Fintech start-up, Moni, unveils loan scheme to drive SME growth

Moni, a fintech startup has unveiled a new range of business loans to support the growth of small and medium enterprises (SMEs) in Africa.

According to a statement from the company, the loans will enable market traders, spare parts dealers, textile merchants and other small business owners on the continent to tap into the power of their communities to access the working capital they need to run and scale their businesses.

“Across Africa and other emerging markets, community groups and associations play an important role in providing various essential services, protecting the interests of the collective, facilitating accountability and self-governance that enable communities to function as effectively as possible,” it said.

It said the company 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.

SMEs account for more than 90 percent of businesses and almost 80 percent of employment in Africa, according to the African Development Bank.

However, insufficient data and ineffective credit decision-making 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.

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“The community-driven business loan product is just one of the ways we are innovating around the unique context of Africa to make the most of what is already in place to deliver the financial services business owners need to create long-term wealth for themselves and their communities, ” said Femi Iromini, CEO and co-founder at Moni.

He added that they have plenty of evidence to show that this approach works and they are excited to get more companies on board to drive economic development on the continent.

The Y Combinator-backed startup launched the pilot for its community-driven 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 small and medium-sized businesses, with a repayment rate of 99 percent.

The company is now building on the success of its community-driven model to deliver game-changing financial services to a wider range of African SMEs that have previously been underserved by the traditional financial system.
“Moni has built a risk engine that combines financial data and business performance with social intelligence to enable more effective credit decision-making for African SMEs,” the company’s statement said.

That said, starting in Nigeria, small business owners with a good social reputation simply need to join a lending cluster with an invitation from an existing Moni user, and once eligibility is verified, they can access funding in five minutes or less.

“Once the loan is disbursed, the cluster shares responsibility for the loan, and members can access funds from an automated savings pool to bail out members if needed.”