African SMEs now get new ways to attract investment for their growth needs.
A Nigerian startup Moni, which has caused big waves in the financial world recently, now announced a new program offering business loans to local businesses to help them get the working capital to grow.
Africa is home to numerous tech startups offering software development services to different countries. Yet, many market niches remain investment-hungry. In Europe or Northern America, any SMB, whether it is a business analysis services company or a beer manufacturer, can get investment relatively quickly. In Africa, it is different. The continent still faces issues attracting foreign or in-house investment.
The solution offered by Moni is brilliant.
The group created a platform that enables peer-to-peer financial loans. Thus, small business owners, like market traders or spare part dealers, can raise or invest money in their communities. The system provides security checks and depends significantly on social trust.
Moni’s system boosts financial inclusion.
90% of African businesses are SMEs. Yet, the complicated system of state-backed investment makes it almost impossible from SMEs to get loans as needed and when needed. According to World Bank statistics, most of the population in Africa is either unbanked or underbanked.
Moni aims to reduce the barriers to entry into financial relations. Their statement says: “We are here for the long haul to empower Africans everywhere to prosper and build long-lasting legacies.”
Their algorithm combines the financial data of the companies and their business performance to assess the financial risks of funding. It parcels information on the transaction history, the real-time status of a business owner’s account, loan history, income, and expenses. All information is received with customer consent.
The rest works as an invite-based social network: an existing Moni user can invite a prospective candidate. The system provides the credit check, and if the latter is successful, they can apply for a loan in 5 minutes. Other registered members can use their accounts to bail out the users who do not deserve trust.
That caters to the growth of social responsibility: no one wants to be excluded from the financial community with a compromised reputation. Therefore, the repayment rate reaches a stunning 99%. By the way, in 2022, Moni disbursed about 22 million US dollars to more than 11 thousand SMEs.
It is a promising number, as the company was launched only in 2021, after getting more than two mln US dollars of the initial investment.
At the moment, the company is going to expand to other countries, mainly Ghana and Kenya. The company’s CEO Abdul Hassan also plans to expand to other markets, including telecom and data mining: “Our expansion is mostly inspired by our customers looking to expand to other markets, same with some of our products. We work with our customers to give them the right tools to build new experiences for their customers,” said he in an interview with TechCrunch.
Author’s bio: Anastasiia Lastovetska is a technology writer at MLSDev, a software development company that builds web & mobile app solutions from scratch. She researches the area of technology to create great content about app development, UX/UI design, tech & business consulting.