A financial emergency can occur at any time to anyone, that’s why we have got credit cards and savings account for those situations. However, what about the people living in the secondary parts of the world where they do not have access to the bank or loan facilities? David Munga, a 33-year-old Kenyan, who is also the founder of Raven Ltd., started an emergency loan facility which can be used with the help of cell phones in Kenya. M-Pepea was launched in 2010. It is for the Kenyans who do not have access to banks and credit card facilities.
How does it work?
M-Pepea works with the help of M-Pesa service for Safaricom. Safaricom is the largest cellular network operator. M-Pepea allows the users to withdraw money 24×7 through their M-Pepea application. M-Pepea collaborates with local businesses across Kenya and enables their employees to withdraw 20% of their salary. The borrower needs expressed consent from the employer. The interest of up to 10% is charged on the borrowed sum. The loan gets repaid directly from the borrower’s salary at the end of the month.
Every M-Pepea user can register for free and is given an M-Pesa account. When required, the user sends a text to M-Pepea 5278 with the amount that one wishes to borrow. M-Pepea sanctions the loan and sends the money to M-Pesa account which can be withdrawn from a cash machine nearby or any Safaricom branch using the security code which is sent to them. The amount of the loans range from 58 USD to 350 USD, which is about 1000 – 30000 in Kenyan shillings. This amount can be withdrawn instantly and can be useful in any emergency to the users. The banks only provide loans for significant investments like buying a home or starting a business, and the interest rates are as high as 50%. In such a situation where a man might have an emergency need to stay a night at a hotel or fix their broken car, M-Pepea comes to rescue them.
Surpassing Every Obstacle
David Munga and Edwin Maina are the founders of Raven which launched the M-Pepea application. They say they were inspired by the cases of people who were stuck in need of money urgently. The owners don’t have any intentions of competing with convention money lending, as M-Pepea provides money to the users for a very short period so that no one gets into wrongdoings to fulfil their short term requirements. Most Kenyans have experienced the feeling of standing on the roadside with their broken car, and no money. David and Edwin have come up with the idea of M-Pepea to help their fellow countrymen in these kinds of hopeless situations.
Loan defaulting remains a problem which they try to tackle. Raven has collaborated with businesses so that they only allow the users with permanent jobs to withdraw money. Raven has made agreements with over 100 companies to provide this facility to their employees.