Kenya Looks to FinTech, Credit Unions for Growth

Credit unions have served as a financial backbone to millions of households in Africa for decades, with some 39,000 organizations across the continent providing small installment loans and credit lines. Now, the industry is embracing technology to accelerate growth and bring about expanded financial inclusion.

The savings and credit cooperative organization (SACCO) sector in Africa is aggressively stepping up its digitalization efforts to not only drive financial inclusion to the last mile, but ensure that underserved consumers have access to financial services that had been previously unavailable to them or hard to obtain.

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The Kenyan FinTech Kwara, founded in 2018 by Cynthia Wandia and David Hwan, was developed to help the unbanked and underbanked build wealth in a frictionless way. Kwara also strives to assist credit unions in East Africa transition to digital platforms.

Its $4 million seed round earlier this month, which was led by Breega and the SoftBank Vision Fund, is working to build a neobank for SACCOs, How We Made it in Africa reported on Wednesday (Dec. 29).

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Kenya National Police Deposit Taking SACCO National Chairman David Mategwa believes technology will bring underserved populations in more remote areas products like credit, savings and pensions.

“Members of a SACCO in far-flung areas are now able to transact without needing to visit a physical branch,” Mategwa said, per the report.

He added that mobile phone-based money transfer services like M-PESA are already helping to make big changes, such as advancing paperless transactions. However, smartphone apps will be the game-changer, offering a wider variety of financial products and services.

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“Kwara provides omnichannel ways for members of a SACCO to transact — web apps, Android, iOS and, critically, USSD — that is simple, well understood from mobile money use and does not require a smartphone,” Wandia told Ventures Africa. “We will continue to ensure as many features as possible are available to all members of a SACCO.”