•The former algorithm-based trader at New York's Wall Street says the company's larger balance sheet gives the company a competitive advantage to lead and stay ahead of its competitors
• Haile says there is a big need for access to credit in Nairobi and Mombasa. Tier 2 and Tier 3 towns have not been fully served or are charged higher rates by firms using aggressive lending practices.
A product financing company, Aspira Kenya si picking up pace in the country, taking advantage of lack of credit access.
The company was launched by Mauritius-based and listed firm CIM Financial Services Limited (CIM Group) in April 2017 to offer finance to help customers purchase products including electronics, furniture and motorcycles on hire purchase terms.
Speaking to the Star, the managing director Yoeal Haile is optimistic to beat the competition from other players and have sustained growth in the Kenyan market.
This is as the firm squeezes into a space that is comprised of increasingly asset finance services by banks and a high number of digital money lenders in the market.
Recently, telecommunication company Safaricom launched a similar product, Beba Sasa Lipa Pole Pole in partnership with KCB Bank. The market has other players such as Lipa Later.
Despite this, the former algorithm-based trader at New York’s Wall Street says the company’s larger balance sheet gives it a competitive edge to lead and stay ahead of its competitors.
What drove you to choose Kenya?
Our parent company in Mauritius has been in operational for 32 years and wanted to expand into other African markets. After extensive market research we discovered Kenya is the most attractive country to bring hire purchase and leasing operations. We considered factors like lack of access to credit and size of the market, established retail networks and opportunities to start up a fintech business. Kenyans are comfortable using mobile money and mobile-studio financial services.
We kicked off operations mid-2018 and are now trying to grow awareness of the brand.
How does Aspira work?
We facilitate customers to buy goods they want immediately and pay for them over three months, six, nine or 12 months. Using a downloaded online application, customers take two minutes to apply and get approved for up to Sh500,000.
How has the firm priced credit to beat the competition?
We have tried to be as lean as possible in order to offer cheaper credit to customers, charging interest of as low as three per cent per month.
We had to outsource some functions, particularly to manage the customer journey. This means our tech has to be highly enhanced.
Just like any other creditor, we are also working with the credit bureaus to gauge on clients’ credit history and scores.
How has been the business over time?
We have experienced growth in sales and human resource, increasing from three retailers on board and 10 staff. Now we have 75 retailers on board and over 100 employees. We also do 40 times the sales compared to when we started.
Where are you sourcing finance for the business from?
We are working with one of the leading local banks. We are currently in talks with the lender on partnering to increasing our customer base.
What is your biggest selling item on the platform?
The biggest seller is mobile phones constituting about a third of sales, furniture, household items and televisions. This category makes 80 per cent of the sales.
The firm is also dealing out other products like motorcycles in partnership with Car and General. We are also working on a pilot programme to provide tuition and laptops with a company in Kisumu.
We have expanded to finance travel and other non-consumption items that can be used to establish a business like car wash machines and construction materials.
How does financing the travel business work?
We give a minimum of Sh10,000 ranging from domestic travel like Masai Mara or coast to international travel. The service allows the traveller to book a visit with one of our travel partners through us, allowing you to make payment before the trip to spread the costs.
Currently, we are working with two travel companies and holding talks with retailers. The firm also recently kicked off a corporate travel programme.
We hope this segment will pick up considering the increasing demand to travel with most Kenyans.
How has competition affected your business?
There are many players in this space as others join day by day. It’s not an easy space to operate in as it needs a large balance sheet to lend, which we have a competitive advantage.
We have to make sure the processing is quick and easier to serve as an alternative than going to banks or other players. This helps us strike a balance in keeping our clients happy and deliver value to our retailers as well as have fast-moving inventory.
Partnership with brands such as Apple and bringing onboard additional electronic retailers has offered the opportunity to increase the range of items offered. Aspira has finalized a partnership with one of the top supermarkets that will be kicking off soon.
Are there instances where customers fail to pay?
The non-performing loans and default rates are less than 20 per cent, similar to most financial institutions here, helped by our focus on fraud prevention. We have also adopted the IFSR9 provisions requirement, coupled with the support from our parent company.
Our model involves lending tied to an asset, therefore a customer is always reminded they have a loan to pay as opposed to cash loan. This creates a difference in the market flooded with transactions of cash loans that are used to pay other cash loans, driving the huge backlog of large loans in the industry.
Every fintech should make sure each loan given is based on your ability to pay unlike when you give higher loans tied to, for example, a logbook.
What does the future hold for Aspira?
We intend to expand countrywide and to broaden the range of products we finance. The partnership with supermarkets and education will help create awareness on the consumer side.
We plan to include financing businesses like restaurants while emulating our parent company in leasing and factory operations. There is a lot of interest from small and larger companies to finance even banks.