Aligning itself with a Malaysia-based Islamic fintech platform, an African digital finance service provider is banking on Shariah compliant asset-backed financial instruments to expand its reach in the continent and in China.
BaoBab, previously known as Microcred, will develop Muslim-friendly savings and financing products in partnership with HelloGold, the first digital gold-backed savings platform certified Shariah compliant according to AAOIFI standards. The idea is to provide mobile-based inclusive alternatives to Baobab’s 800,000 customers across its nine-nation network spanning Africa and China, while also using the new range of products to foray into new African markets. Baobab’s mobile app, to be integrated with HelloGold’s savings platform, is slated to be launched this year.
Originating over EUR3 billion (US$3.4 billion) in loans, with EUR940 million (US$1.06 billion) disbursed to the underbanked and unbanked segment, including micro entrepreneurs, youth and women since its launch in 2005, Baobab expects to grow its loan book by tapping into a new segment of religious-conscious individuals who have been excluded from the conventional financial system due to the dearth of instruments respecting their Muslim faith.
Despite almost half of the population in Africa professing as Muslims, Shariah compliant financial products are relatively limited and mainly concentrated in a handful of countries, although governments such as those in Nigeria, Kenya, Senegal and South Africa are increasingly actively pushing for the inclusion of Islamic financial products to widen their sources of funding as well as include more of their people into the financial system.
Viewed by many as a blue ocean for Islamic finance, with several impressive fintech success stories (for example M-Pesa), Africa’s financial inclusion narrative would largely be driven by a strong technology note evident by mobile-driven financial inclusion growing by 20% over the last six years.
Robin Lee, CEO of HelloGold, is one of many who see Africa as a fertile market for Islamic fintech. The partnership with Baobab has given the Kuala Lumpur-headquartered start-up a significant leg up in its growth plans, as it has provided HelloGold with access to nine African countries (Burkina Faso, Congo, the Ivory Coast, Madagascar, Mali, Nigeria, Senegal, Tunisia, Zimbabwe) and China. Already active in Malaysia and recently launched in Thailand, IFN has learned that HelloGold is looking to enter the Indonesian market in the second half of 2019 and is currently working on extending its services, on a white label basis, to the Middle East.