It might not yet have even entered beta phase in Uganda, but fintech startup awamo, which offers tech solutions to microfinance institutions, is planning expansion across Africa after closing its first round of funding.
Disrupt Africa reported earlier this month awamo had closed its first funding round, raising EUR500,000 (US$550,000) in order to launch its mobile and biometric all‐in‐one‐solution for lenders in Africa, with Uganda the first port of call.
The startup’s “out of the box” biometric, mobile microfinance management solution is designed specifically for microfinance institutions in emerging markets. Designed for mobile use, it features reliable biometric identification and completely digitises credit management, risk management and portfolio management processes.
It was piloted in Uganda last year, and is now set for a beta phase and full rollout in 2016. Uganda will be the first destination, but founder and chief executive officer (CEO) Benedikt Kramer told Disrupt Africa awamo was a solution that was relevant across Africa.
“It was clear to us that we were going into East Africa first because it is an attractive microfinance market, and the countries are very close to each other,” he said.
“We also have a very good network in East Africa. We started with Uganda because we found a perfect test candidate. We were looking for something very small, very rural, and completely paper-based.”
Kramer has been plotting awamo for a while now, having first come up with the idea four years ago while working in Kenya with a microfinance advisory firm.
“I talked to a lot of stakeholders and they were all talking about the same problems. They have no overview over their portfolio, how much money should be coming back when. They run their whole business by rule of thumb and they didn’t really know who their borrowers were,” he said.
“That was the first time the idea popped into my head. Why don’t they have a credit bureau for the informal microfinance sector with a biometric component?”
In most African countries, credit bureaus only focus on the banking sectors, but Kramer said even there they are quite behind. In Uganda the bureau is eight years old and only covers five per cent of the adult population. He does not see credit bureaus as competitors, but said the challenge awamo seeks to solve is a large one.
“A major problem of microfinance institutions is that they’re completely paper-based, so there is no dataset that can be shared,” he said.
The startup aims to assist more people in obtaining access to microfinance, empowering entrepreneurs to create their own startups. Its funding has come from business angels in Europe, the United States (US) and the United Arab Emirates (UAE) as well as Ugandan and European grantors.