Remittance company Mukuru has, for the first time, begun to offer loans to its customers through a new partnership with Jumo.
The company, known for its cross-border payments and remittances services in Africa, is going after a market in which millions of people are left out of formal lending systems in SA.
Mukuru’s financial technology (fintech) platform has a customer base of more than 16-million across 50 countries in Africa, Asia and Europe.
The service, dubbed “fast loan”, is a “scalable, mobile-first credit solution designed to address a critical gap in SA’s financial ecosystem”, the company says.
It adds to a growing number of products that the company now offers to its customers, which include a digital wallet and card.
Mukuru CEO Andy Jury told Business Day that the company had been working on creating a lending product for three years.
“Our perspective is that a higher degree of formal financial inclusion should include the ability to access formal credit.
“A lot of what we’ve done in the last decade-and-a-half has been learning about our customers and creating this platform in which we can engage with them and service their needs. This has built up to this point where they can change their lives by accessing transformative credit.”
Jury, who has been at the helm of the company since mid-2017, said the partnership with Jumo allowed them to work with a specialist provider around lending.
Founded by Andrew Watkins-Ball in 2015, Jumo primarily offers savings and credit products to entrepreneurs in emerging markets, as well as technology infrastructure to partners such as mobile operators and banks to assess lending risks, detect fraud and verify the identity of their clients.
The company has also partnered with MTN to offer loans through the cellphone provider’s mobile money platform.
Data from TransUnion shows 16.8-million people in SA remain outside the formal credit system. Many earn irregular incomes and lack traditional credit histories, leading to exclusion from mainstream financial services.
This is the opportunity that Mukuru is looking to exploit.
To access the facility, Mukuru customers can apply via WhatsApp, with disbursements going into their Mukuru Card. Loan amounts range from R100 to R8,000, repayable over 30 days.
Once received, funds can be used across digital channels such as POS [point of sale] or e-commerce with the card, or on any of the many value-added services offered by Mukuru. Funds can also be withdrawn as cash at ATMs or at more than 11,000 of Mukuru’s retail partner points, including Spar, Pick n Pay, Boxer and Shoprite.
Pricing includes a 11.5% initiation fee, 5% interest in arrears for first loans, then 3% thereafter, and capped penalties.
Customers who repay early incur no interest charges, an element that Mukuru hopes will encourage responsible borrowing and spending behaviour from its customers.
“Partnering with JUMO allows us to scale this offering responsibly, combining trust, technology and insight to deliver meaningful financial solutions where they’re needed most,” said Jury.
Watkins-Ball, who is CEO of JUMO, said, “We are proud to work with Andy and the team at Mukuru. Their products are relied upon by millions of customers, and we will work hard to provide them with the technology infrastructure that they need to deliver more value to their customers.”
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