By Rosemary Iwuala
Moni Africa has launched a new range of business loans that enables Small and Medium Enterprises (SMEs) to leverage their communities to access the working capital they need to run and scale their businesses.
The digital platform that leverages social trust and group responsibility to deliver financial services in Africa is targeting the likes of market traders, spare part dealers, textile traders and other small business to reduce the $421 billion credit gap already identified by the Africa Development Bank (AfDB).
Across Africa and other emerging markets, community groups and associations play an important role in providing various essential services and protecting the interests of the collective.
They also facilitate accountability and self-governance that enables 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 in African communities to improve access to essential financial services for small business owners across the continent.
According to the African Development Bank (AfDB), SMEs account for more than 90 percent 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 need to scale.
Moni has built a risk engine that combines financial data and business performance with social intelligence to enable more effective credit decisioning for African SMEs.
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 once eligibility has been confirmed, they can access financing in 5 minutes or less.
Once the loan is disbursed, the cluster 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).
In 2022 alone, Moni disbursed more than $22 million in loans to more than 11,000 SMEs, with a 99 percent 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, CEO 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 be bringing more businesses on board to drive the economic development we all want to see on the continent.”