Friday, April 26, 2024
ReportBaobab Group to offer Shariah financing product in a bid to win...

Baobab Group to offer Shariah financing product in a bid to win favor with Muslim consumers in Africa

An African financial inclusion group will be expanding its suite of products to include a Shariah compliant financing scheme which will be delivered on a digital platform in a bid to broaden its geographical reach and deepen its market penetration in Muslim-majority nations on the continent.

“We are starting first with a gold-backed savings product then conversely, to leverage this to offer other Shariah products including a lending product,” Baobab Group Founder and CEO Arnaud Ventura tells IFN.

Product development will be conducted in collaboration with Malaysia-based Islamic fintech start-up HelloGold, which is currently engineering a digital gold savings platform to be integrated with BaoBab’s current infrastructure servicing about one million customers across nine African markets and China.

The group, which began as a traditional bricks-and-mortar institution in 2005, began the transition toward a digital model about three years ago following a significant spike in smartphone utilization among its consumers. The digital shift, in a large part, was also triggered by the consumer-driven digital economy of China.

“What was interesting and inspiring about China is that innovation, data, digital and mobile services have exploded in China — and we followed the explosion, making sure all our services were still relevant in that market. In that context, China was a source of inspiration for us on what to do, not only in China but also globally — we see this as the path for Africa,” explained Ventura.

With more than half of its consumer base using a smartphone, Baobab’s digital distribution strategy is bearing fruit. According to Ventura, at least 45% of the loans it disbursed in 2018 were secured through its e-mobile platform: the group has originated 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.

“Four to five years ago, we were looking at internet and phone to distribute our products, but now smartphone penetration is the way to go. So you have to follow the market and move with the market,” said Ventura.

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