Professional Lender, formally known as KAFUNA,- is an affordable, intuitive web-based loan management solution with a mobile version designed for money lenders and community SACCOs/saving groups who can’t afford some of the existing and complex loan management solutions. The software solution handles everything from origination and servicing of loans, member registration and shares management, to management and collections loans.
In Uganda, Money lending is legal, but theoretically constrained by the provisions of the
Money Lending Act of 1952. The flexibility that money lenders provide over the formal sector financial institutions like Banks make them darling to most average Ugandans. They require little or no security, guarantors and are able to provide a loan just by a phone call. Money Lenders have greatly increased most people’s access to financial services by providing quick agricultural development loans, business development loans, commercial loans and school fees.
Most money lenders use calculators to calculate interest rates and manuscript books for record keeping. The manual processes involved result into numerous errors and hence losses. Customers are always cheated with all sorts of miscalculations, information concealment and tricks so as to remain in business.
Clients/Borrowers want information on their loan balances, how interest rates and fines are calculated and next repayment date.
A lot of people have lost properties to money lenders. This doesn’t benefit money lenders neither because by the time a court case is concluded, a lot of money will have been spent. Most money lenders agree that a system to manage their loans and remind clients of their next repayment dates
would be most needed. The challenge however is that most Loan management solutions available are very expensive and customized for banks, not for SMEs like individual money lenders.
How It Works:
Professional Lender is a secure, cloud based system. It can be accessed through a browser and hence need no installation or specific hardware costs to be incurred on the side of client. Clients buy an annual license to access and use the service.
Managers of money lending scheme are able to create customer accounts, enter loan details, approve/reject loan applications, track repayments, generate and view reports, among others. The system automatically generates repayment schedules, recalculates interest rates and tracks non-payments, show notifications and reminders and generate customized messages to defaulters.
Customers/borrowers use the mobile version-Professional Lender App to track their account details like account balances, last re-payment and next re-payment due-date. They are able to submit in Loan reimbursement applications using the mobile App. They receive reminders three days to next repayment date. These reminders continue, once every day, until repayment is done. The app also generates an advice notification showing how much money someone will be paying as extra incase the repayment date is not honored.
There are over 6,584 registered money lenders in Uganda, most of whom are operating within Kampala and Wakiso Districts. In addition to these, there is at least one SACCO operating at each parish level in more than 80% of districts in Uganda. All these are currently using manual processes and are in need of an electronic system to manage their businesses. With the increase use of mobile phones and computer skills, the above will be our target. We intend to extend this market to Rwanda, South Sudan and Kenya, once we are successful with the Ugandan market.
By: Collins Mugabi