Moni, a digital platform that leverages social trust and group responsibility to deliver financial services in Africa, has launched a new range of business loans that enables market traders, spare part dealers, textile traders and small business owners to take advantage of the power of their communities to access the working capital they need to run and scale their businesses.
How does this new community finance model work?
Across Africa and other emerging markets, community groups and associations play an important role in providing various essential or basic services and protecting the interests of the general collective. These community groups and associations also facilitate accountability and self-governance that enables African communities to function as effectively as possible.
Moni is pioneering a community finance model that builds on the importance of this form of group responsibility within African communities to improve access to essential financial services for entrepreneurs as well as small business owners across the entire continent.
Moni has built a risk engine that combines financial data and business performance with social intelligence to enable more effective credit decisioning for African small businesses. Starting with Nigeria, small business owners with a good social reputation simply need to join a lending cluster with an invite from an existing Moni user and then once eligibility has been confirmed, they can access financing in 5 minutes or less. Quick, easy and convenient for SME owners.
Once the loan is disbursed, the cluster or the group shares responsibility for the loan and members are able to access funds from an automated savings pot to bail out members if needed. The Y Combinator-backed startup launched the pilot of its community powered loans in August 2021 with 3,000 mobile money agents (more than 5,000 on the waiting list).
What is the market offering of Moni’s new finance model?
According to the African Development Bank (AfDB), small businesses account for more than 90% of businesses and almost 80 percent of employment in Africa. However, insufficient data and ineffective credit decisioning by traditional financial institutions has led to a $421 billion credit gap, with business owners unable to access the working capital they will need to scale.
In the year of 2022 alone, Moni disbursed more than $22 million in loans to more than 11,000 SMEs, with a whooping 99% repayment rate. The company is now building on the success of its community-powered model to deliver game changing financial services to a wider range of African SMEs who have previously been underserved by the traditional financial system.
According to Femi Iromini, Chief Executive Officer and Co-founder of Moni, “Our community-powered business loans product is just one of the ways we are innovating around our unique context in Africa to make the most of what is already in place to deliver the financial services business owners need to create long lasting wealth for themselves and their communities.”
“We have ample evidence to show that this approach works, and we are excited to bring more businesses on board to drive the economic development we all want to see on the continent.”