Senegal’s Matontine is providing access to small loans

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Senegal’s MaTontine is a digital financial services platform seeking to improve locals’ access to financial services through the use of digital technology. Matontine shared more insights with TechMoran about their company, what it is doing to achieve this and its vision for the future.

Tell us about yourselves; your team, your educational and professional backgrounds
MaTontine was formed in 2015 by brother and sister co-founders, Bernie Akporiayeand Tosan Oruwariye. The MaTontine team is based in Senegal. This is the team that built the current solution. We also have an international advisory board with expertise in Consumer Marketing, Microfinance, Technology, Finance, etc. MaTontine was formed in 2015 by brother and sister co-founders, Bernie Akporiaye and Tosan Oruwariye. We saw Africans behaving financially responsibly within tontine groups and felt that they were not being rewarded for that behavior. Hence, we created MaTontine to offer these people a range of services based on their financial behavior.

How would you best describe Matontine briefly, what does it do?
MaTontine is a digital financial services platform, with a mission to improve the financial outcomes of our members by unlocking access to financial and related services through the use of digital technology and entrepreneurship. We have automated the traditional savings circles found throughout Africa, and built a software platform that enables us work with a range of partners (mobile payment providers, insurers, banks, NGOs etc.) in order to provide access to small loans & related financial services like micro insurance for the financially excluded in Francophone Africa.

The problem we are trying to solve is an enduring and challenging one: how to unlock access to financial services like small loans to the poor at scale. The banks and Micro-finance Institutions have realized that they cannot do this profitably at scale with their current infrastructure. It turns out that it’s actually very difficult to profitably make small loans like $100. Consequently, for our members the only
providers of these type of loans charge between 25%-100% per annum.

We solve the problem for our members by utilizing mobile phones and our platform to digitize the benefits of traditional savings groups. Thereby reducing the cost of borrowing by 75% or more. MaTontine provides the infrastructure and business model to unlock financial services for its members.

What market gap did you spot that motivated you to start this company?
Our gap in the market is financial services (especially small loans) for the poor. Despite all the innovations in the space, the problem of how to loan a small amount like $150 profitably and at scale has not been resolved. We believe we have solved this problem with our solution.

How does your company make money?
Access to our platform is free. We generate revenues through commissions from partners who offer their products (loans, insurance etc.) to our members on our platform.

How are you funded so far
Up until recently, we were self-funded. We have however accepted grant funding from the World Bank/CGAP, an innovation fund as well as an equity investment from a US foundation. Other major landmarks include: signed partnership with key money transfer company, Wari, Signed partnership with regional insurance company, SUNU Assurances, signed partnership with regional financial services company, Cofina Sénégal, Awarded grant by the World Bank/CGAP to pilot our solution in Senegal and signed partnership major Nigerian Health Management Organization, Novo Health Africa.

How has uptake been like so far
In December 2016 we completed our last pilot with 2,000 members including 475 active ones to which we have granted small loans for a total amount of $12K, with a default of 0% rate. The public launch is scheduled for March 2018 with partners such as Wari, SUNU Assurances, Cofina Sénégal Orange Money and the World Bank/CGAP. We have a goal of acquiring at least 15,000 members by the end of the
year.

Who would you say is your major competition in this space at the moment?
For sure we are not the first to digitize traditional tontines. Our major differentiation is that instead of just tontine automation we provide access to a range of financial services to our members accessible via a basic (feature) phone.
For our solution, we went back about century to a system used all over the developing world. It is called Tontines in Francophone Africa (Natt in Senegal, Esusu in Nigeria, Cundina in Mexico etc.); the industry term is Rotating Savings and Credit Associations and here’s how it works. A group of say 10 people, each with its own manager, contributes say $10 every month into a pot and at the end of the
month one member of the group collects the pot of $100. This cycle repeats itself until everybody has won the $100 pot.
Our innovation is to build a digital platform that automates this whole process and incorporates a credit scoring system in order for us to facilitate small loans and other financial services like micro-insurance from our partners based on the credit score of our members. All financial transactions are done digitally using mobile phones and mobile money.

The competition is intense. They range from Telcos, to MFIs, banks, other FinTech startups etc. Our differentiation is that offer a range of integrated services on our platform and not just traditional savings automation.

What is your vision for the company in the next 5 years? What is your plan for expansion? Any new products coming soon?
In 5 years’ time, we envisage MaTontine as the default platform for digital tontines in Francophone Africa. MaTontine anticipates establishing operations in five countries over the next four years: Côte d’Ivoire (2019), Mali (2020), Cameroon (2021) and Niger (2022). After five years, we expect membership to reach a million people and annual lending on the platform of approximately $140 million

At the moment, how do you measure your own success? What are your metrics?
The keys to success for MaTontine and similar startups are a friendly regulatory environment, easier access to strategic partners, a simple and intuitive customer experience and the ability to attract and retain senior management. We measure success quite simply by the number of people we are able to recruit unto the platform and provide services to. Some key metrics we measure include the number of members, number of services provided amount loaned on the platform, the amount saved on the platform, default rate on loans and the increase in personal income of members over time, among others.