The digital lending industry in Africa has been plagued with unethical practices, including borrower harassment when loans are overdue. At the same time, due to the banks under-serving the majority of the population, we expect digital lending to continue growing, especially for those without formal credit histories and vulnerable to over indebtedness. However, they have challenges with collections, which increases the cost of capital.
The market for credit collection in the 8 largest emerging markets is $14.4B, with Nigeria and Kenya growing the fastest (27% and 21% 5-year CAGR respectively). The market size is currently $200M in Nigeria and $300M in Kenya.
BFree is a Business Process Outsourcing (BPO) firm focused on debt collections that leverages machine learning and artificial intelligence to optimize debt recoveries across different sets of lenders and debtors. Thus far, they’ve been able to collect more effectively than traditional collection firms.