Technology firm is causing disruptions in the financial services sector through deepening the credit market and reaching the unbanked
Lack of access to financial services is a challenge that many Kenyans continue to grapple with. Despite the country being celebrated for performing well in deepening financial inclusion, many people remain excluded from the formal financial services sector. In particular, accessing credit from the main stream commercial banks is a herculean task for customers without collateral like title deeds and log books.
Against this background, Peter Muraya, an entrepreneur, established Okolea International, a financial technology (fin-tech) company committed to ensuring that all people in Kenya and beyond have access to innovative services, besides easily and efficiently accessing loans.
Founded in December 2016, Okolea International’s philosophy is based on a commitment to ensuring that all people can access loans among other financial products. It strongly believes that everybody deserves a chance to get a loan to finance his or her needs. “From our past experience, we appreciate the challenges people face in their quest to secure loans including discrimination and tough conditions placed by the main stream financial institutions and hence our desire to overcome such hurdles by developing a suitable solution,” he says.
Universal loan access
The ‘universal loan access’ concept underpinned by Okolea’s ‘everybody gets a loan’ maxim is one of the lender’s driving forces. Though providing loans using digital means is a core service, the firm is also committed to providing other services including money transfer, digital payment, big data and accounting software. It is guided by its vision of being the leading fin-tech platform enabling revolutionary and disruptive financial solutions in Africa.
Okolea’s operations and services are also underpinned by a mission of seeking to leverage on the drive and skills of its team and the vision of its leaders to create, test and deploy visionary fin-tech solutions with an aim of positively impacting businesses, individuals and the society at large.
Any person is free to register with Okolea guided by the set due processes and a standard processing fee. The firm’s app, which went live in March 2017 and which can be downloaded from Google play, facilitates the registration for those owning smart devices such as phones and tablets among others.
The app conducts an automatic appraisal of all loan applicants based on their M-Pesa and credit reference bureaus records. Once the loans are approved, the customers receive their cash through M-Pesa. For traders and small and medium enterprises, Okolea appraises the businesses. “We are not just keen to facilitate cash flow but are also committed to assisting the traders and we do this when we visit their businesses and advice them for growth and stability,” explains Muraya.
Okolea offers unsecured loans varying from Kshs. 150 to Kshs. 100, 000 at five per cent to twenty per cent interest. Those who pay on time enjoy the benefits of having their loan limits increased while they can also negotiate the interest rates.Currently, the loans are repayable in 30 days though Okolea is planning to extend the period. “We consider the customers who pay on time less risky, and even listen to their pleas for lower interest rates depending on the amounts borrowed. Others opt to repay daily which improves their repayment cycles and records,” avers Muraya. “ We have now lowered our interest rate to five per cent for those who repay their loans within two to three days which is the lowest rate in the digital lending market,” he adds.
The firm is exploiting artificial intelligence, given its appeal among customers. Artificial intelligence improves efficiency and enhances better customer service. In this breath, Okolea is planning to launch an information communication technology (ICT) centre to nurture young talent and facilitate easy use of artificial intelligence. Of vital importance, the centre will enable interaction with customers and lead to improved products and more innovations.
Majority of unsecured loans borrowers are faithful in servicing their loans. From the firm’s estimates, only 8 per cent of the customers default. To crackdown on defaulters, Muraya hopes the government can enact tough laws akin to countries like China where some privileges including luxuries are denied to the defaulters leaving them only with to access basic needs. “Denial of some privileges including luxuries would force the intentional defaulters to repay the loans,” he affirms.
Passionate about ensuring that all people can access loans and related revolutionary financial solutions and products, Okolea, which is currently serving over 100,000 customers and aggressively building up a clients’ data base, shall endeavour to break the loans limits system. The system doesn’t work as it assumes a customer’s needs and ability to pay. It’s a lazy system which is unable to determine in real time what a customer’s current needs are and their ability to repay.
The loans limit system also tends to favour lenders by limiting what budding entrepreneurs can access for better business growth given that it ensures interest rates earnings (for lenders) even when businesses are not expanding as per their owners’ projections.Okolea’s 2018 target is to enroll 500,000 customers. It hopes to grow this figure to two million by the end of 2019.
According to Muraya, the government should change laws in order to enhance the decisions made about cash flows so that lenders can share information with borrowers but in tenets of confidentiality. Sharing of information will allow borrowers to know how much they can borrow without the limitation that result from the lenders controlling the borrowing strings. “The big players in the lending industry are not working to bridge lending gaps as most of them are mainly concerned with the bottom lines. Consequently, the government must build the infrastructure for sharing such information to facilitate better operations and decisions in the credit sector,” he emphasizes.
In 2017, Okolea invested in automating its systems to ensure instant access to its application and systems by customers. “Our customers can get loans in less than two minutes,” affirms Muraya. The company is in the process of venturing into Uganda, Tanzania and Rwanda where it plans to replicate its infrastructure and model.
Okolea introduced its agency programme to provide employment and business chances for other Kenyans. In the programme, businesspeople are allowed to use its application and systems to lend to people at given commissions. “We opened our infrastructure to benefit others by allowing them to earn some revenues,” observes Muraya. He adds that the firm intends to grow the network of agents from the current fifty to over one thousand in the next two years.
Okolea target market is everybody in need of cash and financial services. This includes individuals in need of everyday emergency and related funds, Jua kali artisans, small traders as well as small and medium enterprises (SMEs). The firm talks to customers who may be facing challenges servicing their loans and even allows for extended repayment periods. Only the difficult defaulters are penalized through listing at CRBs and with action from auctioneers as the final option. Okolea also shares positive listings with CRBs to benefits its good customers.
According to Muraya, every individual deserves an opportunity for timely and adequate credit. To that end, he emphasizes Okolea’s commitment to providing credit, the best value and customer service to its clientele. He also values the cordial relationship that Okolea has with its partners. “We appreciate our partners’ invaluable support that enables us to provide unrivalled customer care and service, and look forward to their continued support,” he says. “We shall continue giving and adding value to our shareholders and partners investments,” he adds.
Okolea is also focused on corporate social responsibility and to that end, it is partnering with institutions to make society better. For instance, it has started funding higher education for the less fortunate in society, besides providing paid internship to several university students in many fields, before offering them employment once they graduate. “We are also supporting sports and have a memorandum of understanding with Mwamba Rugby Club as we seek to probe other channels through which we can support,” explains Muraya.
Muraya appeals to various governments in Africa to facilitate the establishment of SMEs and start ups such as Okolea through friendly licensing and other support measures. In addition, these governments should appreciate innovative solutions. “At Okolea, we appeal to investors and institutions to partner with us as we seek to make the company a true Kenyan and African icon,” Muraya says asserting that the company is certified as a leading fin-tech entity. Its application is very popular in respect to Google play downloads. “By the end of 2018, we want to be top five in the lending category and fin-tech leadership regionally,” asserts Muraya.
According to him, entrepreneurship is not for the faint hearted. “SMEs’ owner managers must have the right mindset, positive attitude, resilience and perseverance. They must be innovative and consider emerging technology and new trends that shall allow the disruption of normal operations. They must also seek partners who shall complement their weaknesses,” says Muraya. “Apart from relying on personal savings and family support, they must also learn how to map out strategies of sourcing and raising funds, besides embracing technology in helping to cut costs,” he advises. In conclusion, he emphasizes the need for SMEs to rely on professional support in their quest for growth.