In many West African countries such as Ghana, Nigeria, Ivory Coast, Togo and Benin, up to two years’ rent is often required upfront to secure renting a home. In an environment where most people have no access to credit or where the banks lack data on credit history, giving people the tools and the power to save money is an essential way of elevating people out of poverty.
In the recent weeks, Start.Space has been doing research on African start-ups that are really solving problems in Africa with technology and data. One of these interesting startups that have caught our attention this week is PiggyBank, an online savings platform that enables people to save money that they don’t want to use or withdraw easily. In many developed markets, this concept might be seen as “Business as usual”. However, in a continent where there is no access to credit, giving the middle and working class the tools to manage their finances can create great impact on the continent´s economy.
The concept behind the start-up is simple, yet powerful and needed. Through the platform, people can deposit a little as $1 a day into a their online Piggybank.ng account, and then restrict themselves to when they will withdraw their savings by setting a specific dates they choose. What makes the concept interesting is; the way the company is engraving the culture of savings among its customers, by rewarding those who resist the temptation of withdrawing their money before the target date.
Unlike a regular bank’s savings account, where customers can access the money at any time, Piggybank.ng helps its users maintain their savings discipline while building their savings culture, as they save towards their targets. This means in practice that customers cannot withdraw their savings, until an agreed withdrawal date, unless they are want to pay a 5% early withdrawal fee. Now those PiggyBankers that resist the temptation of withdrawing their money and reach their target, can earn on average 6% per annum on automated savings or 10.95% per annum on the fixed deposit fund.
According to the company, eight in 10 Nigerians need to save at least 40% of their monthly income in order to pay for daily expenses, and PiggyBank wants to give people the power to manage their finances by making it easy, clearer and transparent. This start-up story is a great example of how local individuals and entrepreneurs are innovating and “thinking outside of the box” to solve African problems. The team is applying technology and innovation to solve a problem facing millions of the working class on the continent.
PiggyBank was started by three founders, Somto Ifezue, Odunayo Eweniyi and Joshua Chibueze, who met at Covenant University in Nigeria, with the ambition and goal of solving Africa´s great problem: Making easy for people to save money. So far, the company ´s main customer base has been Nigeria’s Millennials, who currently make up 60% of the company’s registered users. Having been able to build a community that have saved $5 million, the company has attracted the attention from Leadpath Nigeria, which have raised $1.1 million from the Nigerian investment communities into Piggybank. The start-up says it will use the funding to acquire licensing, develop products and expand its marketing efforts.