Pezesha is a Peer-to-Peer micro lending Marketplace that connects lenders with high quality underserved low income borrowers by giving them choice, inclusion and affordable digital financial services that elevates their freedom, equality and hope to being part of the formal financial system.
Mobile credit in Kenya has left the poorest 40% of Kenyans behind – with penetration in this segment at less than 10% which prevents them from having the means to expand their micro-businesses and move up in their well being.
Pezesha solves this through taking a data-centric approach to giving loans to low income borrowers which traditional organisations and smartphone lenders won’t.
As such we are able to find rich insights from the behaviours of our customers.
What are the odds
One of the key findings has been the prevalence of gambling amongst low-income borrowers.
Each month, a high number are spending money at some of the most popular gambling companies in Kenya, often forming a major portion of their total outgoings. This exists across both both male and female borrowers, though is seen most with males.
What’s interesting is whether borrowers admit to having gambled.
From our data we are able to cross-reference whether a borrower self-reports their gambling with whether they actually do.
There could be many reasons why they do not self-report. Some may feel shame at undertaking gambling activities, whilst others may feel it is improper to mention in the process of applying for a loan.
In any case, the outcomes from this data make for interesting insights.
A losing streak
The impact of gambling on an individual and their family is large and overbearing.
People can get into a web of bad decisions where one bad bet follows another, and before long invaluable possessions are being sold to try and win back huge losses.
There are naturally huge psychological pressures that come with this, such as strains on familial relations and physical danger from inability to pay ones debts.
Indeed a behaviour we have observed is that of borrowers receiving money from financial institutions (i.e. loans) and within a few hours paying that same amount to a sports betting company.
When we run the numbers, we see how the level of gambling that an individual undertakes translates into a predictive element of whether a borrower will back.
Across our population of borrowers we see that:
- No/ Low gambling: doesn’t affect repayment
- Moderate/ High gambling: repayment is significantly worse
When someone is in the throes of gambling, or doesn’t fully appreciate the implications of betting in the broader picture of their lives, then undesirable choices and actions can often follow.The toil and pressures of betting consistently result in lower likelihood of a person repaying their loan.
Change needs to happen
Much has been written about the appeal of betting for those with low income, and at Pezesha we are seeking to help both through the work we do, and organisations we partner with.
In collaboration with other players in the market we have made it our responsibility to offer education and training to low-income borrowers on the consequences that can arise from systemic gambling, the impact this can have on themselves, their families, and their businesses, and measures they can take curb their influence.
This gets to the heart of why Pezesha exists.
Our mission is to provide a peer to network marketplace of high quality low income loans to our lenders and this can only be achieved if the people who are give credit to are in a position to repay.
Helping micro-businesses grow is not just in disbursing funds at an affordable rate, but also holistic lessons in how to build a better future. Hence why at Pezesha we are keen in building a strong credit ecosystem of quality low income borrowers by collaborating with other market players to join hands with us in building the future of banking that is inclusive to creditworthy and with responsible low income borrowers who have often been ignored and considered risky due to such gambling behaviours. We believe with the right foundation- education and value add services and products e.g. savings and financial training etc that could motivate the low income to save and invest responsibly for the long term then it puts them a step ahead on the formal financial ladder, meaning our vision for the future will be possible.
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