Social lending platform Lendico has made the leap from Europe to Africa by launching in South Africa. The company – a part of the Rocket Internet-backed startup builder Africa Internet Holding – operates as a peer-to-peer marketplace for loans, connecting those with funds and those looking for money directly and thus cutting out the bank middle man.
This in turn, the company claims, means it can offer a lending service at a cheaper price than traditional banks, offering attractive returns for investors and low interest rates for lenders. The service charge for the former is 1 percent, while for the latter it’s from 1.25-4 percent. Loan rates start at 7.92 percent. An algorithm is used to analyse loan applications and classify the type of loan in real time.
Lendico was originally launched in Germany last December and has since began operating in Spain, Poland and Austria. Now it hopes to tap into the incredible potential of what is currently Africa’s largest economy – outstanding consumer credit balances in South Africa amount to R1.49 trillion (€103 billion), which means a 1 percent drop in the cost of loans could see consumers pocket more than €1 billion.
The P2P model has certainly proved to be a success elsewhere, with the top two providers in the US enabling $2.4 billion (€1.75bn) of loans in 2013, up 177 percent on the previous year.
Dominik Steinkühler, MD of Lendico, said the company was being developed as a digital alternative to banks: “Lendico is very different from a bank as borrowers and lenders benefit from direct interest rates. Lendico as a global marketplace represents a modern way to get a loan and to invest in a new asset class.”
Jeremy Hodara is a co-founder of AIH, which is aimed at accelerating the continent’s shift online and which can count JUNIA, Zando, Hellofood, Lamudi and Easy Taxi in its portfolio. He said: “We feel it is now the perfect time to expand our focus and vision into the digitalising finance sector by providing Africa with financial alternatives in order to further support the emerging market’s economy.”