Zambia’s innovative lending solution for low income earners

Low income earners are constantly faced with the challenge of accessing loans. Lisulo Soko, Founder and Director of Versara Finance Limited and a financial expert in Zambia, identified this gap and used his expertise to create a sustainable solution for the low-income earners in his country. He talked to us about his company’s objective, challenges and future aspirations.

Tell us about Versara Finance Limited
Founded in 2016, Versara Finance Limited provides credit via mobile phones to Zambia’s working class who earn between 1000 – 3000 Kwacha monthly, that is, USD 100 – 300. He designed this service as a mobile application to give it significant reach in terms of distribution. Lisulo believes that this category of people is under-served and while some may view it as a difficult market to serve, he takes advantage of its large number of potential customers and serves them whole heartedly.

What attracts customers to you?
Lisulo believes that the unique value proposition of his business is what attracts customers. One, the banks might not extend credit to this market category because they don’t earn a high enough amount to qualify for loans. Secondly, they have a system that allows users to be on boarded and pre-approved before taking loans. In addition, they have a quick turn-around time of 24 hours to dispense loans. However, moving forward, Lisulo hopes to reduce this time to one hour. Versara Finance is also able to give access to loans via the customer’s mobile phones which saves a lot of time for the customer. Currently, he is reaching these customers through direct selling by sales representatives, a process he says is effective but expensive and slow sometimes.

How the business came to be
The idea to start Versara Finance was birthed by Lisulo’s strong belief that everyone should have access to loans and financial services in spite of the income earned. Having a background in the financial sector where he was an investment banker for 8 years, Lisulo saw how the low income earners in Zambia were struggling to access financial services in the bank. He recalled his earlier days in employment when he had experienced this same struggle and when he researched among friends and family, he realized that many other people were facing this challenge too.

How he financed the business
Lisulo raised his initial capital through personal savings and contributions from friends & family. He admitted that given a chance to raise capital differently, he would have negotiated for better terms and also focus the early days of the business managing the credit better so that he would have sufficient returns to  repay his initial investors.

Why your business stands out
Versara Finance developed a unique offering where customers apply for loans and receive the money right from their mobile phones. This unique product design has been well received by the company’s niche market. Lisulo says that this platform provides a competitive edge. The distribution and expansion strategy is also inexpensive since they are not looking into setting up branches. To ensure that his business maintains this unique profile, he has maximized on aggressive brand positioning and marketing

Interesting stories of impact
One of the most interesting stories of impact for Lisulo is when a customer, who is a supervisor from one of the shops in Zambia needed to pay for school fees, yet he had an outstanding loan. They proceeded to restructure his loan repayment plan and this helped him spread his cash flows.

Strategic changes the business has experienced
So far, Versara Finance has changed how money is collected from a customer. Initially Lisulo collected the money manually through the employer on the customer’s pay day but he felt it wasn’t scalable. Today, he uses an automated system where the amount is deducted directly from the employee’s account using debit and credit cards. “It has eased the process of collection and made it more efficient,” Lisulo stated. Another strategic change that Lisulo hopes to achieve is setting up a board of directors and create a management team to improve the governance of the company.

The biggest challenge
Previously, the biggest challenge was collection of money from a customer but to curb this Lisulo together with his team developed an automated system to help ease this process. Currently, the biggest challenge is accessing sustainable sources of funding since they are still depending on loans from well-wishers who enforce high interest rates when collecting their money. This set back on funding has affected their growth since they couldn’t on board new customers as they had hoped to.

Future aspirations of the business
Lisulo is looking forward to turning their loan platform into a permanent mobile bank that offers services in savings, deposits and insurance. He also aspires to move up from serving his current 500 customers to serving over 10,000 customers. He hopes to start working with savings clubs as well as groceries merchants to allow people to purchase on credit. To achieve this, he requires funding to give the business the capacity to take on the new changes.

Advice to entrepreneurs
Lisulo advised entrepreneurs not to hold back from implementing a business idea. He added that they should learn to work hard and manage people effectively and this includes hiring the right people that fit into an organization’s culture. Finally, he stated that putting systems and processes in place helps one do things better and scale the business.

Why I joined GrowthAfrica’s Acceleration Programme?
“The programme will be helpful to position the business in the right direction and help my team and I to understand our market and customers better  in order to build a strong and sustainable business,” Lisulo stated.

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