Founded by Victor Kiruluta, Uganda’s Borrocracy is an online marketplace that matches credible borrowers in need of affordable loans with accredited financial service providers facilitating these loans at reasonable interest rates.
Through the use of big data and machine learning processes, Borrocracy is building a proprietary algorithm that will enable it mitigate default risk and fraud from borrowers using the platform.Similar platforms across Africa include Pezesha and KiaKia.
Speaking to TechMoran, Kiruluta said Borrocracy was inspired by the volumes of nonperforming loans in Uganda over the last three years making banks selective on lending and hence many credible borrowers who would otherwise qualify to get loans and fund their dreams are left out.
“This selective process has hindered financial inclusion,” he said. “This has inspired us to launch a platform where all credible borrowers would be assessed using a proprietary algorithm that would come up with a risk score to enable financial institutions give out loans to borrowers who feel left out by the traditional credit scoring models that are still used.”
Kiruluta adds that regulation in Uganda has embraced the fintech ecosystem enabling financial inclusion which makes it possible for Fintech start-ups to scale their businesses and sign up more customers to compete with legacy businesses such as banks and micro finance institutions.
Currently self-funded, the startup is seeking funding to scale and grow this platform starting in Kampala then expanding to other towns. The firm aims to first target financial service providers to adapt the service then sign up to as many borrowers as possible. The firm is also routing to see more people turn to internet so as it can collect enough data on borrowers, user behavior and several other pain points it aims to solve.
According to Internet World Stats, Uganda had 7.6m Internet Users by end of 2016 against its population of 40m people. The firm believes the government can do more to get people online. Apart from internet penetration, the biggest competition to them are telecoms such as MTN and Airtel who offer micro loans to their vast network of users and can leverage the use of their users’ mobile data to come up with a risk score to curb risk.
However, Borrocacy aims to leverage alternative datasets such as social behavioural factors and machine learning processes to build an algorithm that mitigates risk and fraud. The firm also plans to set up its own loans and become a direct lender to help make it the ‘The destination of affordable loans’ and ‘To make loans affordable to reliable borrowers everywhere’.
The Ugandan Market is their first market where Kiruluta says they have to get it right before they eventually scale into other markets like Kenya, Tanzania and Rwanda. The startup also plans on facilitating lending in Bitcoin or any other future digital currency using blockchain technology. Kiruluta now believes running businesses in East Africa requires a lot of patience, especially if you are operating in an emerging sector such as the ecommerce space.
“I have learnt that the strategies and tactics used to do business in developed countries are totally different than those used in East Africa. Here, you have to be more practical and apply a lot of offline tactics to gain traction for your business,” he concluded.