Financial Inclusion Challenge
“Bloom Finance” by Asante Financial Services Group.
What is the name of your solution?
“Bloom Finance” by Asante Financial Services Group.
Provide a one-line summary of your solution.
Bloom Finance is a product offered by Asante Financial Services Group to Safaricom mPesa ( global leader in mobile money service)’s Lipa Na M-PESA Buy Goods Merchants, the platform enables over 1m micro and small business owners to access credit facilities of between USD40 to USD1600.
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What specific problem are you solving?
The specific problem that Bloom Finance solves is the lack of access to affordable and convenient credit facilities for micro and small business owners in Kenya. These entrepreneurs often cannot secure loans from traditional financial institutions due to lack of collateral or credit history, size of business, weak formal structure; which leaves them with working capital for sales expansion, stock financing, and business operations.
The scale of this problem in Kenya is significant, with approximately 83% of the adult population lacking access to formal financial services and credit gap for MSMEs is well in excess of USD25B per annum. The lack of access to credit is particularly acute for micro and small business owners, who make up a significant portion of the Kenyan economy.
In Sub-Saharan Africa, the annual MSME credit gap is over USD350B, according to a World Bank study. This lack of access to credit can perpetuate poverty and limit economic growth, particularly in low-income communities. MSMEs in Africa are the largest employers of labor (over 60% of adults are employed by MSMEs) and contribute in excess of 40% of the continent’s GDP.
Factors contributing to this problem in Kenya include limited collateral, credit history, documentation, and a lack of trust in traditional financial institutions. Bloom Loan addresses these challenges by providing an accessible and reliable credit facility to Lipa Na M-PESA Buy Goods Merchants, leveraging their transaction history and digital footprint as a form of collateral. This approach allows micro and small business owners to access the credit they need to grow their businesses, ultimately contributing to the economic development of their communities.
What is your solution?
Bloom Finance by Asante Financial Services Group is a credit facility for micro and small business owners who are Lipa Na M-PESA Buy Goods Merchants. It allows them to access loans ranging from USD40 to USD1600 for sales expansion, stock financing, and business operations. The solution works by leveraging the Lipa Na M-PESA platform to provide a convenient and accessible loan service to merchants. To access the loan, merchants need to dial *310# and select Bloom by Asante Finance, accept terms and conditions, enter their operator ID and PIN, and request a loan.
The loan decision is based on the merchant's Lipa Na M-PESA till activity, credit listing status at the Credit Reference Bureau, and the duration of their active use of the Lipa Na M-PESA platform. We feed all of the financial and behavioral data sets into our proprietary AI-based decision engine and process credit limits for disbursements to the businesses. The loan is then disbursed to their M-PESA account, which they can withdraw using their nominated number. From Loan Application to Disbursement is less than 60 Seconds. Bloom Loan uses mobile technology to provide financial inclusion to small and micro-businesses that may not have access to traditional banking services.
Who does your solution serve, and in what ways will the solution impact their lives?
Bloom Finance by Asante Financial Services Group is designed to serve Lipa Na M-PESA Buy Goods Merchants in Kenya, specifically micro and small business owners who traditional financial institutions currently underserve. These merchants often cannot access credit facilities from banks due to a lack of collateral, credit history, or financial records. As a result, they face significant challenges in expanding their businesses, buying stock, and financing daily business operations.
The target population for Bloom Loan is micro and small business owners who have been active Lipa Na M-PESA Merchants for at least three months, settling funds collected in their M-PESA tills to their M-PESA accounts. Traditional financial institutions often overlook this group and may have limited access to financial services. By providing an affordable and convenient, Bloom Finance enables these merchants to access the funds they need to grow their businesses.
The solution impacts the lives of Lipa Na M-PESA Buy Goods Merchants in several ways:
1. It provides an affordable and accessible credit facility that meets their immediate financial needs. This enables them to expand their businesses, increase sales, and generate higher incomes, which in turn contributes to the growth of the Kenyan economy.
2. Bloom Loan helps to address the fundamental need for financing for not just Lipa Na M-PESA Buy Goods Merchants but all Micro and Small Enterprises’, who are often unable to access credit facilities from traditional financial institutions due to a lack of collateral, credit history, or financial records. The solution leverages Safaricom's Lipa Na M-PESA platform, which already has a broad reach among merchants in Kenya, making it easier for them to access credit.
3. Bloom Loan provides a more convenient and efficient loan application process unlike traditional financial institutions. Merchants can apply for the loan by dialing a USSD code, which makes the application process more accessible, fast, and easy to complete. This saves the merchants time and effort, allowing them to focus on their businesses and other priorities.
Overall, Bloom Loan by Asante Financial Services Group is a solution that directly and meaningfully improves the lives of Lipa Na M-PESA Buy Goods Merchants in Kenya. Providing an affordable and accessible credit facility that enables these merchants to expand their businesses, increase sales, and generate higher incomes. The solution addresses the financial exclusion of this group, who often cannot access credit facilities from traditional financial institutions due to a lack of collateral, credit history, or financial records. Bloom Loan leverages the Lipa Na M-PESA platform to provide a more convenient and efficient loan application process, making it easier for merchants to access credit and grow their businesses.
How are you and your team well-positioned to deliver this solution?
The team deeply understands the financial landscape in Kenya and the challenges small business owners face in accessing credit. Asante’s team is familiar with the community they serve since they offer the loan product to merchants who settle funds collected in their M-PESA tills to their account. As such, the team understands the needs of this target population, including their cash flow cycles, and the importance of credit for business expansion. Asante Financial Services Group has been operating in Africa for several years, offering various financial services to individuals and businesses.
The team s has diverse backgrounds and experiences that enables them to approach the problem from different perspectives. This diversity has helped the team develop a product tailored to the needs of the target population and considers the unique challenges faced by small business owners in Kenya.
To ensure that the design and implementation of the solution is guided by the community’s input, ideas, and agendas, the team has conducted extensive research and engaged with Lipa Na M-PESA Buy Goods Merchants to understand their needs and challenges. The team has also leveraged technology to gather data and feedback from the merchants who use the product, which has helped to inform the product design and improve the user experience.
In addition, the team has worked closely with other stakeholders, including regulators and credit reference bureaus, to ensure that the product is compliant with regulations and that the creditworthiness of the merchants is accurately assessed.
Overall, the team is well-positioned to deliver this solution to the target population, given their deep understanding of the community, their diverse backgrounds and experiences, and their commitment to engaging with the community to ensure that the product meets their needs and is designed and implemented in a way that is meaningful and impactful. This, combined with their experience in financial services, makes the Asante team to be well-positioned to deliver Bloom Loan to the target population.
Which dimension of the Challenge does your solution most closely address?
Provide new ways to accurately assess credit-worthiness of MSMEs and individuals, including methods that reduce bias against borrowers who have traditionally lacked equitable access to credit
In what city, town, or region is your solution team headquartered?
Nairobi, Kenya
In what country is your solution team headquartered?
What is your solution’s stage of development?
Growth: An organization with an established product, service, or business model that is rolled out in one or more communities
How many people does your solution currently serve?
We are currently serving 200,000 clients across Africa.
Why are you applying to Solve?
Asante Financial Services Group is applying to Solve to address specific financial and technical barriers the company faces in offering Bloom Loan to Lipa Na M-PESA Buy Goods Merchants. Specifically, the company is seeking monetary and non-monetary support to overcome the following barriers:
Lack of access to affordable capital: Many Lipa Na M-PESA Buy Goods Merchants in Kenya struggle to access affordable capital to expand their businesses, finance their stock, or cover their operational expenses. Bloom Loan is designed to fill this gap by offering merchants access to affordable credit. However, to scale the product, Asante Financial Services Group needs additional funding support from partners, to be able to scale the operations and further reduce the cost of the loans for the MSMEs Asante currently lends to 180,000 of these MSMEs whilst the addressable market by year end is 1.6m MSMEs.
Technical support: To scale the product and reach a larger market, the team could benefit from partnering with Solve to connect with technical experts who can help Asante design and implement a scalable loan management system. With technical support Asante can build a robust system with a capacity to handle large volumes of loan requests and automated disbursements to ensure seamless scalability across the region.
Limited reach and awareness: While the team has engaged with Lipa Na M-PESA Buy Goods Merchants to design and implement the product, there is still a need to raise awareness about the availability and benefits of the loan product. The company needs financial support in marketing and distributing the product to the target population.
Regulatory compliance: Asante Financial Services Group operates in a highly regulated industry, and compliance with regulations can be a challenge for the company as we scale in new countries across Africa. The company is seeking legal support to ensure compliance with regulatory requirements and to navigate any legal barriers that may arise.
Solve can support Asante Financial Services Group by connecting the company with partners who can provide monetary and non-monetary support to address these barriers. For example, Solve can connect the company with impact investors or philanthropic organizations that can provide grant funding to scale the product. Solve can also connect the company with distribution partners to raise awareness about the loan product and reach more Lipa Na M-PESA Buy Goods Merchants. Additionally, Solve can connect the company with technical partners who can provide expertise to our extensive data collection and analytics department and legal partners who can provide guidance on regulatory compliance in new territories.
We are confident that Solve can help Asante Financial Services Group overcome the financial, technical, legal, and market barriers that are preventing the company from scaling its Bloom Loan product and reaching more Lipa Na M-PESA Buy Goods Merchants in Kenya.
In which of the following areas do you most need partners or support?
Who is the Team Lead for your solution?
Chidi Okpala, Chief Executive Officer, Asante Financial Services Group.
What makes your solution innovative?
As a financial services group, Bloom Finance by Asante Financial Services Group has a competitive advantage in the market due to its strategic partnership with Safaricom Lipa Na M-PESA. This partnership enables us to offer credit facilities to Lipa Na M-PESA Buy Goods Merchants, who are a significant market segment in Kenya's economy. Our loan product addresses the needs of micro and small business owners by providing access to credit facilities ranging from USD40 to USD1600 for sales expansion, stock financing, and business operations.
Additionally, our lending decisions are based on various factors, including the merchant's activity on their M-PESA Till, credit history and score, and the duration of their activity as an active Lipa Na M-PESA merchant. This approach allows us to assess the merchant's creditworthiness accurately and make lending decisions promptly.
Compared to other lenders in the market, Bloom Loan by Asante Financial Services Group stands out as a reliable and convenient source of credit for Lipa Na M-PESA Buy Goods Merchants. Our loan application process is quick and straightforward, and merchants receive funding within a short period after making their loan request. Our loan limits increase as merchants actively trade on their M-PESA Till and perform well on their loans, allowing them to access more substantial credit facilities over time. These factors position us as a market leader in providing financial inclusion to Lipa Na M-PESA Buy Goods Merchants in Kenya.
What are your impact goals for the next year and the next five years, and how will you achieve them?
Bloom Loan by Asante Financial Services Group is a solution that directly and meaningfully improves the lives of Lipa Na M-PESA Buy Goods Merchants in Kenya. Providing an affordable and accessible credit facility that enables these merchants to expand their businesses, increase sales, and generate higher incomes. The solution addresses the financial exclusion of this group, who often cannot access credit facilities from traditional financial institutions due to a lack of collateral, credit history, or financial records. Bloom Loan leverages the Lipa Na M-PESA platform to provide a more convenient and efficient loan application process, making it easier for merchants to access credit and grow their businesses.
Which of the UN Sustainable Development Goals does your solution address?
How are you measuring your progress toward your impact goals?
At Asante we measure the success of our solutions by:
a. Tracking the number of Lipa Na M-PESA Buy Goods Merchants who have opted into the Bloom Finance service and the amount of credit that has been extended to them.
b. Monitoring the usage of the credit facility by merchants and the impact it has on their businesses, such as increased sales, improved stock levels, and expanded operations.
c. Tracking the repayment behavior of the merchants to ensure that the credit facility is sustainable and accessible to more merchants in the future.
What is your theory of change?
We currently offer only credit products to our MSME clientele. We intend to expand our product offerings to include deposits, insurance, payments and corporate credit cards, . Additionally, we will introduce essential tools for effective business management like Management Toolkit (a suite of basic business applications – Book Keeping, Inventory Management, Invoicing etc.) and a Business Financial Manager; towards supporting MSMEs to grow and understand their businesses better.
The following table highlights the status of our MSME portfolio at 31 March 2023
Value
Total MSME loans outstanding
USD 6,593,423
Loans disbursed since 2018
USD 90.3M
MSME % of total outstanding loans
99.24>
Total number of registered SME borrowers since 2018
219,918
MSME borrowers as % of total registered since 2018
99.997>
Total number of disbursed loans since 2018
446,129
MSME loans as % of total number of loans since 2018
99.995>
We use hurdle rates to assess the aggregate collected amounts as a percentage of the disbursed principal. The average hurdle rates for monthly cohorts are displayed below for Kenya, which constitutes most of our current portfolio:
2020
2021
2022
Kenya
104.7%
104.5%
100.1%
Describe the core technology that powers your solution.
Asante follows a product centric, segment based approach to SME underwriting. Various approaches are used for segmentation, and varies per product/partnership, depending on the underlying product needs and performance.
Varying levels of credit modelling is applied at Asante, from Heuristic models to full Machine Learning models. Since Asante has primary focus on SME lending, we follow approaches specific to SMEs and not individuals in our approach to credit underwriting. Asante follows a straight-through processing approach for digital on-boarding and credit scoring, as such, the models deployed are deterministic in that the models go through technical sign-off, and are deployed to production, with all decisions from the model scoring being the final outcome communicated to the customer. The models are continuously monitored in product for any enhancements, and taken through the credit committee governance process for approvals. Asante does not follow a model referral approach where some customers are referred to a credit committee for approval, but rather treats these on an exception only basis.
The underwriting process follows a new vs repeat layout, where repeat customers are streamlined in decisioning based on past loan take-up, and get access to enhanced decisioning based on past performance.
Which of the following categories best describes your solution?
A new application of an existing technology
Please select the technologies currently used in your solution:
If your solution has a website or an app, provide the links here:
https://asantefinancegroup.com/about-our-company/
What type of organization is your solution team?
For-profit, including B-Corp or similar models
How many people work on your solution team?
Total number of staff- 83, Permanent Staff- 59, Consultants and Contractors - 23.
How long have you been working on your solution?
5 years
What is your approach to incorporating diversity, equity, and inclusivity into your work?
We believe that diversity and inclusivity are essential values and the key to innovation and success. That's why we proudly boast that 41% of our staff are women and that women make up 50% of our leadership team.
At Asante Financial Services Group we are always reaffirm our commitment to gender equality, diversity, and inclusivity in all aspects of our business.
Solution Team
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Our Organization
Asante Financial Services Group