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M-Pepea is an alternative emergency loan facility accessed through mobile phones for Kenyans who do not have credit cards, bank accounts or access to bank loans. It was developed in 2010 by David Munga, the 33-year old Kenyan founder of Raven Ltd.
M-Pepea provides loans instantly, 24 hours a day 7 days a week via M-Pesa, a mobile phone-based money transfer and microfinance service for Safaricom, Kenya’s largest mobile network operator.
“If, like many Kenyans, you’ve found yourself at the side of the road with a broken car, no credit and no money in the bank, it’s a way of getting yourself that money without having to get into trouble,” Munga says.
As in many African countries, most of the local population has no access to credit cards, and bank loans are only awarded in large sums as investments for purchasing homes or starting new businesses. Although loan sharks are available to Kenyans for emergency cash, they charge interest rates of up to 50 percent. M-Pepea charges about a 10 percent interest rate.
M-Pepea partners with businesses and allows employees of those businesses to borrow up to 20 percent of their monthly salary. Loans range from US$58 to $350 in Kenyan shillings.
Borrowers register with M-Pepea for free and are assigned a M-Pesa account. When ready, the borrower sends a text to M-Pepea 5278 stipulating the amount he or she would like to borrow. M-Pepea validates the request and sends the money to the borrower’s M-Pesa account, which the borrower can then withdraw from a cash machine or any Safaricom branch using the special security code sent by M-Pepea. The loan is repaid directly from the borrower’s salary at the end of the month.
Problems have arisen due to businesses defaulting. “We’re still in our initial phase, but we’ve seen how positively people have responded to the service,” Munga says.
M-Pepea has partnered with 20 businesses and has about 300 subscribers to date. Munga hopes to increase subscribership to 20,000 by the end of 2013.
