CapitalSavvy is a Ugandan venture capital investment company that seeks to connect local developers with job opportunities. Tumusiime stated that the organization is currently collaborating with Swiss technology firm Monetix to build a new lending solution that is completely digitized and built on the BSV blockchain, allowing local SMMEs to have more efficient access to loans.
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Credit: Ugandan SMMEs’ Lifeline
The African Development Bank estimates that there is a $100-billion loan shortage for local SMMEs, with Sub-Saharan Africa accounting for 80% of it. Monetix and CapitalSavvy’s joint venture provides new financial options to these businesses using an end-to-end digital solution that allows clients to apply for loans online and receive payments with mobile money.
“Access to credit is very difficult and most of the big commercial banks have many requirements that are not met by most SMMEs,” Tumusiime explained. Small company owners typically trade under their own names and hence borrow as individuals, making it challenging for lenders to assess their eligibility either for having poor record-keeping or having no books of accounts at all.
Because they do everything online, Monetix customers only need to upload necessary documents, such as government IDs and clean passport photos, on the platform to expedite loan review, approval and final money distribution. These activities are automatically recorded and can easily be accessed on the blockchain, allowing lenders to determine credit eligibility, cutting down on weeks—or even months—of due diligence in the process.
This method is consistent with the previous decade’s extensive use of mobile money in Africa. Furthermore, CapitalSavvy’s initiatives include reducing the number of trips to the bank to make deposits or withdraw funds, as well as removing traditional banking fees—where most blockchains go wrong.
Blockloans Extend Financial Inclusion to the Unbanked
Because they are not scalable and have huge transactional costs, the unbanked cannot use well-known blockchains like Ethereum, which have recently had extremely high transaction fees. If a blockchain-based payment system costs more fees than VISA, Mastercard or PayPal, it would not be practical and inclusive at all.
Blockchain technology provides a layer that permits it to cross boundaries. As a result, there is no need for further settlement, permissions, and so on, making it a fantastic fit for both enterprises and financial markets.
It can establish financial solutions that allow for investments as little as a dollar or a euro, rather than a four-figure investment. Financial service companies could expand their offerings outside conventional regional boundaries, allowing access to global markets. Even then, Monetix strongly believes in developing local partnerships first.
“Think global, act local” is profoundly ingrained in Monetix’s DNA and the founder’s mission, and the company looks forward to strengthening its cooperation with CapitalSavvy in the next few years. Moving these transactions on-chain would give the lending sector new collateral that could be certified and appraised on the blockchain in real-time.
Tumusiime believes that, with over 60% of the region’s population under the age of 25, technology-based solutions are the way to go, and he looks forward to being a part of the solution.