The Africa Internet Holding (AIH) yesterday in South Africa launched Lendico, a platform by which investors can directly fund the loans of private individuals after successfully launching the service in Germany, Spain Poland and Austria.

The service, which is regarded as a digital alternative to banks, offers cheap loans to borrowers as well as attractive returns to investors in Europe and, now, Africa.

“Lendico is very different from a bank as borrowers and lenders benefit from direct interest rates. Lendico as a global marketplace represents a modern way to get a loan and to invest in a new asset class,” says Dominik Steinkühler, Managing Director of Lendico.

Investors and borrowers alike have nothing to lose by using Lendico, a service that functions globally, beating the prices of banks and passing these savings directly on to their borrowers and investors, the group said.

“The idea of social lending is universal: people with money invest in the projects of people looking for funding. One party benefits from attractive returns, the other from cheap interest rates,” says AIH in a statement.

AIH intends to utilise the transformative power of the p2p model in South Africa, where the volume of outstanding consumer credit balances already stands at $150 billion.

“We have high standards when it comes to selecting borrowers, because we always have the interests of our investors in mind,” says co-founder of AIH Jeremy Hodara. He added that Lendico’s cost advantage gives it the luxury of providing loans at affordable interest rates and also giving out smaller loan sums that banks regard as unprofitable.

The new venture is in furtherance of AIH’s expansion plans across emerging markets.

“We feel it is now the perfect time to expand our focus and vision into the digitalizing finance sector by providing Africa with financial alternatives in order to further support the emerging market’s economy,”  Hodara reiterates.