Why We Invested in ImaliPay

Oluwasanmi Akinmusire and Tatenda Furusa, Co-Founders of ImaliPay. Photo courtesy of ImaliPay

The gig economy is accelerating in Africa at an exponential pace. However, traditional and emerging fintech solutions have not been building products for this segment, due to the lack of guaranteed income among informal workers. ImaliPay saw this massive and rapidly growing market gap and built a solution. The founders left their roles at a leading Pan-African fintech to develop a product which harnesses the rise of ‘digital’ gig work to create an embedded fintech solution which makes smart credit decisions that are profitable for gig worker users and platforms from day one.

At Mercy Corps Ventures (MCV), we are obsessed with equitable fintech solutions that are designed to empower those who lack access, giving them the tools to be more resilient against tomorrow’s shocks. As the last year of lockdowns, protests, COVID-19, sweeping regulatory changes, and severe weather events has proved, the gig worker is at the frontline of the disruptions taking place across Africa. Imalipay’s customer-centric approach, which is hyper-focused on serving the financial needs of gig workers across Africa, allows users the ability to access the financial tools they need to withstand shocks and adapt to quickly changing climate, political, and economic realities.

Market Need

In Sub-Saharan Africa (SSA), 20 million new job seekers enter the labor market every year, and in 2020, this was matched with a drop in employment levels of 8.5% in 2020 due to the COVID-19 pandemic. While working in the informal economy is nothing new in Africa (>2/3 of the workforce in SSA are in the informal sector), increased digitization has given rise to a rapidly growing ‘gig economy’. There are roughly 400 gig economy platforms in Africa today, the largest sub-sectors being ride-hailing/mobility and e-commerce. As more Africans enter the labor force or see their jobs displaced, the continent’s number of gig workers is expected to rise to 80 million, yet nearly half this group are underserved by the financial system due to their unreliable earnings history. Gig workers lack access to savings products to withstand periods of unrest — such as government lockdowns — and lack access to (affordable/productive) loans. In the e-mobility sector in particular, drivers miss on average ~36 days per year in work due to lost, stolen, and broken cell phones and vehicles, which, according to Mastercard Foundation, results in a $15.8 billion loss in earnings. Access to a reliable source of accessible productive use financing would allow these workers to get back on the road more quickly and grow their earnings substantially.

The ImaliPay Solution

ImaliPay is the first Pan-African embedded finance solution for Africa’s gig economy. Using proprietary technology and AI-driven analysis of income flows, ImaliPay seeks to provide a safety net to gig workers through “pay as you go” productive use financing, savings and credit building tools. The company’s initial footprint covers e-mobility drivers through a savings product that allows them to store their earnings in an easily accessible account, and a productive asset credit product which finances spare parts, tires, gasoline, and cell phones via short-term loans repaid through driver earnings on the e-mobility platforms. The company integrates directly with mobility platforms such as SafeBoda and Bolt, which allow ImaliPay to leverage the platforms’ customer databases and ride history to build a credit profile for workers from day one. Gig platforms benefit from greater worker productivity (e.g., more platform revenue per worker) and higher retention rates. Workers benefit from affordable, customer-centric asset financing that keeps them on the road, reducing their downtime by 3 days a month, effectively adding a full month’s income to their annual earnings.

“Gig workers are underbanked and neglected by existing or traditional financial institutions in Africa. Through our proprietary technology, ImaliPay is on a mission to make it easier and simpler for gig economy workers to access, manage and grow their finances.”
Tatenda Furusa, Co-Founder of ImaliPay

Investment Rationale

Fintech platforms serving the gig economy have taken off globally, yet despite the explosion of African fintechs, ImaliPay is the only player capitalizing on this proven model on the continent. This represents a massive first mover advantage particularly when, according to MasterCard, ~60% of gig workers say they would like to receive loans, 50% said they would like to receive money management tools, and 30% said they would like to receive insurance and other benefits. ImaliPay plans to expand its product offerings to be an All-in-One financial suite custom designed for gig workers to include insurance, credit and savings, increasing customer lifetime value. ImaliPay’s partnership model creates value for all stakeholders in the value chain and can solve some major pain points for platforms — contractor loyalty and productivity. In just the first 12 weeks with SafeBoda, ImaliPay generated a 100% increase in revenue per worker. Alongside driving financial inclusion for this rapidly growing population, ImaliPay presents an opportunity to learn about potential intersections of fintech, alternative livelihoods, climate adaptation, and data and resilience.