Two developers have created ‘M-pepea,’ an emergency micro credit solution accessible via mobile phones, and insist that they are not threatened by the launch of Safaricom’s MShwari product yesterday.
Co-founder Daniel Munga told HumanIPO that the products were similar yet different.
“The difference is our divergent targeted audience,” he said. “Although MShwari targets M-Pesa users some of whom are SACCO members. It is unlikely that our targeted members would stop their contributions to SACCOs that have the lowest interest rates in the market in favour of Safaricom’s MShwari. After all, our product has fewer demands which is why your SACCO or company should register with Mpepea.”
Mpepea, which facilitates transfer of credit funds for members in emergencies, currently works on the M-Pesa platform, tapping possible subscribers for its savings and credit facilities.
On registration, members of the Savings and Credit Co-operative Organizations (SACCOs) can access credit to a maximum of KSH20,000 (approx $230) from M-pepea, with interest dependent on the repayment period.
For fast-paying members, those who refund the monies in one or two days, the minimum 5 percent is charged, while for those paying in not more than 15 days an interest of 10 percent is charged. Longer repayments of up to a month attract an interest of up to 15 percent.
In less than 60 days since it was rolled out, the founders say many people are willing to subscribe. According to the service’s co-founder Daniel Munga, they are currently constrained to enrolling just a few members as the solution is still in the scalable phase.
He added that the uptake of the solution has exceeded expectations, with 90 registered members from three savings and credit co-operative societies that they have partnered with.
Under the same period of operation, he says the members have borrowed KSH208,000 (approx $2,430) in emergency loans, an average of about KSh10,000 (approx $115) per borrower, a figure he expects to surge with more members enrolling.
Munga says that in the first month of operation KSh100,000 (approx $1150) was disbursed, with zero defaults confirming that low income earners default less than the rich.
He says his model is cushioned from risks of non-payment as the members further use their contribution to the SACCOs as collateral.
Munga further admits that although he is currently slowing down on enrolment as he monitors various aspects of his business, he expects that the business will surpass 10,000 members in the next 12 months.
He currently is in talks with close to 30 SACCOs, most of which have welcomed his idea.
“Already 11 SACCOs have had follow up meetings with more than half awaiting the members consent,” he added. He says the solution targets to serve the entire SACCO movement, which has 2.9 million members, in the long-term
Success of this innovation is crucial, with his capital reserves quickly diminishing. He approximated that securing an injection of up to KSh21.4 million (approx $250,000) would keep the business operation serving some 10,000 members.
