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Social Lender Is A Nigerian Startup That Helps People Access Finance Using Their Social Profiles

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Even as Nigeria grapples with a recession at least after the official announcement this week by the Finance Minister; Mrs. Kemi Adeosun, small businesses and startups will have to do more for the country to come out of that recession eventually. One way of achieving is through financing which is currently difficult to access in Nigeria with respect to small businesses and startups. Mpesa in Kenya has made money remittance easier thereby providing an environment of freer capital flow thereby giving people in rural areas access to banking activities from the comfort of their mobile phones.

Ericsson banking image

While Mpsea has been a success story in Kenya, it is still estimated that nearly 80 percent of Africans still don’t have access to traditional bank accounts and if this is still is still like this even in 2016, how then will startups get access to finance cee easily because one of the fastest ways of accessing money from banks is to have a credible banking history which analysts believe many in Nigeria still don’t have. Other Nigerian banking stats are;

  • About 53 percent of Nigerians are in the banking system
  • 2 percent of Nigerians own 90 percent of the entire deposits according to the Nigerian Deposit Insurance Corporation

The irony though is that while numbers in the banking sector may not show a very good picture, Nigeria now has a teledensity above 100 percent according Nigerian Communications Commission (NCC) figures. This means the number of Nigerian connected on voice and data networks is at a pretty good level which has given rise to several other startups. Among them is one that now aims to make it easier for people to access financing in Nigeria using their social media profiles. The BBC reports that Social Lender uses its own algorithm to assign a “social reputation score” to each user, with “social guarantors” acting like referees validating their trustworthiness.

Here are excerpts from the BBC story

Social Lender uses its own algorithm to assign a “social reputation score” to each user, with “social guarantors” acting like referees validating their trustworthiness.

As the youth-orientated website strapline has it: “Get rep, get cash, stay fly”.

“The solution is designed to bridge the gap of immediate fund access for people with limited access to formal credit,” says co-founder Faith Adesemowo.

faithbadesemowo social lender

“Loans are guaranteed by the user’s social profile and network, allowing users to borrow from banks and other financial institutions based on their social reputation,” she says.

Social Lender currently has more than 10,000 registered users taking out loans of up to 10,000 Naira (£24) with a default rate of less than 4%.

Users can withdraw cash loans via bank accounts or mobile money.

“We solve the problems of prohibitive cost to serve the market, inadequate financial history, unreliable credit score and lack of collateral for these people that hitherto prevented our partner financial institutions from serving this market,” says Ms Adesemowo.

Mobile phone data is also helping to give lenders and other financial service providers useful information about potential customers.

Based in Cape Town, Jumo partners with mobile operators in countries like Kenya, Tanzania and Zambia, to gain access to data on how people use their phones.

Its algorithms analyse a person’s smartphone usage – how much they spend on airtime, how they use their mobile money wallet – to come up with a “Jumo score”, which rates their creditworthiness.

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A look at the list below of the 30 startups that showcased their services at least year’s Demo Africa event, about 8 of them where in FinTech and related services. There’s a huge market in Africa in this sub-sector and the few who have been in it for some time now how gone on to make huge profits over the years.

Company Enterprenuer Category Country
       
Koomza Longchi Gide Kanouo Education Cameroon
Feem Wifi Fritz Ekwoge Ekwoge Communication Cameroon
LockName Mourad Ashry Transport &Logistics Egypt
Raye7     Egypt
Zeepay Mobile Financial Services Andrew Takyi-Appiah Finance & Banking Ghana
Flippy Campus   Educatiom Ghana
Airshop Francis Yapobi Retail Ivory Coast 
InsureAfrika Gagan Hayer Finance & Banking Kenya
Abacus Joel Macharia Finance & Banking Kenya
SimbaPay Nyasinga Onyancha Finance & Banking Kenya
ENT Mobile Andrew Kamau Communication Kenya
Bitsoko Daniel Bloch Finance & Banking Kenya
BambaPOS Karogi Kamau Retail Kenya
Shield Finance   Finance & Banking Kenya
LipaPlus Ndeeri Macharia Finance & Banking Kenya
Mavis Computel Limited Chizaram Ucheaga Education Nigeria
OgaVenue Andrew Airelobhegbe Transport &Logistics Nigeria
Talking Bookz Kolapo Ogungbile Educatiom Nigeria
CarpartsNigeria Automobile Ltd Ade Oladapo Transport &Logistics Nigeria
Zuvaa Kelechi Anyadiegwu Retail Nigeria
SmartEdu Molawi Adesuyi Education Nigeria
PoshRite Chidimma Nwankwo Media & Entertainment Nigeria
iKon Tracker Adedayo Charis Communication Nigeria
Edge Books Daniel Oluwagbemiga ben-Daniel Retail South Africa
Bozza Media Emma Kaye Media & Entertainment South Africa
Eco-mc2 Compressed Air Hydraulic Energy Storage Magriet Leaper Energy South Africa
Tango TV Victor Joseph Media & Entertainment Tanzania
Roundbob David Gonahasa Other Uganda
IPC eProductivity Lovemore Jokoya Finance & Banking Zimbabwe
RoadRules   Transport &Logistics Zimbabwe
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