MTN expands its offering to the small businesses lending market

MTN continues with its push for more financial services products, announcing on Tuesday a new lending facility mainly for small businesses in partnership with fintech company Jumo.

Like its biggest competitor, Vodacom, MTN is working to add more layers to its MoMo mobile payments platform. The mobile operator has tended to focus on insurance but, like Vodacom, the company sees a future for lending through its financial services unit.

Dubbed “Qwikloan”, MTN said its new offering is meant to give its mobile money customers access to small, short-term loans on their mobile phones, ranging from R250 to R10,000 depending on eligibility. 

As with its other financial services offerings like remittances, MTN is looking to take up market share by making its offering cheaper than its competitors.

Unlike traditional banking institutions with a 24% interest rate on short-term loans, MTN says Qwikloan can reduce the cost of lending to “as low as 10%”. 

“This is made possible by MTN MoMo’s payment infrastructure and Jumo’s core banking infrastructure with AI prediction capabilities,” SA’s second-largest mobile operator explained.

Founded in 2015, Jumo primarily offers savings and credit products to entrepreneurs in emerging markets, as well as technology infrastructure to partners such as mobile operators and banks to assess lending risks, detect fraud and verify the identity of their clients.

This latest partnerships builds on MTN’s existing lending business, which began offering personal loans from R2,000 to R180,000 a year ago.

The mobile provider partnered with Lndr, a local registered credit provider, which will handle the application and loan approval process. Customers can get a portion of funds into their mobile money wallet, with the balance going into a bank account.

Small business lending has become a highly competitive sector in SA.

African Bank is in the final stages of developing a digital lending product aimed at small, medium and micro enterprises (SMMEs), with the offering expected to go to market in the first quarter of this year.

TymeBank, controlled by Patrice Motsepe’s African Rainbow Capital Investment, bought Retail Capital, a fintech company that provides funding to small and medium-sized businesses, in a R1.5bn deal.

Vodacom has been making money in recent years in the credit market, driven by its airtime loans. SA’s largest mobile company also offers personal and small business loans. 

MTN said its new offering with Jumo has been available to smartphone users in SA through its MTN Mobile Money app since December 2023. The service is now being opened up to include users of feature phones via USSD, taking out the need for data and smart devices. 

MTN is targeting local entrepreneurs and the informal sector through its partnership with Jumo. The latter hopes its banking technology can reduce costs, making it possible to deliver the offering at low prices.

“MoMo’s Qwikloan offering is a testament to our dedication to providing financial solutions that prioritise accessibility and affordability. In these challenging economic times our goal is to empower SA consumers by offering a reliable alternative with significantly lower interest rates compared to banks,” says Bradwin Roper, chief financial services officer at MTN SA.

In 2021, Fidelity Management & Research Co, the world’s fourth-largest asset manager, led a $120m (R1.8bn) funding round for Jumo, joining a host of international investors in betting that the company’s efforts to help extend financial services to entrepreneurs in emerging markets will pay off.

The company operates in seven countries — Ghana, Tanzania, Kenya, Uganda, Zambia, Ivory Coast and SA. Its partners have included MTN Group, Absa and Airtel. Through its lifetime, the company has enabled disbursement of more than $5bn in loans and reached over 26-million customers and small businesses.

MTN SA’s partnership with Jumo comes in the same week that the group’s fintech business received a $200m investment from MasterCard for a 3.8% stake in the unit. 

gavazam@businesslive.co.za