Ethiopian Startup eQub Wins Fintech Pitch-Off at 4YFN 2024
Revolutionizing Peer-to-Peer Credit with Digital Equbs
At the recent Mobile World Congress (MWC) event, a groundbreaking fintech startup from Ethiopia took center stage. eQub, the winner of the fintech pitch-off at 4YFN 2024, is shaking up the traditional banking landscape by introducing digital peer-to-peer credit through its innovative app.
According to Nahom Michael, business development lead at eQub, the startup’s name originates from an Amharic word that refers to a local form of rotating savings and credit association (ROSCA). This financing model has been in practice for centuries, particularly across Africa, where it serves as both a personal and business loan mechanism. However, its digital transformation is long overdue.
The Traditional ROSCA Model: A Brief Overview
For those unfamiliar with the concept, a traditional ROSCA group consists of members who pool their resources to achieve a common goal. The savings are distributed on a rotating basis, ensuring each member receives their share in turn. This modality has been effective in facilitating financial inclusion among communities that lack access to formal banking services.
The eQub Revolution: Digitalizing the ROSCA Model
eQub aims to modernize this traditional approach by creating a digital platform for Equbs. The app targets users with bank accounts and mobile phones, but limited access to credit. By leveraging technology, eQub is improving the efficiency of Equbs in several ways:
- Convenience: Members can add money without visiting an ATM, while administrators no longer need to handle cash.
- Credit History: The app’s points system helps users build a credit history by demonstrating their ability to save consistently. This feature has the potential to expand eQub’s offerings into buy now, pay later (BNPL), regular loans, and more in the future.
Key Features of eQub’s App
During its pitch, Michael presented impressive traction statistics, including:
- 25,000 Users: The app has attracted a significant user base since its launch.
- 200 Saving Groups: These groups have been formed through the platform, demonstrating its potential for community-driven financial inclusion.
Measures to Ensure Savings Security
eQub is committed to ensuring the security of savings in both self-managed and curated Equbs. For instance:
- KYC Requirements: Detailed Know Your Customer (KYC) procedures are implemented for self-managed groups, which already surpass traditional offline Equbs.
- Data Sharing with Banking Partners: eQub has partnered with over 10 banks to facilitate data sharing, reducing risks associated with traditional Equbs.
Future Plans and Expansion
eQub is setting its sights on achieving significant milestones in the near future:
- 1 Million Users by 2025: The startup aims to reach this target among gig workers, a major component of the workforce in sub-Saharan cities.
- Expansion into Other Countries: With the visibility gained from MWC, eQub is well-positioned to expand its operations into other countries in the near future.
Conclusion
eQub’s innovative approach to digitalizing peer-to-peer credit has earned it recognition as a pioneer in the fintech industry. By harnessing technology to improve the traditional ROSCA model, this Ethiopian startup is poised to revolutionize financial inclusion in Africa and beyond.
