NewTech Friday: Microfinance Pro – Empowering financial inclusion in Africa
Microfinance Pro is an award-winning SaaS solution that was selected for the CATAPULT: Inclusion Africa program in 2023. Lionel Aluka, Founder and CEO of the Togo-based startup, shares the compelling story behind their mission to democratize finance and foster sustainable development in underserved communities, and outlines ambitious plans for the future.
Microfinance Pro is an award-winning SaaS solution that was selected for the CATAPULT: Inclusion Africa program in 2023. Lionel Aluka, Founder and CEO of the Togo-based startup, shares the compelling story behind their mission to democratize finance and foster sustainable development in underserved communities, and outlines ambitious plans for the future.
What led to the creation of Microfinance Pro?
The director of a microfinance institution in Togo requested that I develop a solution to tackle a serious problem of employee theft, after losing over 30% of their clients’ deposits in one year. The institution had 10,000+ customers but could not afford reliable software to manage their accounts. It would send field agents to collect daily deposits, ‘tontine’, from them. How else could it help its customers save money when so many of them do not have a smartphone or internet access? As the director was explaining to me that their clients did not have a digital banking app, an older lady barged into his office begging to be reimbursed any portion of $400… her entire life savings that had vanished without a trace. She had many paper receipts proving she had given all this money to field agents.
After setting up in-person meetings with over 30 microfinance institutions’ executive management in Togo, Burkina Faso, Benin and Ghana, we confirmed that the same technology and theft problems had played a big role in causing thousands of institutions to suspend ‘tontine’ operations or shut down altogether in the last six years. Further research had us shocked to learn that 83% of people in Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo (the WAEMU Zone) are underbanked or unbanked, and thus do not have access to banking services. This led us to create digital solutions suitable for these countries’ practices and challenges, while also focusing on financial inclusion.
Could you present your firm’s offer?
Our SaaS solution Microfinance Pro offers every individual a digital wallet, a way to constantly to check their account balance whether they have an internet-capable phone or not, whether they are giving their ‘tontine’ (daily or weekly collect) money to a field agent or directly depositing it into their account in some digital format. Whether they can afford a bank account or not. And we want them to transfer their own funds to someone else with the lowest overhead costs possible. True democratization of finance, highly secure transactions, reliability, traceability and a pleasant customer service experience not typically emphasized in Africa, are the words that resonate most with us.
Our board consists of American expats from Togo, Haiti and Jamaica, tech savvy individuals who face the same customer issue, and we intend to use all our collaborative knowledge, connections and experience in the field to ensure our product expands to these countries. Over 900 users and three institutions have been hosted in our databases. This number will grow!
Despite our strong focus on catering to the underbanked and the unbanked, we have given great importance to providing financial institutions with intelligent insights, APIs and better lending algorithms. We also place a focus on interconnecting branches and also to a lesser degree institutions, to allow them to focus on managing their business rather than on tech stack mismatches and legal challenges dealing directly with each other.
What’s coming next for Microfinance Pro?
Our young fintech recently won first prize for best digital transformation initiative in the Togo Digital Awards 2024, and we have big plans for the future. As innovators in a young francophone African fintech ecosystem, we will push the envelope and actively exploit the best ways to leverage AI to further transform our customers’ experience as well as our financial partners’ (financial institutions) ability to exploit their data over the next 12 months. This will happen regardless of recognition for our efforts (though we have had a few notable highs to go with our lows).
Democratization of financial transactions and better client scoring are in our opinion the best catalysts for achieving financial inclusion, and they are firmly entrenched in our future roadmap. Our partnership with Microsoft gives us great confidence in our ability to deliver a truly transformative next iteration of our software.
As a startup that is most proud of the great emphasis we have placed on social responsibility and sustainable development, creating jobs and improving the quality of life in our community, for our employees and their families, we want to do more. We also want to recruit and groom more local and foreign talent. We will double down on efforts to do so. In order to achieve our goals, we will need to sign and implement new partnerships with digital platforms and microfinance institutions. We are seeking the right funding strategies and players to accomplish our goals. It is another endeavor we are actively working on.
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