Kanzu Microloans aims to improve financial inclusion in Uganda by providing instant credit access to millions of unbanked and underbanked individuals through a mobile-first, interoperable platform.

According to FSD Uganda, a staggering 89% of the Ugandan population is either unbanked or underbanked. This means millions of people lack reliable access to formal financial institutions or products. A barrier that perpetuates poverty and limits economic opportunity.

To help close this gap, Kanzu Finance Limited is developing a solution tailored to the needs of community-based savings groups such as Saving and Credit Cooperatives (SACCOs), Village Savings and Loan Associations (VSLAs), and investment clubs. These groups are vital to grassroots financial inclusion, yet they continue to face long loan processing times, fragmented systems, and limited access to credit when it’s most needed.

Kanzu’s work is supported by the Interledger Foundation through its Digital Financial Services (DFS) Grant, a global funding initiative that backs organizations building inclusive, interoperable financial systems using open-source technologies like the Interledger Protocol (ILP). Kanzu is leveraging this support to build Kanzu Microloans: an open, instant microloans infrastructure embedded within the Kanzu Banking platform.

This mobile-first, interoperable solution would enable SACCO members to apply for, and receive, microloans instantly via mobile wallets. The repayment terms of these microloans would be tailored to the needs of the SACCO member. Powered by integration with Rafiki and ILP, Kanzu Microloans is set to be a game-changer for women and low-income communities. These groups often face significant barriers to credit access due to a lack of collateral, paperwork, or formal financial records.

The potential benefits of Kanzu Microloans are multifaceted. For one, it would provide instant credit access, which is especially crucial in emergencies. The solution would be built on open, secure financial protocols, ensuring that transactions are safe and reliable. Moreover, it would extend credit to communities that are traditionally left out of the formal financial system. The interoperable design of Kanzu Microloans can integrate across networks, platforms, and borders. This makes it a viable solution for SACCOs and Microfinance Institutions that are looking to scale their impact.

One of the key advantages of Kanzu Microloans would be its ability to leverage data-driven lending. The platform uses alternative data sources and machine learning algorithms to assess creditworthiness. This enables it to provide loans to individuals who may not have a traditional credit history. This approach not only increases inclusion but also reduces default risk, making it a more sustainable solution for lenders.

Kanzu Finances Limited envisions Kanzu Microloans to have a significant impact on financial inclusion in Uganda and cultivate economic resilience and financial stability. The rollout of the project would improve access to credit for over 50,000 SACCO members, reduce loan disbursal time from days to minutes, and lower barriers to credit for informal workers, border traders, and youth.

The development of Kanzu Microloans is coming along well. The project team has made significant progress on the backend implementation of the loan lifecycle, including loan product creation, credit scoring, disbursement, and repayment integrations. The frontend for the self-service loan application is still under development. Once it’s live, users will be able to request and repay microloans entirely through the Kanzu Finance mobile and web apps.

The Rafiki adapter is under development to support disbursement and repayment processing via ILP, and the MoMo integration for mobile money disbursement is complete and tested.

As the project continues to unfold, the team is gearing up to begin end-to-end user testing in the next development sprint. The project is set for substantial progress in the coming months, as the technical stack nears completion and discussions with the Bank of Uganda and the Ministry of Finance advance on securing the necessary licences.

Kanzu Microloans’ alignment with our mission to enforce equitable financial access is clear. The project has the potential to make a lasting impact on Uganda's financial inclusion landscape by empowering financially underserved populations through open payments.