Despite contributing immensely to Uganda’s Gross Domestic Product and employing the largest number of Ugandans, Micro, Small and Medium Enterprises (MSMEs) face a multitude of challenges, including limited access to credit.
Commercial banks do not want to extend credit to these entities as they are considered risky, have no collateral and most of them have unregistered businesses.
Identifying this gap in the market, ChapChap Africa, a low cost mobile payment application (App), sought to bridge it by bringing MSMEs into a digital age and enable financial inclusion for them and their customers.
Emmanuel Emodek, the Team Lead at ChapChap Africa says that with the App, MSMEs are able to tap into extending financial services such as mobile money to do deposits, withdraw as well as bill payment services in just five minutes.
“If you want to access mobile money right now as a service, 90% of businesses would fail to access it because they do not have formal documents like a bank account that has been operational for six months. They would also fail to tick the box of being a registered business. They would also fail to raise a minimum of $400 to be able to access the lines,” he says.
Emodek explains that in partnership with telecommunications companies, ChapChap has been able to aggregate and lower these requirements close to zero so as to increase the uptake of these solutions.
“Today if you want to run a mobile money business or a bill payment solution in this country through the ChapChap platform, it will take you five minutes to be on-boarded.
“All they need is an application, $5 and a simple Know-Your-Customer (KYC). They do not have to have a bank account and they are able to start running business,” Emodek says.
In a span of three years, Emodek says about 17,000 businesses have been on-boarded.
The ChapChap mobile payment platform was launched in 2017 in Uganda, initially allowing customers to pay for digital goods and services and do online shopping while earning cashback on their transactions.
Additionally, Agatha Kyozira, a member of the Customer Support Team at ChapChap Africa notes that by introducing the digital economy to MSMEs’ day-to-day activities, ChapChap Africa has created credible financial profiles for these businesses, which has indirectly opened for them multiple credit opportunities.
“These businesses today have been able to tap into these financial institutions to be able to access credit. We want inclusion for everyone; if we level the playing ground, we will eliminate so many things that hinder businesses from participating,” Kyozira said, adding;
“This is in line with our goal of ensuring that these enterprises are seen, have access to manufacturers, financial institutions, governments and a fair advantage to compete thereby improving the livelihood of women and youth by providing employment for sustainable development.”
ChapChap Africa is among the firms participating in the on-going second edition of the 40-Days 40-FinTechs programme, organized by HiPipo in partnership with Crosslake Technologies, ModusBox and Mojaloop Foundation, and sponsored by the Gates Foundation.
Emodek commended HiPipo for the initiative, saying that it has created for them the much needed visibility.
“Developing a product is the easiest bit but marketing it is the hardest and most expensive. A lot of Tech organisations have less spend on marketing because they cannot afford the mainstream media.
“We mainly serve the low income people market; if you charge them high, they shy away from the product. So the charge has to be low. But if you went to a media organisation to place an advert, what they ask for would kick you out of business,” he says.
He adds: “But 40-Days 40-FinTechs is that moment in life where you are in darkness then someone shows up with a candle and says I am going to amplify you.”
The HiPipo Chief Executive Officer Innocent Kawooya alludes that FinTech is the launchpad on which the promise of full global financial inclusion will be fulfilled.
“The 40-Days 40 FinTechs LevelOneProject shall show we have the innovators to take on the challenges,” he says
He, however, notes that FinTechs need to be prepared with appropriate products and have appropriate real time payment systems in place to support an inclusive, interoperable digital marketplace that is both thriving and safe.