We did a podcast in person! It was about damned time - I needed to prove to people who haven’t met me that I actually have legs.

This week I’m joined by Tarek Mouganie, CEO of Affinity Africa, for a mindblowing discussion on bringing banking services to underserved cohorts across Africa.

For those based in other parts of the world, there are some eye opening points raised here. Tarek explains that banking was designed for the global north and transplanted to Africa with little consideration for local realities. This is a market with 78% informal employment, where documentation requirements can exclude a large portion of the population.

Tarek explains how he turned this challenge into an unexpected advantage. While European KYC and ID verification providers refused to operate in Ghana, Affinity took the decision to build the necessary processes from scratch, a move that led to a huge reduction in costs and the creation of a new revenue generator for the bank. Other institutions are now using the tools that they built.

Tarek also tells a compelling story about credit and financial inclusion. With private credit in Ghana sitting at 8% of GDP, relative to 100%+ in OECD countries, there is a huge opportunity to grow the pie and lend to those who could benefit from it. This has been achieved, in part, by providing credit scoring without pre-existing data.

How is this doable? In short, Affinity banks customers and observes three months of transaction data before extending credit. This has produced compelling results, with its default rate sitting beneath 2%.

Affinity’s approach to customer acquisition is also highly notable. 60%+ of its clients are women, with a major focus on women working in the informal sector, a cohort proven to be risk averse and reliable borrowers.

For those interested in the commercial aspects of delivering these services, Tarek offers up further gems. By targeting new customers in an underserved market, Affinity has been able to grow its client base with a customer acquisition cost of a mere $1.30 - $1.50.

Anyway, I don’t want to give away the whole podcast. Tarek has a fascinating personal story to tell too - give this one a listen.

Check out the LFG! podcast channel here:

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