FinTechs Bridge Gap for Unbanked with Hire Purchase Solutions » Capital News

By Eric Massawe

The Kenyan asset acquisition market has continued to grow in recent years with the emergence of fintech-based firms providing quality solutions.

Traditionally, the options would revolve around disciplined savings mobilization through banks or other options to acquire an asset. At the enterprise level, asset financing solutions, including leasing options, have been around for several decades.

The only missing link was always the availability of an accessible solution catering to the micro end of the market. Growing up in the 80s and 90s, the micro end of the market was primarily covered by hire purchase entities from Africa Retail Traders (ART) to KuKopesha and Kenya Credit Traders (KCT), among others, who operated brick-and-mortar outlets.

These hire-purchase solution providers bridged a gap in the market that allowed civil servants and teachers, among other cadres, to own assets and meet their physiological needs. With these hire purchase solution providers, our families acquired galvanized iron roofing sheets, electronic equipment, solar panels and even motorbikes, which were paid off through a check-off system with their employers.

Today, the later-day hire purchase solution provider is now fashioned as an Asset Finance FinTech solution provider, and several players are now playing in this market segment. From Watu to Hakki, Mogo to M-Kopa among others. It is instructive to note that none of these firms are digital lenders, banks, microfinance banks, or deposit-taking finance institutions.

They are simply asset finance solution providers operating under the Hire Purchase Act and, unlike their forerunners, rely mainly on tech solutions for credit scoring and administration. They, therefore, enjoy better operating efficiencies and are actively bridging the asset acquisition gap in the micro-enterprise and individual market segments.

In Kenya, among many other developing countries, access to credit continues to be the leading drawback to accelerated economic development. Many informal sector players lack collateral and the formal instruments that allow them to access credit from mainstream players, yet they also aspire to better their lives economically and socially.

Lack of collateral and simply being unbanked means poor financial inclusion forcing this micro-segment of individuals and entrepreneurs in the SME sector to turn to predatory financing options such as shylocks at very high-interest rates. While large corporates easily access leasing and related hire purchase options, small-scale and micro players haven’t had it easy and are only finding relief in reputable Asset Finance FinTech.

In the hire purchase model, Asset Finance FinTech provide a solution that allows Kenyans with a minimum down payment to proudly own assets such as vehicles, motorbikes and mobile phones with flexible weekly payment plans. The hire purchase loan advanced is made up of the retail price of the asset and the value-added services. In this case, the value-added services include fees for the GPS tracker, log book transfer, comprehensive insurance policy, customer service, and a 24/7 emergency response team.

Asset Finance FinTech are, therefore, simply bridging the gap between people and accessibility to flexible financing through financial inclusion and accessibility, and the numbers tell the story.

For example, at Watu, by providing access to affordable and flexible financing for motorbikes and tuk-tuks, the company has attracted more than 1 million clients across seven countries and positively impacted the lives of more than 4 million people. Besides access to asset finance solutions, Asset Finance FinTech actively promote financial literacy and independence, adopt digital payments, and increase regulatory and safety compliance.

Looking ahead, many of these companies are also investing heavily in ‘clean and green mobility’. At Watu, we are leading the way to a cleaner and more sustainable continent by financing new electric motorbikes.

While basing our operations on ethics, integrity, and self-regulation, Asset Finance FinTech will maintain the course to achieve its mission of changing the future of last-mile mobility and household financing in Africa.

Using tech solutions and financial intermediary options such as mobile money, Asset Finance FinTech will continue supporting the dreams of the unbanked and underserved so that they can change the course of their lives, staying true to the financial inclusion horizon.

The writer is the Kenya Country Manager at Watu Credit Limited

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