Your online reputation might help you get a loan


Traditional banking in Africa has failed, with 80% of the 1.2 billion people without access to official financial services Arkansas loans.

So mobiles and web-based services fill the need. In 2007, Kenya and Tanzania created M-Pesa, a very popular mobile banking application.

For example, Nigeria’s Social Lender evaluates borrowers’ social media accounts.

Obtaining accurate data on individuals is difficult for lenders, especially in rural areas. So cellphone and web are good sources.

Social Lender’s algorithm assigns each user a “social reputation score,” with “social guarantors” serving as referees.

“Earn rep, get cash, remain fly,” is the website’s slogan.

“The solution is meant to help those who don’t have access to formal credit,” explains co-founder Faith Adesemowo.

Users may borrow from banks and other financial organizations depending on their social reputation,” she explains.

More than 10,000 people have enrolled on Social Lender, with a default rate of less than 4%.

Withdrawal by bank account or mobile money.

“We tackle the challenges of prohibitive cost to service the market, poor financial history, inaccurate credit score, and lack of collateral for these individuals,” adds Ms Adesemowo.


Loan officers and other financial service providers might utilize mobile phone data to learn more about prospective clients.

Jumo, based in Cape Town, collaborates with mobile providers in Kenya, Tanzania, and Zambia to collect statistics on phone use.

Its algorithms examine a person’s smartphone use to calculate a “Jumo score,” which assesses their creditworthiness.

Using Jumo, users can apply for loans from traditional lenders and have cash directly to their phones.

“A $20 [£15] loan made without collateral in the middle of the night in a small town might be the difference between getting sick or not,” explains Jumo CEO Andrew Watkins-Ball.

“A comparable amount may have a substantial influence on a micro-capacity entrepreneur’s to acquire stock successfully at higher quantities and cheaper prices.”

Because impoverished areas have yet to embrace smartphones, the technology has been designed to work on both basic “feature” phones and smartphones.

Jumo may then target users with things they are likely to require. Since its start in 2015, the IT business has lent $3 billion to 3 million customers.

Informal and rural merchants need data to get loans, says Hendrik Malan, operations director at Frost & Sullivan Africa.

“This will create a huge micro-lending industry throughout Africa,” he argues.


Mobile and online technology also helps Africa’s 30 million expatriates transfer money home faster.

Every year, the African diaspora sends almost $40 billion home. But fees are prohibitive: the World Bank estimates that Africans spend 9.74 percent on average for transactions through Western Union and Moneygram.

Now, smaller start-ups are challenging the money transfer giants.

One of them is Redcore Interactive, based in Uganda, whose service Remit allows users to transfer money to friends and family in Uganda, Kenya, and Rwanda using debit or credit cards.

The money may be used to pay bills directly from mobile wallets or withdrawn at any mobile money agency.

Remit, claims founder Stone Atwine, saves time and money by skipping physical infrastructure for a 4.99 percent charge.

Remit’s minimal overhead enables them to provide remittance services at a considerable discount to traditional suppliers.

“Sending money inside and to Africa is costly. We overcome this by creating technologies that interoperate mobile money networks throughout Africa.”


The spread of “fintech” services throughout Africa seems to be a challenge to conventional banks.

But this isn’t the case.

Many fintech entrepreneurs would argue that their services complement rather than threaten traditional banks. Many African banks are working with rather than competing with fintech start-ups.

Banks have access to clients, whereas fintech startups do not. So, says Frost & Sullivan’s Mr Malan, cooperation makes sense.

This synergy between new technology and current bank networks may allow millions more Africans to access much-needed financial services.


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