In much of Africa, many people still lack access to basic financial services for many reasons. One of the reasons is that financial institutions have set standards or thresholds that make it impossible for low-income earners to even open a bank account.
Access to soft loans or other forms of financing is even more cumbersome while the punitive interest rates charged ensure that SMEs, farmers, and other groups do not even entertain the idea of borrowing banks.
The fact that this has been ongoing for many years is a clear indication that the conventional banking system has failed these groups. This particular failure is another example of why an alternative financial system is needed. It also explains why more emerging fintech start-ups are now attempting to solve this. One of such start-ups is Koinwa, a crypto borrowing platform.
Bitcoin.com News recently discussed solving the problem with the startup’s CEO, Disu Hakeem to understand how the application is helping financially excluded groups from Africa.
Bitcoin.com News (BCN): When was the app launched?
Disu Hakeem (DH): The platform was launched in 2019 but the mobile application was released in May 2020.
BCN: How has been the response so far?
DH: The reception has been enormous, as people want to experience what it feels like to own bitcoin. In addition, we have made it possible to purchase bitcoins that are worth as low as $2 on the Koinwa app.
BCN: You say have you created an app that allows Nigerians to borrow bitcoin yet the Central Bank of Nigeria has imposed restrictions that have essentially kicked out the crypto players from the banking ecosystem. How then will the borrowers convert from crypto to fiat when there is this directive?
Disu Hakeem (DH): Koinwa app is not meant for Nigerians alone, it is majorly built for Africans and can be accessed from anywhere in the world. So anyone from any part of Africa can access the Koinwa app as we are also a registered limited liability company in the United States.
We also have a peer-to-peer (P2P) escrow-based bitcoin trading service on the platform, where you can exchange bitcoin for local currency and vice versa. This by the way enables one to be their own bank and control bitcoin price.
So with this app, an individual can decide to sell on our P2P trading solution or preferably sell to a third party. Alternatively, an individual can use the borrowed cryptocurrency to make payments for goods and services from many companies that now accept bitcoins.
BCN: Who else can use this app?
DH: The platform is built majorly for Africans to bridge the gap between Africans and the Western world in terms of trade and payment. This app has been created for the purpose of providing financial services to the unbanked African population.
BCN: Regular banks will often ask for collateral security before approving a loan. This is done to protect banks from defaulting clients. How is Koinwa approaching this need for collateral?
DH: The loan system is (only a) value-added service to our customers as it has been built to target the underserved groups such as SMEs, farmers, market traders, widows, students, etc. We are not collecting collateral for any of the loan application just to make seamless for everyone, but there are terms and conditions in place to help savage the loan recovery system.
BCN: You have said crypto loans offer a cheaper alternative to regular bank loans which as you say can come with interest rates as high as 25%. However, some might argue that the volatility of crypto assets works against the low interest rate that is charged. How do you respond to this?
DH: Every cryptocurrency enthusiast is certainly aware of the volatility. The Koinwa app was launched after the findings of our research found that many people probably want to be involved in the cryptocurrency market but do not have the requisite funding. We now understand these challenges and that’s why we have taken care of this by providing a cryptocurrency-based lending platform at Koinwa.
Every cryptocurrency loan approved is pegged to the local currency of the user. For instance, a user from Kenya can apply for a bitcoin loan of 0.0002, and let us say this is equivalent to 10,000 Kenyan shillings as at the time of applying for the loan.
Therefore, whenever the user is paying back the loan the user will pay Koinwa 10,000 shilling plus the interest rate which is 10 percent. So this solves the problem of volatility if the cryptocurrency rate increases or drops at the time of loan repayments.
BCN: We are witnessing some kind of coordinated crackdown against cryptocurrency exchanges and related businesses. Do you think this is going to slow down interest in cryptocurrencies?
DH: The crackdown was expected as cryptocurrency is yet to be regulated worldwide and also considering the huge market cap and the acceptance of bitcoin.
But I don’t think that it will slow the pace of acceptance of cryptocurrency as most countries are now planning to launch their own digital currencies (CBDCs). For example, China is already piloting its digital currency while Nigeria and Tanzania are planning to launch their own CBDCs as well.
In any case, countries that are not adopting cryptocurrency in this 21st century will be left behind. Also, I have a feeling that in 2022/2023 there will be a conflict between governments and the crypto community when bitcoin goes mainstream beyond our imagination.
What are your thoughts about this interview? Tell us what you think in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
In a lot of Africa, many individuals nonetheless lack entry to primary monetary companies for a lot of causes. One of many causes is that monetary establishments have set requirements or thresholds that make it not possible for low-income earners to even open a checking account.
Entry to comfortable loans or different types of financing is much more cumbersome whereas the punitive rates of interest charged be sure that SMEs, farmers, and different teams don’t even entertain the thought of borrowing banks.
The truth that this has been ongoing for a few years is a transparent indication that the standard banking system has failed these teams. This specific failure is one other instance of why another monetary system is required. It additionally explains why extra rising fintech start-ups at the moment are making an attempt to resolve this. One among such start-ups is Koinwa, a crypto borrowing platform.
Bitcoin.com Information lately mentioned fixing the issue with the startup’s CEO, Disu Hakeem to grasp how the appliance helps financially excluded teams from Africa.
Bitcoin.com Information (BCN): When was the app launched?
Disu Hakeem (DH): The platform was launched in 2019 however the cell utility was launched in Could 2020.
BCN: How has been the response thus far?
DH: The reception has been huge, as individuals wish to expertise what it feels wish to personal bitcoin. As well as, we have now made it attainable to buy bitcoins which are price as little as $2 on the Koinwa app.
BCN: You say have you ever created an app that permits Nigerians to borrow bitcoin but the Central Financial institution of Nigeria has imposed restrictions which have basically kicked out the crypto gamers from the banking ecosystem. How then will the debtors convert from crypto to fiat when there may be this directive?
Disu Hakeem (DH): Koinwa app is just not meant for Nigerians alone, it’s majorly constructed for Africans and will be accessed from wherever on this planet. So anybody from any a part of Africa can entry the Koinwa app as we’re additionally a registered restricted legal responsibility firm in america.
We even have a peer-to-peer (P2P) escrow-based bitcoin buying and selling service on the platform, the place you’ll be able to trade bitcoin for native foreign money and vice versa. This by the best way permits one to be their very own financial institution and management bitcoin worth.
So with this app, a person can determine to promote on our P2P buying and selling answer or ideally promote to a 3rd celebration. Alternatively, a person can use the borrowed cryptocurrency to make funds for items and companies from many firms that now settle for bitcoins.
BCN: Who else can use this app?
DH: The platform is constructed majorly for Africans to bridge the hole between Africans and the Western world when it comes to commerce and fee. This app has been created for the aim of offering monetary companies to the unbanked African inhabitants.
BCN: Common banks will typically ask for collateral safety earlier than approving a mortgage. That is performed to guard banks from defaulting purchasers. How is Koinwa approaching this want for collateral?
DH: The mortgage system is (solely a) value-added service to our clients because it has been constructed to focus on the underserved teams corresponding to SMEs, farmers, market merchants, widows, college students, and so forth. We aren’t accumulating collateral for any of the mortgage utility simply to make seamless for everybody, however there are phrases and situations in place to assist savage the mortgage restoration system.
BCN: You’ve gotten stated crypto loans supply a less expensive different to common financial institution loans which as you say can include rates of interest as excessive as 25%. Nevertheless, some would possibly argue that the volatility of crypto property works towards the low rate of interest that’s charged. How do you reply to this?
DH: Each cryptocurrency fanatic is actually conscious of the volatility. The Koinwa app was launched after the findings of our analysis discovered that many individuals most likely wish to be concerned within the cryptocurrency market however should not have the requisite funding. We now perceive these challenges and that’s why we have now taken care of this by offering a cryptocurrency-based lending platform at Koinwa.
Each cryptocurrency mortgage authorised is pegged to the native foreign money of the consumer. For example, a consumer from Kenya can apply for a bitcoin mortgage of 0.0002, and allow us to say that is equal to 10,000 Kenyan shillings as on the time of making use of for the mortgage.
Subsequently, at any time when the consumer is paying again the mortgage the consumer pays Koinwa 10,000 shilling plus the rate of interest which is 10 p.c. So this solves the issue of volatility if the cryptocurrency fee will increase or drops on the time of mortgage repayments.
BCN: We’re witnessing some type of coordinated crackdown towards cryptocurrency exchanges and associated companies. Do you suppose that is going to decelerate curiosity in cryptocurrencies?
DH: The crackdown was anticipated as cryptocurrency is but to be regulated worldwide and likewise contemplating the massive market cap and the acceptance of bitcoin.
However I don’t suppose that it’ll sluggish the tempo of acceptance of cryptocurrency as most nations at the moment are planning to launch their very own digital currencies (CBDCs). For instance, China is already piloting its digital foreign money whereas Nigeria and Tanzania are planning to launch their very own CBDCs as nicely.
In any case, nations that aren’t adopting cryptocurrency on this twenty first century might be left behind. Additionally, I’ve a sense that in 2022/2023 there might be a battle between governments and the crypto group when bitcoin goes mainstream past our creativeness.
What are your ideas about this interview? Inform us what you suppose within the feedback part beneath.
Picture Credit: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This text is for informational functions solely. It’s not a direct supply or solicitation of a proposal to purchase or promote, or a suggestion or endorsement of any merchandise, companies, or firms. Bitcoin.com doesn’t present funding, tax, authorized, or accounting recommendation. Neither the corporate nor the writer is accountable, immediately or not directly, for any harm or loss induced or alleged to be brought on by or in reference to the usage of or reliance on any content material, items or companies talked about on this article.