Unlocking Access to Finance: Datatech Startups Improving Financial Inclusion in Africa

Eva Waweru
By Eva Waweru 6 Min Read

In many ways, technology is enabling entrepreneurs to solve some of the world’s most pressing challenges.

Now more than ever, we see entrepreneurs developing solutions with a deliberate focus on underserved populations, enabling improved access to essential services like healthcare, education, financial services, and beyond to underserved communities.

This trend has become so prominent that it gave rise to the term “Tech4Good.”

A good example is Marketforce. Established in 2018 to support neighborhood merchants with digitized retail distribution, the Kenyan startup enables local businesses to seamlessly source, order, and pay for inventory in a digital environment. Their mobile wallet allows users to collect digital payments and access credit facilities.

Additionally, merchants can earn extra income through agency banking and reselling digital financial services such as airtime, electricity tokens, and bill payments in their communities.

For these technologies to serve the people they intend to serve, they must analyze large data sets. In the wrong hands, data breaches and losses could have catastrophic consequences for individuals and institutions. In the right hands, data can create equitable access to services for underserved user groups.

As businesses position themselves to handle an expanding portfolio of user data, they are tasked with acting as data custodians (not owners) and charged with maintaining customer privacy, and ensuring client data is protected. Credit and lending startup Pngme is on a mission to improve access to finance.

The startup leverages machine learning models to understand users’ financial behavior and make data-driven lending decisions. Banks, fintechs, and credit bureaus use Pngme to minimize lending risks and create innovative financial products for underserved beneficiaries. Pngme has supported over 100 financial institutions across Kenya, Ghana, and Nigeria.

The need to maintain users’ data privacy and protection while leveraging it to provide these services is unquestionable. Businesses must inform users how their data is collected, used, and shared. Users should also have control over their data and be able to opt out of sharing it if they choose to do so.

Asset financing startup Assak enhances motorcycle ownership in Uganda through alternative data. The startup primarily supports motorcycle operators, or “boda bodas” as they are referred to in East Africa, who traditionally lack access to institutional banking services due to strict income history and account activity requirements.

The startup partners with mobility and e-commerce platforms – like Bolt, Jumia, Safe Boda, and Uber – to leverage behavioral and financial information, including their earnings, trip history, and ratings. Asaak then turns this data into a credit score for their borrowers, giving them full transparency into qualifying for finance.

Drivers usually receive motorcycle financing (about US $1,500 worth of credit) within hours of signing up and pay around 35% annual interest, depending on their credit score. The startup, which recently entered the Mexican market, additionally provides financial literacy and defensive driving training to ensure the boda boda operators responsibly care for their motorcycles.

“Over the past five years, IBM, through their Hyper Protect Accelerator, has worked with startups such as MarketForce, Pngme, Asaak, and many others to de-risk their solutions and focus on impact,” shares Adam LG Ring, Global Head of the IBM Hyper Protect Accelerator.

When startups start putting user’s sensitive data on the world’s most secure public cloud service, it helps address concerns around data breaches and general compliance in the heavily regulated financial markets, and generates greater confidence from investors.

The accelerator, which Village Capital runs, provides an all-round approach to supporting the startups’ needs of scaling and becoming investor-ready by benefiting from IBM’s world-class services to enhance their data handling compliance while accessing the highest level of security.

As the use of big data and analytics continues to play an integral role in developing solutions, innovators are similarly tasked with ensuring that the data collection, access, and storage process meets the highest levels of security. With secure data ownership, businesses can fully benefit from the data and provide more inclusive services.

If you’re a datatech startup seeking to enhance your data management and connect with industry experts, mark your calendars for IBM Z Day, a free virtual conference taking place on October 18, 2023. This event will showcase cutting-edge innovations and insights from 180 global industry leaders, sharing their experiences and best practices to boost your datatech startup and introduce the latest IBM Hyper Protect Accelerator cohort.

Register today >>> ibm.biz/ibmzday-2023 

Eva is a Senior Associate for Communications at Village Capital, spearheading the organization’s strategic communications and brand building initiatives across Europe, the Middle East, Africa, and Asia.

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