exactly this. The difference came down to one of them having done the afternoon’s work.
The same is true of pricing conversations with customers. Pricing is a trajectory, and part of what determines that trajectory is a currency decision you made or failed to make years earlier.
Where I have to stop
There is a version of this essay that goes further, into why the conditions are what they are and who is responsible for them. I am not going to write that version here.
Partly because it is well covered by people better placed to write it. Mostly because the founder reading this has to operate on Monday regardless of how that argument resolves.
What I will say is this. The largest risks in this market are not the ones on your risk register, and they are not the ones you can hedge. What you can do is refuse to be surprised by the ones that are entirely knowable, and your own currency exposure is the most knowable of them. It is sitting in your own books, this afternoon, waiting for somebody to write it down.
The honest cost
Doing this properly will tell you something you would rather not know.
Most founders who run the exercise discover that a business they thought was growing has been roughly flat in real terms, and that the growth was translation. That is a difficult afternoon. I have had it.
The alternative is not avoiding the fact. The alternative is finding out later, with more staff, more obligations, and less room to respond. I have had that afternoon too, and it is worse.
