Last week I wrote a little about the incredible work the iSpace, a technology hub in Accra, Ghana are involved in. I spent a lot of time in the hub, taking in the atmosphere and talking to the inspiring young people learning, creating, innovating and aspiring out of the Labone office. One of those that I was introduced to was Emmanuel Mbalam, who has founded a startup called Lending Square. Emmanuel arrived at iSpace for an interview for a position at iSpace but ended up himself being supported by iSpace to develop his business, with funding, business support and event accommodation!
Emmanuel had an air of confidence about him when he began to tell me about his startup. It may have had something to do with being introduced as iSpace’s cash cow, or simply because he has a great idea, which promises to change the lives of many in Ghana.
Access to funds is extremely difficult for many across the entire continent. What happens when you have had a failed farming season, the rains are about to come, but you have no funds to prepare your land? Or demand for your product is high, but you can not afford more stock? A trip to the bank to ask for some credit? Well, for many this simply isn’t possible, with banks not willing to loan money out to those without bank accounts and with very few assets to offer as collateral. What makes it difficult is that is is very difficult to create a credit rating for those who are not part of the traditional banking system and haven’t taken loans before.
Credit is incredibly important for individuals and small businesses to grow and develop and become self sufficient. It is not all banks that have systems that leave out the majority of Africans. Some banks are giving access to loans to people desperately who are looking to set up small businesses. In one example, a young lady told me how she had taken a small loan from Agave Rural Bank, in Dabala, Ghana, in order to set up her roadside bean selling business. The terms of the loan were very reasonable, and to enable her to make repayments, without having to travel to and from the bank every week and spending more money, the bank sends a motorcycle banker around in order to collect the loans. A really impressive idea that is giving access to many in that area to much needed capital to start up their small businesses and keep them going.
But, what about those that do not have such forward thinking banks in their area. That is where Lending Square comes in. They have a unique rating at collating information and create credit scores for banked and unbanked population and then offer micro loans. Check out the video below to find out more from Emmanuel himself.
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