A Kenyan startup has developed a fully automated system dubbed M-Pepea set to revolutionize country’s credit system by offering instant loans to workers at a fee via their mobile phones.
Developed by Raven Limited, a Kenyan software firm, the service targets employees on full-time basis registered for the service. It offers small emergency loans ranging from KSh5000 to KSh30,000 (US$58 to US$350) — depending on the borrower’s pay-scale — to registered borrowers via M-Pesa, Kenya’s mobile money service.
Banks in Africa have been slow at adopting technology and adjusting their lending requirements. M-Pepea intends to fill this gap, says Edwin Maina, Senior Business Development Manager at Raven Ltd.
To be eligible for the loan facility, interested employee along with his employer register for the service by signing a contract with the M-Pepea. Once registered, borrowers can request for loans by sending a blank SMS to M-Pepea from their registered phone numbers. The system will then automatically send a request to M-Pesa to credit the borrower’s number with the specified amount of money depending on the contract agreement.
The loan is repaid through a check-off system from the borrower’s salary at an interest rate ranging between 10 to 15 percent.
“Our customers ask for the money through a text. Transactions, including checking whether one has arrears on a previous loan are computerized. The process only takes minutes and the money is forwarded to one’s M-Pesa account.” Maina told The Standard.
Launched in 2010, the SMS-based service set to make it easy for Kenyans to access loan facilities anytime anywhere is the first of its kind in Africa. Similar services including Txt loan, Instant txt loans, 24-7 Money Box, Cash Genie are currently in use in the UK.