Block-chain based microfinancing for Kenyan food stall owners
DURBAN - IBM Research and Twiga Food will be extending access to microloans to 220 food stall retailers across Kenya using a block-chain based financing system.
Twiga Foods which is a business to business logistics platform for kiosks and food stalls were looking to extend their logistic services into a total market ecosystem by adding financial services.
According to Isaac Markus, the IBM Kenya Researcher, IBM has been looking to spearhead efforts for block-chain rollout on their open standards. They selected Kenya to introduce block-chain based microfinancing because their targets aligned with the government's big four agenda which includes the following:
1. Affordable and decent housing
3. Food security
4. Universal healthcare
Markus said their partnership with Twiga Foods is a first of its kind and the outcome of the project is a testament to the positive effect of this technology and its use to our everyday life.
There has already been an 8-week pilot this year which processed more than 220 loans and the average loan was worth $30 (R357,90). The loans were for 4 and 8 days with an interest rate of 1% and 2% respectively. The loans were cashless and went directly to the capital for the businesses.
When a retailer had an order delivered, they would receive an SMS with loan options for financing that order. They would then reply to the SMS confirming the loan option that they wanted.
At the end of the pilot, users reported the value and utility fo the technology with many of them becoming repeat users.
IBM said that they are looking at opportunities locally for block-chain based microfinancing. They said that financial services, supply chains, IoT, risk management, digital rights management and healthcare are some of the areas that are poised for dramatic change using blockchain networks in South Africa.
This project will see Twiga Foods, a Kenya-based startup, use machine learning and the blockchain to determine a credit score and distribute microfinance loans for small food stands across Nairobi.
The technologies address a basic challenge in the region, how can businesses get access to microloans without a credit rating to scale-up their businesses.
This platform links SME's, banks and FMCG's to enable access to working capital and assist the SME in developing a financial profile or identity.
- BUSINESS REPORT ONLINE