Kenyan startup whizzkid techs is set to launch M-Chama, a mobile bookkeeping application for informal investment cooperatives, in July once it has completed a pilot phase.
The applications which was a semi-finalist for this year’s edition of the PIVOT East conference, is aimed at chamas – informal cooperative societies normally used to pool and invest savings by people in East Africa, particularly in Kenya.
M-Chama does the bookkeeping for these groups, with M-Chama lead Martin Kimani telling HumanIPO chamas rarely had the ability to do this for themselves and ended up spending large amounts of money on accountants.
“Actually there are very few people who know how to bookkeep for table banking groups and their services are very expensive, normally not less than KSh1,000 (US$11) per sitting,” he said. “That’s where M-Chama comes in, and we can do all those activities at about a quarter of the price above.”
The app captures the individual member’s savings, credit history and status, while also tracking the fines given to members for things such as absenteeism or defaulting. It then outputs monthly and annual financial reports.
Registration is free but revenues gained by charging for use of the service, with a group paying through M-Pesa when they have a session. Users are also charged for the generation of annual reports, at the rate of one per cent of total profit.
The company, which launched in March this year and is funded by the savings of its founders – believes it can succeed based on the size of the chama movement in Kenya, which Kimani says manages around KSh300 billion (US$3.4 billion) in assets.
He said the company is in talks with the largest chama umbrella body, which has over 100,000 members in approximately 3,000 groups.
“With this partnership we will have 3,000 paying clients and projected monthly revenue of about KSh500,000 (US$5,700) and our estimated costs amount to less than KSh100,000 (US$1,100). We really think it is a viable business that is profitable and has an impact in the society,” he said.
“It is our feeling that our product has an opportunity to grow even bigger. This concept is scalable and would work very well in Africa since accessing credit is one of the biggest headaches for those people in the non-formal sector and SMEs all over. The fact is that members own the body giving them credit, therefore it is like getting credit on your own terms, very enticing to every entrepreneur.”
HumanIPO reported in December last year the Bank of Africa (BOA) Kenya had partnered Safaricom to roll out a mobile banking service for investment groups, also called M-Chama.
The service allows members of the groups to make deposits into the group’s joint account using M-Pesa, after which an SMS alert is sent out to other members for verification.
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