A tech company that offers loans to low income earners is eyeing the growing use of mobile money services in Rwanda.

Jumo, a South African company will partner with telecom operators and banks to give mini-credits to active mobile money users.

If rolled out, the mini-credit product will be the first in the local market, but it is being used in other five African markets.

By accessing the USSD menu on phone, a subscriber will see an option to apply for a loan; If the loan request is approved the funds are transferred into the applicant’s mobile wallet immediately.

“While these technology developments provide opportunities that enable choices and financial inclusion to previously underserved people, they also allow for responsible management of parts of the financial system as there is highly accurate data and unparalleled transparency,” said Andrew Watkins-Ball, chief executive officer, Jumo.

The South African company says it is working to meet licensing requirements in the country and hopes to get the green light from Central Bank by the end for this year.

According to the central bank’s annual report for 2015, the number of mobile payment agents continues to increase and more than doubled in the previous year. They more than doubled to 36,000 as at June 2015 from 14,000 at the same time in 2014.

But security is always a concern as fraudsters target these platforms. In 2014 there was a fraud scandal in mobile money transfer services in which two insiders defrauded over Rwf495 million on the Tigo Cash platform.

Jumo plans to partner with local operators including MTN Rwanda to roll out their mobile based financial services.

According to data from RURA, MTN Rwanda Ltd still has the biggest market share at 46 per cent, Tigo Rwanda followed with 35 per cent and Airtel Rwanda has 19 per cent in mobile telephone subscriptions.

Jumo says on average the loans given to the mobile money subscribers will be between $10 (about Rwf8,000) and $20 (Rwf16,000) in various markets. The loan size depends on the user’s behaviour over time or what is called the mobile wallet.

The company said some customers have applied for hundreds of dollars including small businesses that were lent a higher amount.

“The size of loans disbursed is dependent on the customers’ history as well as their activity in the mobile money ecosystem,” Mr Watkins-Ball said.

The company that relies on customer’s data (information on their expenses on telco products) for its business says interest rates are highest for new customers with very limited information and are then reduced as the relationship develops and customers prove their ability to repay.

For the short term (emergency or convenience product) a fee would be 10 per cent of the loan amount plus 0.5 per cent interest per day.

But in some other markets, like in Kenya a similar product called M-Shwari offered by Safaricom, charges 7.5 per cent of loan facilitation fee payable only once for each loan taken.

According to the Financial Inclusion report 2016 only about 26 per cent of adults use banking channels, 23 per cent of those banked adults have dormant accounts.

The same report says there are 46 per cent (2.7 million) mobile money accounts in the country and one in four use their m-money accounts monthly, 62 per cent use m-money less than once a month but few times a year.