‘We can all go further together than we could all alone’, is the promise of the 2,000-year old practice of ‘jameya’ (‘gameya’ in Egyptian Arabic), which is still popular in Egypt and other predominantly Muslim countries in Africa and the Middle East.
The idea is straightforward: a group of people monthly pitches in a fixed amount of money to a pot, and everyone takes turns taking home all of the money at the end of each month. The practice is also called rotating scoring and credit associations (ROSCA).
This even distribution of a community’s financial resources helps each community member pay off larger expenses he normally wouldn’t be able to afford if depending on his income alone.
Considering that accruing interest, through means like borrowing from banks, is not a practice that most Muslims tend to embrace because it goes against Islamic values, this interest-free lending that ‘jameya’ embodies makes this practice even more important and necessary.
Egyptian engineer and fintech entrepreneur Ahmed Wadi is bringing this practice online through his startup Moneyfellows.
Strength in numbers
Wadi realized that the practice he has seen work so well offline could be feasible in an online setting that benefits even more people. His startup’s website summarizes its offer as ‘banking with friends.’
“The lack of access to credit, and the somewhat expensive credit fees, inspired me to launch my startup in the region,” said Wadi. According to him, digitizing this traditional model makes it a lot easier to access interest-free credit. It also facilitates reaching saving targets without relying on conventional credit scoring systems but rather on an alternative scoring ladder that reflects payment intention and ability of our users.
Moneyfellows is currently focusing on scaling up through a round of funding. The startup has been gaining traction over the past six months. It participated in the 1864 fintech startup accelerator launched by Barclays Egypt and Flat6labs, winning first place in the ‘startups Track’ at the MIT Enterprise Forum (MITEF) Pan-Arab Region held in Bahrain. It has also been named by the World Economic Forum as one of the 100 Arab startups shaping the Fourth Industrial Revolution.
“The MITEF prize will give us some runway as we are currently closing our seed round which will then allow us to publicly launch in the Egyptian market and reach our target of at least 45,000 paying users by the end of the year,” said Wadi about the boost his startup received.
Wadi added that he is now learning more about the intricacies of personal finance.
“We've learned that things like socially scoring people, referrals, vouching, and payroll connecting can build a new era of credit scoring in the region, enabling and empowering financial inclusion,” explained Wadi.
Moneyfellows isn’t the first startup to leverage the power of the crowd to empower individuals financially. In the MENA region, there have been several crowdfunding startups launched over the course of this decade.
Tunisian fintech entrepreneur Thameur Hemdane has launched three: Afrikwity (a play on words, combining ‘Africa’ and ‘equity’) for letting people crowdfund to support startups in Africa, and Cofundy for letting people support the artisanat economy in countries like Tunisia, in addition to nonprofits like Darna, which helps vulnerable Tunisian children. Dubai-based Fodil Mahani, a French-Algerian serial entrepreneur from Paris, launched Aoon.org several years ago before moving from Paris to Dubai to provide an ethical crowdfunding platform focusing on funding social and educational initiatives in various countries, including the MENA.
Meanwhile in the US, microfinance and crowdfunding startups have been making their impact felt since the middle of the last decade. These include startups like KIVA (microfinance startup founded in 2005 to support projects in countries around the world) and Profounder (crowdfunding startup founded in 2009 to help entepreneurs in the US raise money for their startups) launched by the Los Angeles-based entrepreneur Jessica Jackley. These are examples of platforms that have focused on helping people receive money online in markets similar to Egypt and in the US, respectively. ProFounder ultimately was a bit ahead of its time, as the US Senate didn’t implement new regulatory measures that crowdfunding startups wanted in order to allow for people to invest online, so it shut down in 2012.
Another Los Angeles-based startup called Tala (formerly Inventure), launched by Shivani Siroya, has been a successful catalyst for providing microfinance for individuals in countries like India using mobile technology.
Yet what makes Moneyfellows unique is how it is letting Egyptian people empower their compatriots by lending money, as opposed to other startups which revolve around people from other countries chipping in money for a specific cause (such as to finance someone’s small business, in the usual microfinance format).
The next chapter
Wadi says his team has now its sights set on expanding to more countries and managing the logistics for scaled growth.
“We are in Egypt and the UK now and plan to launch in UAE and potentially Saudi in the upcoming two years, with a couple of banking and partnership announcements.”
The startup has also received an additional support following a collaboration between the Egyptian branch of UK-based bank Barclays and MENA startup accelerator Flat6labs.
“Our experience with the 1864 Flat6labs accelerator powered by Barclays Egypt was very beneficial. Being a fintech-only focused accelerator, it connected us to the most relevant mentors and advisors in the sector. We were also able to work very closely with Barclays' decisionmakers.”