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Mobile operator says loan values average 4; users can build up credit history for bigger sums and lower fees.
Millicom’s mobile operation in Tanzania on Thursday announced plans to launch a new nano lending service that will not require collateral, but will instead enable users to build up their own credit history.
The telco, which operates under the Tigo brand, said the new service will be available to users of its Tigo Pesa mobile money service.
The product, known as Tigo Nivushe, gives customers immediate access to small loans, with different lending periods, with administrative costs varying based on the length of the loan.
The loans have an average value of 10,000 Tanzanian shillings (€4).
The actual amount customers are able to borrow depends on the credit history they build up with the company; those with longer histories can borrow higher amounts with lower admin fees, Tigo explained.
The loans are transferred to the customer’s mobile wallet, meaning that the funds can be used to pay bills, can be passed on to other mobile wallet holders, or may be cashed out with one of thousands of agents in the country.
"Tigo Nivushe has been designed to encourage responsible lending," said Ruan Sawnepoel, Tigo’s head of mobile financial services. "Previous mobile behaviour is used to determine suitable limits for loans and customers will only be able to have one loan at a time."
Users are automatically insured for the loan amount against death or permanent disability, he added.
"Most importantly, as the product is fee based no interest can be accumulated in the event of default and acquiring a loan will not affect mobile or Tigo Pesa accounts in any way, " Swanepoel said.
Tigo believes the product will help to drive financial inclusion on Tanzania.
"These quite small loans can make all the difference and are crucial for building credit history and obtaining credit in the future," said Swanepoel.
