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JOHANNESBURG – If you threw a rock in a room full of African start-up founders today, you would likely hit one determined to deliver eager users loans “in just 10 minutes!” via their cellphones.  

In the past 24 months we've witnessed a windfall for fintech start-ups on the continent, with early-stage investors deploying unprecedented amounts of capital into the sector.

The problem these new aspiring businesses aim to solve is well-documented. Many people in emerging markets live their lives entirely outside the formal financial ecosystem. 

They are financially "excluded" and, in response, start-ups hope to harness mobile technology to "include" them in the formal economy. And often, with little existing infrastructure to "disrupt", these start-ups must build it.

Take the lending industry, for example. Today's formal financial systems are designed around what is predictable; a certain amount of money labelled “salary” reliably shows up every month, courtesy of the same stable source. 

Most banks’ risk assessment methods only support giving loans against such consistent sources, despite such conditions not mirroring the reality of the average consumer in emerging markets. 

For most African citizens, income is irregular and unpredictable, and with most transactions happening off-line in cash, other signals must be used to determine creditworthiness.

Fintech start-ups are betting big that they can accurately identify and target customers who can and will repay unsecured loans. 

They aim to circumvent the traditional institutions who have so far failed at this task and to build new financial ecosystems around themselves.

However, a US-based company called Mines has recently closed a $13 million (R198m) Series A investment round to do the exact opposite.


The dominant narrative in start-ups today closely tracks the story of the demise of knights. In the Tudor period (1485 to 1603), the English Renaissance brought new philosophy, new art, and new literature. Henry VII took the throne like you would expect a 15th century monarch to: noble knights on horseback engaging in chivalric combat. Being a warrior in those days required years of intense training and mastery of hand-held weapons like swords, axes, and war hammers.

But the Renaissance also brought new technology. By the end of Elizabeth I’s reign – the end of the Tudor period – battles were won by siege warfare and through the use of projectile weapons, like crossbows, cannons, and muskets. 

The result was that all men were made "equal". Knights and castles that were once impenetrable were now vulnerable to armies of barely-trained peasants with bows and guns. The knights became "priests of a dead religion", and succumbed to obsolescence as the grounds of warfare shifted beneath their feet. 

Things that once made them invincible became their greatest handicaps – for instance, reinforcing their breastplates to withstand bolts and arrows ultimately made them too heavy to carry. They were – to quote an often-misused term – disrupted.

Similarly, accepted wisdom suggests that the battle between start-ups and incumbent enterprise comes down to whether the former crack distribution before the latter learn to innovate. “Large corporations are not nimble enough,” the narrative goes. “Innovate or die!” “Disrupt or be disrupted!” 

The trend towards ubiquitous web-enabled mobile usage is changing the nature of markets, and enabling young companies in Africa to take the fight to old, large institutions. Bucking the trend, instead of competing with the old guard, Mines is trying to empower them. 

By bundling all the administrative components of a credit product (ie risk assessment, disbursement, loan management, collections, etc) and selling large banks, mobile operators, retailers, and payment processors a plug-and-play pre-packaged solution, Mines is offering incumbents the ability to offer credit to previously-unbanked customers who might have otherwise continued to go unserved. The knights are getting guns, too!

Mines started in 2014 as an AI research project by a Nigerian Stanford Professor, Kunle Olukotun, who partnered with a fellow countryman named Ekechi Nwokah – who then was Principal Security Engineer at Amazon AWS – to apply the technology to risk assessment for the financial services industry. 

The pair has since integrated with the Nigerian mobile telco, 9Mobile (formerly Etisalat Nigeria), to launch the instant loan service, Kwikcash, which has reportedly disbursed more than 4.5 billion naira (R190.5m) over the past 18 months. 

Mines has also penned partnerships with two other Nigerian biggies – mobile telecom Airtel and payment processor Interswitch.

Osarumen Osamuyi is a writer and investment analyst based in Lagos, Nigeria. He is the author of The Subtext, a publication about the business of innovation in Africa. You can email Osarumen on [email protected], or follow him on Twitter @skweird and The Subtext @thesbtxt.

The views expressed here are not necessarily those of Independent Media.

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