Tech firm targets workers with loans via mobile phones

M-Pepea advances loans ranging between Sh5,000 and 30,000 to employees at interest rate of 15 per cent.

The clients first need to register with Raven Limited where they are incorporated to the M-Pepea platform Interested employees issued with unique reference numbers, which they use to obtain loans through their mobile money transfer accounts.

A mobile phone software firm is targeting employees in the formal sector with its new application that allows mobile money transfer service subscribers to borrow emergency loans electronically at a fee.

Raven Limited has developed an automated system dubbed M-Pepea that seeks to offer mobile money transfer users from the four mobile operators small emergency loans any time regardless of their location.

The service is tailored mainly for corporate clients and NGOs whose employees travel a lot in the field by advancing them credits ranging between Sh5,000 and Sh30,000 a month at an interest rate of 15 per cent per month.

Clients first need to register with Raven Limited where they are incorporated to the M-Pepea platform and their interested employees are then issued with unique reference numbers.

In the event of an emergency, the employee sends a text message request to the reference number provided, which in turn initiates a transaction on M-Pesa and the user receives the amount requested.

The firm recovers the money from the organisations that have signed up for the service, which deduct the loan from their employees’ salaries.

Edwin Maina, the business development manager at Raven Limited, says M-Pepea seeks to address every day financial constraints and emergencies experienced by Kenyans while in the line of duty.

“Imagine a situation where you are travelling to a remote part of the country on business and your car experiences mechanical problems,” he explains. “You do not have enough money on you and your ATM card is useless because there is no teller machines nearby.

“The whole process is automated and no human input is required. Raven then deducts the credit advanced plus interest from the employee’s salary as per the agreement signed with the employer.”

The service comes at a time when mobile money transfer service seem to have reached its peak, even with more than 30 per cent of registered mobile phone subscribers being left out.

According to recent data from the Communications Commission of Kenya (CCK) the number of mobile money transfer subscriptions stood at 18.4 million as at September last year.

In addition to this, the amount of deposits made through the mobile phone services grew by 17.5 per cent from Sh48 billion in the previous quarter to Sh56 billion during the period under review, an increase of 58.6 per cent compared to the same period last year.

The commission further states that the continued growth is an indication of mobile phone subscribers’ preference for mobile money transfer, which could be attributed to accessibility and affordability even to low-income earners who form the bulk of the unbanked population.

Mr Maina says that the company is not a deposit-taking institution and does not seek to compete with the established micro-finance organisations.

“M-Pepea’s does not really fall into the micro-finance segment and our purpose is not to compete with the traditional micro-lending institutions,” he says. “We only come in during emergencies and difficult situations, for example, helping NGOs provide financial assistance to their field employees who are in remote areas.”