Nigerian Bernie Akporiaye came back to Africa and already had a successful life running a financial services software company. But he wanted something more from life. He believed that through entrepreneurship and technology he could have an impact on poverty. Russell Southwood talks to MaTontine's founder about how he went about it.
Akporiaye was schooled and went to University in the UK and worked in business software companies before deciding to come back to Africa. In 2009 he started Rapid Performance in Dakar which set out to be an outsourcing team for US companies using "blue chip" software like Hyperion Planning and Cognos.
But he was discontented with the work life he had:"I realized that was not what I wanted to do for the rest of my life. I wanted to reduce poverty through entrepreneurship and tech".
His "road to Damascus" moment was seeing the local credit associations in Senegal called Tontines. Each member puts in a sum at a particular point and one member of the group uses the whole sum, a process involving mutual trust between members:" It was a classic example of people behaving in a financially responsible way and not getting any rewards. I thought they have the leverage to provide a range of financial services".
So the product he devised was to provide small loans and different types of insurance: micro insurance, health insurance and life insurance for the financially excluded in Francophone Africa. The key challenge was how do you do this at scale and profitably. The idea was to automate Tontines and reduce the cost of borrowing by 75%:" We give communities 360 degree solutions. 95% of what we do is loans and the other services are 5%. We're launching 2 new products next month".
Launched in 2015, MaTontine now has 6,000 individual users from 300 Tontines. Its target is to get to 25,000 individual users by the end of 2019 and it has plans to expand to Cote d'Ivoire in the next 18 months and then to the rest of Francophone Africa.
The added value for the Tontine is the ability for their members to have a credit profile:" We capture a lot of psychographic and biometric information, all the typical KYC stuff. We also have their saving habits and financial transactions and we can use it to create credit profiles. We're just completing a Monitoring & Evaluation study on our work".
Originally the average size of loan was US$200 but the size of the loan was skewed by the service's origins in urban Dakar. This came from the perceived need at the time to push up user numbers:"Our target is now getting rural women. It's now 30% rural and we would like it to be 70-80% in the longer term".
So what lessons has MaTontine learnt over its journey since it launched:"Literacy has been a core challenge in rural areas. The communication piece is all via SMS. So how do you interact with your customers? We don't accept cash. Everybody in urban areas has an Orange Money account but it has only just gone into rural areas and they don't have Orange Money accounts and don't know how they work".
"In the urban areas, we were targeting the same 20% lower middle class and middle class users. These are the same groups as the banks are targeting. They have plenty of choice. Because they are over-targeted they are not as much in need. They don't respect repayment conditions. In rural areas, there were no other services and therefore they respect the conditions of the loans".
Tontine are very different from any other kind of organization. Rural users of these groups have almost no education. The users select the Manager of the Tontine and it's usually the person with the most education. To work in this context, MaTontine set up a set of community monitors who help organize monitors in an particular area. These monitors have physical meetings and share information locally.
MaTontine wants to scale up to one million users over the next five years but Akporiaye is keen to differentiate the company from others in the market:"It's important not to compare us to an app doing mobile banking, not the broadcast kind approach to loans. We're a digital community bank and the best comparison is MFIs. We're not an app but we have an app. There are no direct competitors for Tontine automation. But some competition from banks, MNOs, Fintechs, MFIs, Mobile/Digital, etc where there are many providers.".
Interestingly the company has had only one investor and not of the conventional kind. The DRK Foundation is a private foundation focused on high impact philanthropy. Specifically, it makes philanthropic investments in nonprofit ventures that it believes to have high impact. It is the philanthropic arm of Draper Richards, a venture capital firm:"All the rest has come from growth."