Ms Rose Muturi (left), the Tala East Africa regional manager, with
Shivani Siroya, the Global CEO & founder. PHOTO | CORRESPONDENT
For three and a half years, Shivani Siroya engulfed herself in
the depths of Sub-Saharan Africa, digging up data on microfinance
solutions.
She was then working at the UN Fund for
Population and had opted to manually do the research since there was no
data on what she was looking for online.
Apart from
just talking with people, she would walk to homesteads to get a clear
picture of how they were saving and understand what informed their
financial decisions.
At the conclusion of her research,
she had interviewed an estimated 3,500 individuals and had established
that majority of the small borrowers failed to grow their enterprises
due to lack of suitable credit.
Armed with personal savings of Sh3 million ($30,000), a team of
10 and an undying passion to transform the financial inclusion spectrum,
Ms Siroya went into entrepreneurship full throttle.
The information she had gathered formed the foundation of establishing her technology-driven credit company Tala.
The
firm’s smartphone app uses alternative data to deliver instant credit,
majorly to small enterprises, without the need for collateral.
“The
app unveiled in Kenya in March 2014 riding on the country’s dominant
mobile money platform M-Pesa. This made it easier for Tala to integrate
with the player and get to up to 27 million people,” Ms Siroya said.
Among
the first steps the Tala team made was to use Facebook for advertising
the mobile phone application, saying it guaranteed instant credit.
Ms Siroya recalls doubting that the advert on Tala Kenya, formerly Mkopo Rahisi, would attract any customers.
However,
in a span of one week, 100 customers had downloaded the app that relies
on mobile data points such as network diversity, geographic patterns,
and financial transactions to score customers in real time.
The
data collected is what is used to determine the creditworthiness of a
particular customer. Other credit providers use collateral or a person’s
formal credit history to determine borrowing.
Tala
offers its customers two products: a 30-day loan at an interest rate of
15 per cent and the 21-day credit at an interest of 11 per cent. The
first 8,000 customers on the app were served manually and Ms Siroya
notes “this came with its own challenges”.
Today,
the micro lender has serviced more than 4.5 million loans and has lent
out Sh25 billion ($250 million) to its customers in Kenya, Tanzania,
Philippines and Mexico.
“Repayment rates are at 92 per
cent with eight per cent accounting for the slow payers. Interestingly,
95 per cent of our clients are repeat customers,” said Ms Siroya, a
graduate of Columbia University.
Tala says when launching in a country, they rely on diverse cultural differences.
“When
we got started, we raised investor capital of $1.2 million (Sh120m),”
she says of the venture that has employed 220 people, among them
customer service, engineers and collectors.
Plans are
underway to introduce the service in West Africa in countries such as
Ghana, Senegal and Nigeria as well as the southern part of the continent
in South Africa.
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