The digital era’s answer to traditional ‘gam’eyat’ and money circles is expanding across Africa.
The digital era’s answer to traditional gam’eyat or money circles, Egyptian fintech MoneyFellows has just raised its most recent round of investment, $4 million from venture capital firms Partech and Sawari Ventures. The investment will fund the startup’s expansion nationwide across Egypt and new African markets, as well as new product launches.
Though the phenomenon of money circles is at once daunting and omnipresent in the Middle East, it is far from unique. Gam’eyat in the Arab world, chit funds in India, ‘committees’ in Pakistan, tandas in Mexico, and tontine in West and Central Africa all follow the same model of rotating credit and savings associations (ROSCA), where group members pool their money into a single fund, with one member withdrawing the lump sum every rotation. The practice acts as an informal financial institution, particularly for unbanked and underbanked sectors.
MoneyFellows’ goal as a financial enabler is simple. Following existing models, it has digitised the entire process, with a scoring model that compliments the current offline model, making it safer and more efficient. To date, MoneyFellows reports 150,000 active users verified by their user assessment algorithm.
“The impact of MoneyFellows on financial inclusion is already massive in Egypt, as the solution offers convenient secured lending and saving schemes to consumers by digitizing a traditional savings model,” says Partech General Partner, Cyril Collon.
“In enabling people to save beyond their immediate circles, they are not only promoting a culture of saving, but also facilitating a gateway for the further introduction of financial services to larger numbers of people as they become more financially aware,” says Sawari Ventures Managing Partner, Hany Al Sonbaty. “We are thrilled to be investing in the company and joining them on this exciting journey.”
Pictured: Ahmed Wadi, founder and CEO of MoneyFellows.
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