About CARE and hiveonline
Fintech is not just about digitizing conventional financial services but also about solving challenges beyond the core financial areas. Together with CARE Danmark and hiveonline Copenhagen FinTech Lab has embarked on an experiment to make fintech matter.
CARE is a humanitarian development organization that has the mission to fight poverty and the impact of climate change on a global scale. Like many humanitarian development organizations, it is facing the “NGO challenge” of operating in areas with poor financial infrastructure and access to financial services. We believed that there must be a Fintech solution out there that can help overcome these challenges while delivering on the objectives that the NGOs pursue.
Niger’s village savings and loans system
As part of an experiment, Copenhagen FinTech Lab and CARE Danmark formulated a challenge for Niger, which has been ranked the second least-developed country by the United Nations Human Development Index and has a large unbanked community making up 93% of the 28 million population, disproportionately women.
Like in many African countries, the limited access to financial services in Niger has been replaced by CARE’s informal saving and loans groups. The Village Savings and Loans Association (VSLA) formalized these traditional informal lending circles from 1991, significantly empowering women in economic decisions. The ingenious system allows the village members to take small loans from a common box of shared savings of the community.
However, in case of a crisis or a high demand of loans by the community members the savings box can’t provide its members with sufficient capital beyond the credit limit. As a consequence, many citizens take up microloans with high interest fees (40% on average) due to high cost of administration and high risk of default, which are difficult to pay back and make the population run into even more debt. Especially women can´t access these lending services due to high costs of moving cash around as the money needs to be sent with an armed guard because of bandits and other potential dangers. Making this way of lending beyond the VSLA pot cost ineffective.
About the journey
For this challenge, we have created a virtual lab, scouting our global applicants and presenting the most promising ideas to CARE while also allowing CARE to provide applicants with feedback on their ideas and projects. Hiveonline was soon selected as the winner of the challenge. It offers a blockchain solution that addresses the challenges of microfinance today by providing the unbanked sector with a frictionless system, reducing the cost and effort of customer validation for micro insurance and savings.
Sofie, the founder and CEO of hiveonline, worked in building banks for 20 years (including UBS, Nordea, and Citi among others) and wrote a book on the Fintech Revolution. With CARE, she and her team immediately started off with a POC and funding of DKK 100.000 to work together on the project on site. In Niger, they met with the government and local NGOs to work on a commercial pilot and are currently developing a MVP to deliver in time for the African Union Congress in June.
“We’re really excited to be working on this project with CARE, building on the transformational work they’ve done with the VSLA to take it to the next level. Niger is an incredibly challenging environment because of the limited infrastructure and connectivity, but blockchain provides a perfect solution, enabling the women to transact without needing continuous connectivity.”
Sofie, founder and CEO of hiveonline
We have been extremely impressed with the fast and straightforward approach by which this project has been brought into being and initiated on site. The collaboration between CARE and hiveonline is a flagship example for a successful cooperation and shows the demand and potential of financial technologies in the impact sector.