Bereng Mpaki
INFORMAL money lending or rotational schemes are common mechanisms that have been used by many people for many years to share and build their finances but they have been losing popularity and credibility over the years because the absence of secure and transparent administration mechanisms have led to some members embezzling funds.
But this could soon change after two enterprising youths, Tumisang Sibeko (26) and Seeta Matete (27) developed a management software application that makes it easier to administer such operations in a secure and transparent manner.
The web application, Mochaellano.com was developed with the ultimate goal of influencing and celebrating financial discipline.
According to Mr Sibeko, “the idea of creating this product was inspired by an article that I read a few years ago on informal money societies in South Africa and I realised there was a huge market for this type of practice yet there was no platform to assist in making the systems more transparent and easier to manage”.
Last year, Mr Sibeko registered Mochaellano Pty Ltd as a software development company at the Register of Companies.
Having dropped out of the Centre of Accounting Studies (CAS), Mr Sibeko first developed interest in entrepreneurship while he was involved in advising small entrepreneurs through the Student Entrepreneurship Community Hand at CAS.
Today he also owns Platinum Square Resources, a sandstone mining enterprise called.
He said the software would benefit community-based community schemes that were not catered for by the existing financial institutions, including the rotational lending circles and collective savings.
A lending circle generally refers to a group of people who pool money on a regular basis, and either provide rotating loans to circle members or democratically select a member to receive a zero-fee, zero-interest loan. Most lending circles can be categorised under one of the following models: 1) lending, 2) emergency, and 3) hybrid.
A lending circle focused purely on lending requires members to pool money on a regular basis, select the value of the loan, and rotate the loan on an agreed-upon schedule until each member benefits.
For example, five individuals meet once a month for a total span of five months. Every month, each member contributes M300 to create a total fund of M1, 500. The group democratically decides on whose turn it is to collect the M1, 500 as a loan, so that each member receives the loan once.
After receiving the loan, each member is still expected to contribute M300 every month to both pay off the loan received and fund the same loan to other members. At the end of the five-month period, each member will both have received and contributed M1, 500 to the circle.
Mr Sibeko says through Mochaellano, members of such circles would able to tell how much funds the group has at any given time, the amount of funds each member has borrowed, the amount each member has paid including interest, as well as generating periodic bank statements of the group.
“Our product is able to generate bank records if such a group has a bank account. This is because we have a working arrangement with one of the commercial banks for this type of service,” Mr Sibeko said.
He said they were also in talks to bring other banks on board for facilitation of their product. Currently available on computers only, part of the product development is also to expand the application to be available on mobile platforms.
“Many people no longer have trust in these community societies due to the bad reputation they have developed over time so we want to transform the industry and bring back the trust of the people so they can grow their money into worthwhile investments,” he said.
He said the software was safe and secure to use as it had passed tests before being taken to the market.
“Having satisfactorily tested our product, our focus in 2017 is to roll out the products around the country.
“This is not unique to Lesotho so we hope to expand into the region,” he said.
