Leaping Into the Future: Nigeria’s Rural Microfinance Community Gets Connected Using Stellar and Oradian
Tuesday, February 2, 2016
In the 1970s, microfinance began to take off as people started extending credit to small businesses and farmers as a way of getting them out of poverty. Microfinance works: the only problem is it’s hard to scale; it’s time-consuming and expensive to disburse and collect loans for instance. People are not able to transfer money within the country because they can’t get normal bank accounts or afford to pay 20% for traditional remittance/money transfers.
The conditions to have a bank account are difficult and banks are not that accessible in rural areas. (According to the Gates Foundation, 95% urban Nigeria has access to financial services, while rural is 24%). Money transfer is a financial service that is needed but not accessible.
This challenge has brought together Stellar.org, a non-profit technology provider inspired by Bitcoin that allows local currency to be effectively emailed at close to no cost, and Oradian, cloud-based software for local financial organisations in West Africa. Together they are rolling out a pilot payment transfer network among microfinance organisations in Nigeria. This network reaches a total of 200 branches and serves more than 300,000 end clients (more than 90% are women), mainly in rural areas across the country.
Joyce Kim, CEO Stellar, told IBTimes: “To move money from one microfinance institution (MFI) to another, people put money in a bag and then they would put that bag on a bus, and that bus could take 12 hours to get where it needed to go. It’s obviously not safe, it’s not fast, it’s not efficient and it has become more unsafe as the local political situation worsened with Boko Haram. Oradian started to tackle that problem and that’s how they found us.”
Source: International Business Times (link opens in a new window)