[Sponsored] Amano Capital makes second early stage investment in ComGrow

Amano Capital have made their second early-stage strategic investment of the year into ComGrow, a fintech solution focusing on utilizing traditional village banking system’s as a way of tackling Africa’s high borrowing rates. The company was founded by Mkuzo Kuwani and Mikael Maingard, Michaelhouse Old Boys, now fresh out of Durham (Mkuzo) and Stellenbosch (Mikael) universities.

 

The idea came to the pair shortly after graduating from boarding school. They built an algorithm to allow for exceptional interest on savings without making the cost of borrowing inaccessible. Since 2017 the group has been managing the savings of a small group with total savings alledgedly reaching a peak of K500,000 under management while the pair were still teenagers. Commenting on their impressive numbers for 2020 Mkuzo said:

“The continent, in general, must improve its borrowing habits, to accelerate the ability for an African individual to have a firm standpoint in the ever-growing Pan-African tech economy” Explains Kas Shirley, General Partner at Amano Capital. He continues to clarify that “Disruptive tech solutions are being built across the continent, but the biggest challenge is the ability for the mass market to participate. ComGrow adds an almost gamified solution to regimented savings and responsible lending. We need to build an assembly line of products to drive tangible growth and it starts with a more informative savings solution”.

Mikael and Mkuzo are currently in R&D and are working on synergies across Amano’s existing portfolio to create their Smartphone and USSD platforms. Mkuzo voices that “Full roll-out should be in Q3, 2021 as we are very much focusing on functionality and are analysing consumer habits via a small testing group of 30 agreed Zambian traditional savings groups over the next year”. The app is seeking to integrate with several stakeholders during the R&D period to understand the most efficient way for users to save, borrow and participate in a variety of other services via API’s and management has gained strong traction on how the flow of capital will actually function over the last two months.

Mikael explains “Of course, this is not a new problem. When anyone thinks of giving out some money, they think of whether they’ll be paid back or not. There is a reason established credit providers develop algorithms for credit profiling; they typically work.”

Over the last two years the Bank of Zambia has openly promoted further innovation in the village banking industry. The industry is yet to be fully established, when the Comgrow team started there was widespread fear that the system could only work in its traditional form, this severely stagnated the development of new technologies  Mikael noted “Village Banking, however helpful, suffers because it lacks the necessary technological tools to mitigate risk, amongst other things”.

 ComGrow’s back-end will run a machine learning algorithm to create client risk profiles. We believe this will be a key component in our value proposition as it will drastically reduce the risk of default, thus improving the Village Banking experience for our users”. Mwangele Kaluba, a market analyst at Amano Capital, explains “You will find a radical uptake in participation in money lending solutions when interest rates are clearly lowered. Comgrow’s ability to offer substantially lower interest rates than the banks, due to the collective nature of the bank-end system will see them achieve a strong early advantage in the market.”

The offline money circle practice is over 200 years old and is heavily part of society in over 83 countries. Additionally, the value of all EMEA money circles is estimated at $100billion. However, the race to formulate a technological solution for this type practice is well underway with several other African Start-ups raising series A in the market over the last 4 years. A company to note who is making substantial strides is MoneyFellows in Egypt, who just closed on a $4.5million Series A round of investment led by Partech Partners and Sawari Ventures. However as discussed by an investment analyst at Amano Capital “Comgrow has a good pilot demographic. In the SADC region alone, there are over 100 million village banking participants. To add, only 35% of Zambia hold traditional bank accounts. However, nearly 5 million Zambians now have smartphones”. Zambia holds a strong case for the pilot and the Comgrow team is excited for the year to come.

If you would like to find out more about the business please visit our website www.comgrow.org