Why We Invested: ImaliPay
Imagine being a gig economy worker on a ride hailing platform – in some cases living paycheck to paycheck to support your family. Your phone flies out of your hand one day while riding your motorbike, falling onto the street and getting smashed to pieces by oncoming traffic. As this phone was what you used to find your next ride, you are left without income for the rest of the day. Without access to formal financial services, and with limited savings available, you have to wait a couple of weeks until you can gather the money from your friends and family, or take out a high interest loan to purchase your next smartphone, racking up days of lost income that continue to set you back financially.
This is the reality that some 80 million gig workers face across Africa. Growth of this employment segment in Africa is catalyzed by digitization, the young population, persistent unemployment gaps, and the desire for more flexibility in the workplace. While gig economy work provides flexibility, there is limited job stability and unpredictable income flows that make it challenging to manage finances and ultimately increase risk for the worker. Fifty percent of African gig workers are financially underserved- they lack a savings safety net (and protection benefits) and are unable to access productive finance to support their work. Without stable income flows and proper documentation, financial institutions are unable to assess credit risk of potential clients, limiting financial inclusion.
Tailoring Financial Services to Gig Workers’ Needs
Gig economy work is only becoming more prevalent on the continent as digital technology continues to evolve, and workers want more flexibility and opportunities for supplemental income. Technology platforms that are designed to capture and synchronize data from these various platforms, and integrate it into a credit scoring mechanism, can better provide access to finance to this segment of the population. That is why FINCA Ventures invested in ImaliPay, a digital financial services platform that offers tailored marketplace products and services that promote the inclusion of African gig economy platforms and workers.
ImaliPay has designed a cash flow scoring model that allows gig workers to formalize their digital work history to create a verified and universal credit score that allows the financial inclusion of digital and self-employed gig workers. ImaliPay offers in-kind loans around tools of trade, including smartphones needed to access the mobile apps to capture gig work, spare parts and fuel for motorcycles, and cash advances for freelance work. Additionally, ImaliPay provides a savings product to encourage workers to build up a safety net to be able to weather unforeseen circumstances. In-kind loans for tools of trade not only directly support an increase in productivity, but also reduce the risk of repayment, which is critical in determining the financial resilience of their customer base.
Increasing Gig Worker Income and Productivity
By offering access to savings and in-kind loan products, ImaliPay helps blue-collar workers (earning on average $300 per month before ImaliPay) improve productivity and income potential, build credit through savings and timely repayments, and create a financial safety net. With access to affordable tools of trade, riders can reduce down-time from the app and can work an additional 36 days per year. As ImaliPay scales, we are excited about their ability to bundle on other impactful financial services for its customers, like accident and hospital coverage insurance.
Building Upon Extensive Financial Inclusion Experience
ImaliPay’s founders, Tatenda Furusa (Zimbabwean) and Sanmi Akinmusire (Nigerian) are impressive, Pan-African entrepreneurs with over 20 years of fintech and financial inclusion experience, most recently at one of the leading digital payment platforms in Africa. Tatenda and Sanmi are both nimble, ready to take on the next day’s challenges while balancing the priorities of multiple types of partners, from gig economy platforms to vendors to financial service providers. From all stakeholders that we spoke to, it became clear that the founders were passionate about building a solution to meet workers where they are, supporting their literacy level, with the goal of being a leading Pan-African financial services provider for all. They are backed by CTO Hayden Eastwood, the brains behind the technology, with extensive experience in IoT, Big Data, and AI.
FINCA Ventures’ First Gig in Fintech Investing
FINCA International’s network of 20 financial institutions on five continents provide formal financial services to over 2 million clients. While these financial services positively impact the lives of millions, FINCA recognizes that incumbent financial institutions are not alone enough to extend formal financial services to the remaining 1.7 billion unbanked individuals globally and that digital-first technology innovators, like ImaliPay, are building pioneering products that hold the potential to expand the frontiers of financial inclusion. Partnering with financial institutions facilitates a cheaper and faster path to commercial scale than is possible for fintech startups alone. Incumbent financial institutions can offer fintech startups large balance sheets, deposit-taking capabilities and facilitate necessary regulatory approvals. For financial institutions, these partnerships accelerate the creation of new product offerings targeted at new market segments that would otherwise take a significant amount of time and resources to develop, if at all.
The FINCA Ventures team decided to back ImaliPay given the strength of the founding team, sheer size of the market opportunity, and because we see future potential in ImaliPay unlocking new lending and deposit mobilization opportunities for FINCA subsidiaries which will ultimately support ImaliPay’s expansion across the continent.
With pilots underway with a few mobility platforms in Nigeria and Kenya, ImaliPay is well positioned to take the gig economy by storm. FINCA Ventures can’t wait to be along for the ride!