Trust is your currency, so spend it wisely. The way you spend it determines how far you go in life.
– Femi Iromini.
Owning a PoS (Point of Sale) outlet is currently one of the most profitable businesses in Nigeria. It has recently become ubiquitous and can be found on nearly every street corner in the country. Its expansion has been championed by agent banks such as Polaris Bank’s Sure Padi, FirstBank of Nigeria’s FirstMonie, and Access Bank’s Access CLOSA. Fintechs like Kuda bank, TeamApt, OPay, Paga, Interswitch, and Quickteller are also drivers of this growth. Agency banking brings financial services like cash deposits, withdrawals, fund transfers, utility bill payments, airtime recharge, and other related services closer to the unbanked and underbanked people in societies.
There are hundreds of thousands of agents in Nigeria, but one major challenge for these agents is getting access to working capital. Enter Moni Africa; the startup helping agents get instant loans weekly (up to ₦3 million in 3 minutes) for their POS business at the lowest interest rates.
Femi Iromini, the CEO of Moni Africa, has quite a robust work experience. Prior to Moni, he worked in the investment banking space, the World Bank, and some digital banks in Nigeria. He also co-founded an educational startup. While some of these works made him familiar with the African fiscal terrain, they did not provide the kind of personal fulfilment he desired. The world bank, for instance, was “too organised”, and he wanted a “disruptive venture”.
In 2019, Iromini linked up with a former colleague, Dapo Sobayo, who had over five years of experience in the lending space, having built startups like Zedvance Finance Limited and SEL Capital Finance. Together, they founded Moni in 2021. But the duo did not start Moni simply for the sake of launching a startup. It was fortuity.
How it started
It all began in 2020 when Iromini’s family friend lost her job in the wake of the pandemic. For want of what to do, she started a mobile money business, and he (Iromini) invested in it. In a short while, she expanded to two outlets. As the business grew, so did the demand for working capital from Iromini. As he would later find out through her, many agents faced similar challenges regarding access to working capital. For them, banks or fintech were unviable alternatives to get loans as they often requested “documents or collateral that they can not provide”.
Eventually, he met with her co-agents in the Shapati community, Lekki-Ajah, who recounted their challenges with getting capital to him. These agents then convinced Iromini to help them with capital and committed to paying back weekly with a specific interest picked on their terms. Iromini and Sobayo had no plans to start Moni at this time, so they reluctantly put $1500 into a Shapati Fund support. However, they doubted it would be repaid. “We created a google form and added all of them to it. We did a basic KYC, nothing serious. Then made our first disbursement from our account,” Iromini explained. But contrary to expectation, the Shapati agents fulfilled their commitments.
Social trust as a currency
Iromini is not wrong to have been pessimistic. Default on loan repayment is a massive problem in the Nigerian lending space. The default culture has become increasingly prevalent with the emergence of fintech platforms that have no stringent lending procedure. This, we have seen in the recent public shaming statements released by some fintechs companies to haunt delinquent customers into paying back their loans. Still, this default culture keeps thriving because there is a lack of effective tracking methods and no immediate consequences for defaulting on a loan.
With serious research and the fusion of Sobayo’s wealth of lending experience, a community lending startup built on leveraging social trust to suit indigenous realities was born. And this is what makes Moni different from other players in the lending space. Unlike its peers who rely on databases of local credit bureaus to give out loans and record high default rates, the startup operates a community lending system it claims has helped achieve a 99.9 per cent repayment rate.
Moni Africa has its operations built solidly on four hypotheses. The first was to make it a community-based model of lending. So to be a beneficiary, you must belong to a community where all members are accountable to each other. Because they have a unifying challenge of finance, the community serves as collateral for the loan instead of unimaginable collaterals requested by banking institutions.
There is also a collective consequence if one member defaults. If one person in the community defaults, others will not have access to a loan. Because their business interest is at stake, there is a collective consciousness to refer a member of integrity into the community.
“Leveraging social habits make it easy for people to do the right thing. I am a Yoruba boy, and we cherish communal living. That was how we made it a community-based model of lending. People do not mind being embarrassed on social media, but their community is valuable to them. There is a social intelligence around that guy is a bad guy. You can not use Artificial Intelligence (AI) for it or a statement of account,” Iromini explained.
Conversely, there is compensation for a good referral made by community members. When the referral pays back in time, the referee gets a commission, thus encouraging people to introduce more trusted people into the system.
Born out of a perfect understanding of how life’s uncertainties can affect a member and consequently impede the funding of such a community, Moni Africa introduced a community purse and embedded insurance coverage. As members individually remit their weekly payment, they make contributions in case of unprecedented default and insure themselves.
“Once, one of the agents had an accident. There is nothing you can do in that instance. He was not able to pay it back for a while. The community he belonged to got tired, and the group leader suggested they contribute to save their community. Also, the agent could not go to the clinic because he had no funds, so we thought of ways to avoid such a problem. They pay as little as one dollar for insurance. Their soul and business are in good shape when they know they have coverage. ” Iromini narrated.
The process of growth comes with its hiccups. Iromini identified the inability to meet the increasingly growing demand for financing as Moni’s biggest challenge. He stated, “37 million of over 44 million small businesses in Africa do not have access to funding. The demand was intense, and because we have built enough credibility, we have financial partners that provide us with the debt to scale. We have investors as well. Lending can be difficult. You get people, but how do you get your money back? That is what our model addresses.”
Since starting the business venture, Iromini says he is happy at how the business has grown and its impact. He recounts seeing agents start in tattered shops, and then morph into better ones in several locations. And also seeing an improvement in their lifestyle. Moni Africa is also empowering women and bridging the gender divide in society as women constitute most of its workforce.
Moni Africa is operational in 22 of Nigeria’s 36 states and in Benin republic and Guinea Conakry. Since launching the pilot in August 2021 with more than 3,000 mobile money agents (more than 5,000 on the wait list), Moni Africa has disbursed more than 11,000 loans and more than $5,000,000 in loan value. Ninety-two per cent of merchants use Moni at least four times a week, and the repayment rate is 99 per cent.
Iromini said the goal is to build an operating system that makes businesses function well and create prosperity. “Being able to build a community finance model to make it easier for people to leverage social trust to access working capital is commendable. We say something in Moni – trust is your currency, so spend it wisely. The way you spend it determines how far you go in life,” he said.