Sociallend

Sociallend is working to address two interconnected challenges that significantly affect many communities in Uganda and beyond that is to say predatory lending practices and lack of funding for small businesses. Predatory lending practices are prevalent in Uganda, with some money lenders charging interest rates as high as 50% per month [Source: Financial Sector Deepening Uganda 2021]. These practices contribute to a cycle of debt and financial insecurity for borrowers, undermining the economic well-being of individuals and communities. Only 23% of small businesses have access to formal credit [Uganda Bureau of Statistics 2017] with traditional banking systems often failing to provide them with the necessary support and resources to grow and thrive; leaving them vulnerable to high-interest rates, hidden fees, and exploitative lending practices. These practices not only harm individual borrowers but also undermine economic development, as small businesses struggle to secure the financing they need to succeed. Sociallend’s mission is to leverage technology to create a streamlined lending process that incorporates data-driven assessments to evaluate creditworthiness. By doing so, the start-up aims to reduce predatory lending practices and provide small businesses with the funding they need to succeed.

Sociallend is a Peer-to-Business (P2B) lending marketplace using AI-powered fintech to revolutionize lending. We offer an efficient and accurate credit-decisioning engine in our mobile application for lenders on one side and accessible, affordable funding for small businesses on the other side. By leveraging technology, we streamline the lending process, reduce operational costs and pass on benefits to borrowers in form of lower interest rates and fees. Additionally, our fast and efficient funding process uses technology to assess credit risk based on geography, cultural, demographic data, and transaction volume, giving fair & accessible funding options to small businesses and enabling them to grow and overcome financial barriers.

Sociallend’s solution addresses the twin challenges of predatory lending and lack of funding for small businesses in Uganda and beyond. The solution targets both borrowers i.e the small businesses who are currently underserved by traditional banking systems and the lenders who perpetuate predatory lending practices.

The small business populations often lack access to affordable financing options and may be forced to turn to predatory lenders ready to offer quick and easy access to credit but Sociallend’s solution has the potential to promote economic growth and financial inclusion in Uganda and beyond by reducing predatory lending practices and helping the unbanked and underbanked small businesses meet their financial needs through our P2B lending marketplace.

Predatory lending practices, driven by lenders prioritizing profits over the borrowers, take advantage of vulnerable individuals and small businesses that lack access to affordable financing. These practices, characterized by high-interest rates, hidden fees, and unclear terms and conditions that trap borrowers in cycles of debt, have a devastating impact on borrowers, leading to financial instability, business failure, and personal stress. 

However, predatory lending practices also have a negative impact on the lenders; these practices often result in a high default rate, as borrowers struggle to keep up with the unsustainable repayment terms. These practices lead to reduced profitability, increased reputational risk, and legal and regulatory sanctions. In addition, predatory lending practices erode trust between lenders and borrowers, making it more difficult for lenders to attract and retain customers in the long run. 

Therefore, Sociallend’s solution aims to address these issues by providing a streamlined, data-driven lending process that prioritizes fairness, transparency, and collaboration between borrowers and lenders. 

By connecting borrowers with affordable financing options and providing lenders with tools to assess creditworthiness, Sociallend’s mission promotes a more equitable and sustainable lending ecosystem for all. 

Sociallend is well-positioned to deliver this solution due to the team’s proximity to the communities they serve. The team lead, Marvin Peter Akankwasa, has personal experience with the challenges faced by small businesses in securing affordable financing. He has been lending money informally since 2015 and has created large networks of micro-lenders in the country. He has personally mobilized over thirty significant micro-lenders with loan book size worth over $100,000 and streamlined their lending process. Marvin has also run small businesses for over seven years serving people at the bottom of the pyramid. These include restaurants and mobile money agencies; he thus understands the importance of access to affordable short-term financing for the growth and sustainability of small businesses that are underserved by traditional banking systems.

In addition, the CFO, Laura Karabo, has worked with several small businesses as an accounting professional and understands their financial management challenges. She recognizes the need for proper financial management skills to enable a small business to succeed and grow. She has also given financial literacy classes to over 53 small businesses. Her experience in managing finances efficiently and generating maximum value from investments is crucial to the solution's success. 

The entire team is engaging with both communities of micro-lenders and small business owners to understand their needs and priorities. The team is committed to ensuring that the design and implementation of the solution are meaningfully guided by the input, ideas, and agendas of these communities. By listening to and engaging with borrowers, micro-lenders, and other stakeholders, the team is confident in developing a robust solution that meets their needs and promotes financial inclusion and economic growth for all. 

On one side we have onboarded 54 lenders to our marketplace and on the other side we have processed over 2,000 loan applications and approved more than 85% of them; serving over 1,700 business owners.

Our Company faces several challenges that are hindering our growth. Some specific barriers we are facing include outdated technology infrastructure, difficulty attracting top talent in a competitive industry, and limited access to funding. We believe that Solve can help us overcome these barriers by connecting us with partners who can provide the technological expertise we need to modernize our infrastructure, connect us with top talent in the financial services industry, and provide access to funding that aligns with our vision for sustainable growth. While we are certainly looking for monetary support, our goal in applying to Solve is not just to raise funds, but to find partners who can help us advance our solutions through both monetary and non-monetary support.

Social Lend Africa provides a mobile application with a robust credit-scoring engine that uses Artificial Intelligence to assess credit risk based on geography, cultural, demographic data, transactional history, and over four hundred data points enabling lenders make significantly better lending decisions and giving fair & accessible funding options to entrepreneurs. The mobile application also provides convenience to entrepreneurs enabling them to easily access cash advance or loan on the app anytime, anywhere.

Our impact goals for the next year and the next five years are to provide access to affordable and flexible credit to underserved communities in Uganda. Specifically, our impact goals are:

• Onboard more than 200 lenders to our network, increasing the pool of capital available to our customers and expanding our reach
• Increase our mobile application downloads to 5,000+ users, allowing us to provide credit access to a wider range of customers and improve our customer experience.
• Process over 20,000 loan applications and approve at least 95% of them, ensuring that we are reaching as a many underserved individuals as possible and providing them with the credit they need to achieve their goals.
• Maintain a 96% customer satisfaction rating through continuous customer feedback and a commitment to excellent service.
• Receive national recognition for our innovative lending approach and receive funding from impact investors to help us reach and scale our operations
• Form a strategic partnership with the largest Mobile Network Operator providing merchant payment services to underserved small businesses so as to extend quick and affordable unsecured funding (between 4-6% per month) to them based on transaction volume.
• Develop new features such as savings products, financial education resources, and mobile money integrations to improve customer experience.
• Disburse over $2 million in loans, allowing us to reach more underserved communities and provide them with the credit they need to achieve their goals.

To achieve these impact goals, we plan to invest in technology infrastructure, expand our network of partnerships, and invest in our team’s capacity to deliver innovative lending solutions. We will also continue to prioritize customer feedback and continuously iterate our product offerings to meet the evolving needs of our customers.

• Number of lenders onboarded
• Mobile application downloads
• Loan application volume and approval rate
• Customer satisfaction rating
• Number of strategic partnerships formed
• Usage of new features
• Total loan disbursements

Through these indicators, we will be able to track amount of loans disbursed on a monthly and yearly basis to ensure that we are reaching our target of disbursing over $2 million in loans.

• Lack of access to credit is a significant barrier to economic growth and poverty reduction in Uganda
• There is a large unmet demand for affordable credit among underserved communities in Uganda
• Our innovative lending approach, which leverages technology to connect borrowers with a network of lenders, can help address the gap in access to credit in Uganda
• By increasing access to credit, we can help individuals and small businesses invest in income-generating activities, increase their income, and improve their standard of living support this theory of change

Our activities, which include onboarding lenders, building and launching a mobile application, processing loan applications, and providing ongoing support and education to borrowers and lenders, are all designed to support this theory of change. Our immediate outputs, such as the number of lenders onboarded, loan applications processed and approved, and mobile application downloads, will ultimately lead to longer-term outcomes, such as increased income and improved financial stability for our target population.

The mobile application has algorithms used to analyze various data points such as geographic location, cultural background, demographic information, and transaction volume of the business to determine the creditworthiness of the borrower. These algorithms process this information and determine the risk level associated with the loan, taking into account historical data and other relevant factors. It then assigns a score, which is used to determine the likelihood of loan repayment. The higher the score, the lower the risk, and the more likely the loan will be approved. The algorithm is designed to be flexible, it can be adjusted over time to improve its performance, which means that it learns from the data it processes and improves its accuracy over time. Additionally, it uses artificial intelligence and machine learning techniques to extract insights and make predictions from the data, which allows for more efficient and accurate decision making in the loan assessment process.