Solution Overview

Solution Name:

Financial Independence for MSMEs

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One-line solution summary:

Leveraging AI to provide affordable, relevant and just-in-time financial solutions to MSMEs in Sub Saharan Africa.

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Pitch your solution.

MSMEs are the most vulnerable businesses in SSA and considered as "untouchables" by FIs hence have challenges accessing capital for growth, COVID-19 response and recovery. It is projected that over 60% of MSMEs in SSA will not survive the COVID-19 pandemic; this will have far reaching implications for African economies as they are the largest employers of labor. As a result, poverty levels across the region could increase by as much as 30% potentially resulting in leading to social crisis like crimes. 

We have designed an AI powered decision engine that allows us to evaluate and score MSMEs with "alternative" data sets and proxies. We are also developing a business management toolbox to help them become effective managers.

Our solution works; over $30m disbursed in 26months. We work with corporates as channel partners and it is an easily replicable model, being asset-lite.

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What specific problem are you solving?

Micro, Small & Medium Sized Enterprises are the most vulnerable businesses in SSA and considered as "untouchables" by financial institutions hence have challenges accessing capital for growth, COVID-19 response and recovery. It is projected that over 60% of MSMEs in SSA will not survive the COVID-19 pandemic; this will have far reaching implications for African economies as they are the largest employers of labor in Africa. As a result, poverty levels across the region could increase by as much as 30% potentially resulting in leading to social crisis like crimes.

Commercial Banks do not extend credit to them because they do not have credible financial records and collaterals. MFIs promoted limited supported because most MFIs are not leveraging digital; their operations are entirely manual which has limited their scope, scale and impact. 

Our experience also confirms that a major reason why some MSMEs default on loans is because they lack basic business management tools and capabilities. 


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What is your solution?

Our solution principally leverages Deep Technology and Strategic Partnerships. 

First, we establish strategic partnerships with leading corporates as Channel Partners. These corporates must have large pools of MSMEs in their ecosystem and with the consent of the MSMEs, share independent data on their activities with us for decisioning. These partners include Telcos, Retailers, FMCGs and Marketplaces. We already have multi-country partnerhips with Bharti Airtel, Vodafone, MasterCard, JUMIA amongst others. 

On Technology, we have a proprietary AI powered decisioning engine that enables us evaluate and score the MSMEs on the back of the data from the Channel Partners and other sources of direct data and proxies. We are able to facilitate from APPLICATION-TO-DISBURSEMENT IN 60Secs; all on Mobile Telephony using both the USSD and APP applications.

We are also building a dedicated NeoBank for MSMEs that will incorporate an Account, Digital FIrst Card (in partnership with MasterCard), Business Financial Manager (BFM), Management Tool Kit, An Engager and a Payments HUB. This ensures that MSMEs are adequately empowered to operate as efficiently as large corporations albeit as a small scale. 

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Who does your solution serve, and in what ways will the solution impact their lives?

Our solution is targeted at MSMEs. We launched in Kenya in December 2017 and have now incorporated in Rwanda, Uganda, Nigeria and Tanzania. We aim to be in 10 African countries by 2025. 

We currently service over 50,000 MSMEs in Kenya - 35% are Women Owned, Average-Age of 39years, 60% presence in Rural and Semi Urban areas. They have short business cycles (1-30days) and operate in Agriculture, Trade, General Services sectors. They are resilient, aspirational and seeking a better future for them and their families.

As part of an onboarding process, we conduct an on-site KYC visit where we capture the pictures of the business, promoter and registration document. We also collate additional 55 data points that help us understand them much better towards enhancing the credit decisioning with a higher level of precision and improving on our service delivery. 

We also have an in-house call-center for continuing engagement through both inbound and outbound calls. 

Our solution facilitates financial inclusion and independence for them while advancing the improvement of their well being and quality of life. With our solution, they are able to access the full spectrum of financial services which has been the exclusive of large businesses before now.


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Which dimension of the Challenge does your solution most closely address?

Enable small and new businesses, especially in untapped communities, to prosper and create good jobs through access to capital, networks, and technology

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Explain how the problem, your solution, and your solution’s target population relate to the Challenge and your selected dimension.

MSMEs in SSA are the most vulnerable business segments and considered as "Untouchables" by banks and unaccessible by MFIs because of their weak digital leverage. 

MSMEs are able to enjoy bank-grade suite of financial solutions on their Mobile Phones.

They are able to generate income not only to meet the needs of themselves and families but to save and expand their businesses. They are able to create jobs as they expand their businesses. We will lead the effort to support the MSMEs in the Post-COVID recovery as unlike in the West, African governments have failed to provide reliefs for MSMEs 

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In what city, town, or region is your solution team headquartered?

Nairobi, Kenya
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What is your solution’s stage of development?

Growth: An organization with an established product, service, or business model rolled out in one or, ideally, several communities, which is poised for further growth

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Who is the primary delegate for your solution?

CHIDI OKPALA

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More About Your Solution

Which of the following categories best describes your solution?

A new business model or process

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Describe what makes your solution innovative.

There are over 32m MSMEs in Africa with only about 40% of them having access to formal financial services. Our real competitors are 'Loan Sharks" that capitalise on the unsophistication of MSMEs and their lack of options to exploit them.

We have forged strategic partnerships with leading corporates as Channel Partners, giving us access to large pools of MSMEs and credible data for evaluation and decisioning. Some of our lead partners are Safaricom mPesa, Airtel Money, JUMIA and Diageo

We have a proprietary, Artificial Intelligence powered decision engine called Apollo 101 that is able to utilise multiple alternative data sources and proxies for decisioning with high precision. We have also utilised other deep tech capabilities for a high level of sophistication:

  1. Predictive Modelling to generate a risk score (XGBoost, NN, RForest, LRegression)

  2. Unsupervised learning to segment customers into different categories and disqualify potentially credit unworthy customer groups (PCA/Kmeans)

  3. Timeseries forecasting to identify future performance behaviours from the past (ARIMA)

  4. Deep Neutral networks to detect risky customers on complex and highly unstructured data such as individually sourced financial data and social media

  5. Universal Next Generation Scoring System which has ability to securely integrate different Machine Learning APIs in order to generate a unified score

  6. Extensive use of supervised-Learning Algorithms for anomaly detection. This will dynamically fine-tune the parameters of normal behaviour and identify breaches in the patterns for any manipulations that may have happened in customer data

  7. 100% Mobile and from APPLICATION TO DISBURSEMENT is in less than 60 Secs

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Describe the core technology that powers your solution.

APOLLO 101: Our proprietary decision engine. Leverages the following:

  1. Predictive Modelling to generate a risk score (XGBoost, NN, RForest, LRegression)

  2. Unsupervised learning to segment customers into different categories and disqualify potentially credit unworthy customer groups (PCA/Kmeans)

  3. Timeseries forecasting to identify future performance behaviours from the past (ARIMA)

  4. Deep Neutral networks to detect risky customers on complex and highly unstructured data such

    as individually sourced financial data and social media

  5. Universal Next Generation Scoring System which has ability to securely integrate different Machine Learning APIs in order to generate a unified score

  6. Extensive use of supervised Learning Algorithms for anomaly detection. This will dynamically fine-tune the parameters of normal behaviour and identify breaches in the patterns for any manipulations that may have happened in customer data 

  7. we are 100% Digital and all customer interactions are on Mobile leveraging the USSD and APP interfaces



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Provide evidence that this technology works.

We have been lending in Kenya, using this technology, since December 13th 2017.

We have processed 200,000 loans applications and disbursed over $30m with a 4% Default Rate

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Please select the technologies currently used in your solution:

  • Artificial Intelligence / Machine Learning
  • Behavioral Technology
  • Big Data
  • GIS and Geospatial Technology
  • Software and Mobile Applications
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What is your theory of change?

Find below our Picture of Success by 2025

  1. Financially empower and impact 5m MSMEs in 10 African countries via our propositions, including our Digital Bank. 
  2. A presence in Kenya, Uganda, Rwanda, Tanzania, Nigeria, Ghana, Senegal, CIV, DR Congo and Ethiopia 
  3. Ensure that atleast 90% of our MSME clients survive the COVID-19 pandemic and its aftermath. The World Bank projects that 60% of MSMEs in Africa will not survive the pandemic 
  4. Improve the management capacity of MSMEs via the suite of propositions in our planned Digital Bank. Our Management ToolKit will have Bookkeeping, Inventory Management, Invoicing, Campaign Management and MS Office suite of products  

Thus, our 5m MSME clients will be sufficiently empowered to live their aspirations and sustain their position as the largest provider of employment in Africa. 

We will ensure a high survival rate from the COVID pandemic but more importantly, support in building resilience into their business models against future challenges

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Select the key characteristics of your target population.

  • Women & Girls
  • Rural
  • Peri-Urban
  • Urban
  • Poor
  • Low-Income
  • Minorities & Previously Excluded Populations
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Which of the UN Sustainable Development Goals does your solution address?

  • 1. No Poverty
  • 2. Zero Hunger
  • 8. Decent Work and Economic Growth
  • 10. Reduced Inequalities
  • 12. Responsible Consumption and Production
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In which countries do you currently operate?

  • Kenya
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In which countries will you be operating within the next year?

  • Nigeria
  • Rwanda
  • Uganda
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How many people does your solution currently serve? How many will it serve in one year? In five years?

Today: 69,000 MSMEs

In 1 Year: 1m MSMEs

In 5 Years: 5m MSMEs

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What are your goals within the next year and within the next five years?

in 5 years, we would have empowered 5m MSMEs in Africa with "bank-grade" but digitally propelled suite of financial services product to enable them unlock their potentials. 

We believe that these 5m MSMEs would have created about 15m jobs across the 10 target markets.

Our technology is cloud based hence makes it easier for us to operate an efficient, centralised operating model thus helping us achieve a much higher level of efficiency. 

We have also applied for licenses from the respective central banks to facilitate seamless launch in the target markets.

We continue to build strategic relationships with channel partners and plan to add more multinational partners across the Telecoms, FMCG and Retail sectors  

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What barriers currently exist for you to accomplish your goals in the next year and in the next five years?

A critical piece is funding; we will have continuous requirement for low cost, long term capital to be able to lend responsibly and sustainably

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How do you plan to overcome these barriers?

We have just signed a term sheet for our $5m Series A Equity Round. We will now leverage it to secure a Medium Term Debt Note of about $50m in 5 tranches. We are already reaching out to Impact Funds and Development Finance Institutions to be our strategic partner on this agenda.

We are also having diverse engagements with a number of organisations for grants and concessionary credit to further reduce our cost of funds and pass on that benefit to our MSME clients

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About Your Team

What type of organization is your solution team?

For-profit, including B-Corp or similar models

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How many people work on your solution team?

Full Time: 15

Contractors: 22

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How many years have you worked on your solution?

3years

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Why are you and your team well-positioned to deliver this solution?

  1. Cumulatively, we have a Management Team with over 75years of demonstrated Digital Financial Services experience in Sub Saharan Africa

  2. Our CEO, has a track record for building, transforming and managing businesses in Africa. He was the Founding CEO of Airtel Money with responsibility for one of the most ambitious Digital Financial Services initiatives globally. In 4 years, he achieved 30m customers, 200,000 Agents with $2B and $12M monthly Transaction Value and Revenues; all across 17 African countries

  3. We have already put in place the core foundations for success - IT capability, solid teams, high profile strategic partners and multi country presence

  4. We run a successful business evinced by sound profitability since incorporation

  5. We operate RESPONSIBLY and governed by the core values of TRUST, RELIABLE,

    SIMPLICITY, INNOVATIVE & RESPONSIVE 

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What organizations do you currently partner with, if any? How are you working with them?

Credit Bureaus: Credit Info, TransUnion

Channel Partners: Safaricom, Bharti Airtel, MTN, MasterCard, Samsung, Jubilee, Diageo, Lafarge

Technology: Mobidev, Microsoft


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Your Business Model & Funding

What is your business model?

We leverage 3 things: Deep Technology, Strategic Channel Partners and Best Talents access MSMEs in mass and extend best in class financial products and solutions digitally.

We are 100% Digital, Asset-Lite and dynamic. 

Our team is young, with average age of 32years

 

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Do you primarily provide products or services directly to individuals, or to other organizations?

Organizations (B2B)

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What is your path to financial sustainability?

We have 4 sources of funding:

1. Retained Earnings: We have achieved profitability in our first 2 years of operation; a rarity in our industry. 

2. Equity: We have just closed a $5m Equity Round from 3 top impact finance VCs 

3. Debt: we will continue to access debt capital from DFIs, commercial banks and money/capital markets in the geographies that we operate in

4. Grants: we believe we have a strong social impact story and will continue to see partners from governments, philantrophies, DFIs and Foundations for grants

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Partnership & Prize Funding Opportunities

Do you qualify for and would you like to be considered for the AI for Humanity Prize?

Yes

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Explain how you are qualified for this prize. How will your team use the AI for Humanity Prize to advance your solution?

-MSMEs are the most vulnerable businesses in SSA and considered as "untouchables" by financial institutions hence have challenges accessing capital for growth, COVID-19 response and recovery. It is projected that over 60% of MSMEs in SSA will not survive the COVID-19 pandemic; this will have far reaching implications for African economies as they are the largest employers of labor in Africa. 
-Individuals: Over 400m women and youths in Africa are both underbanked/unbanked and excluded from the Digital Economy. One key reason is the lack of ownership of a smartphone due to affordability challenges. 

We have a model that is principally Data and Digital driven; leveraging best in class Machine Learning and AI-powered decisioning engines that can score borrowers with high level of precision based on "alternative data". As these target borrowers are not banked, they do not have bank records, credit bureau ratings, adequate KYC and thus makes it difficult for conventional lenders to provide finance to them.

We have established Strategic Partnership with leading corporates (Safaricom, Airtel, MTN, MasterCard, Diageo, Lafarge, Samsung and JUMIA to have access to the MSMEs and Consumers in their ecosystem.  
We will use the prize money to further subsidise the cost of the loans 

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Do you qualify for and would you like to be considered for the Future Planet Capital Prize?

Yes

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Explain how you are qualified for this prize. How will your team use the the Future Planet Capital Prize to advance your solution?

-MSMEs are the most vulnerable businesses in SSA and considered as "untouchables" by financial institutions hence have challenges accessing capital for growth, COVID-19 response and recovery. It is projected that over 60% of MSMEs in SSA will not survive the COVID-19 pandemic; this will have far reaching implications for African economies as they are the largest employers of labor in Africa. 
-Individuals: Over 400m women and youths in Africa are both underbanked/unbanked and excluded from the Digital Economy. One key reason is the lack of ownership of a smartphone due to affordability challenges. 

We have a model that is principally Data and Digital driven; leveraging best in class Machine Learning and AI-powered decisioning engines that can score borrowers with high level of precision based on "alternative data". As these target borrowers are not banked, they do not have bank records, credit bureau ratings, adequate KYC and thus makes it difficult for conventional lenders to provide finance to them.

We have established Strategic Partnership with leading corporates (nullSafaricom, Airtel, MTN, MasterCard, Diageo, Lafarge, Samsung and JUMIA to have access to the MSMEs and Consumers in their ecosystem.  
We will use the prize money to further subsidise the cost of the loans

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Solution Team

  • Mr Chidi Okpala CEO, Asante Financial Services Group
 
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