Show of hands if you’ve been burned from participating in a group savings exercise (ajo, esusu, chamas, or stokvels if you’re South African) before? Perhaps, a member of the group refused to contribute when it was their turn, or worse, the person holding the money for the group disappeared with it?
A few African startups, both past and present, have pitched their tent to solve this problem for consumers. Some of them have abandoned the plan entirely; case in point, Esusu, a Nigerian fintech used to digitise esusu groups, before it shifted focus to a credit-building app for home-renters. Others are still playing in the market, trying to figure a way to hit nirvana. But one startup—Egypt’s MoneyFellows—seems to have figured this out.
Lack of trust, credit-scoring models, and non-existent escrow systems plague these businesses. And ultimately, payments are the bread and butter of fintechs, so understandably, many businesses follow the money.
But given its longevity doing business in Egypt, MoneyFellows has seen its fair share of good and bad, and after eight years, it says it is profitable.Â
On May 5, the fintech raised $13 in a pre-series C round.
So what is working for MoneyFellows? It’s not just building an app to manage gam’eya (Egypt’s version of esusu); legal contracts, central bank oversight, and credit scoring. Users who join a savings “circle” sign a contract, payouts are handled by a bank partner, and the system is monitored by Egypt’s Central Bank through a sandbox. MoneyFellows ranks users based on who’s most likely to keep contributing; those ranked higher get paid first, and the cycle continues.
That setup builds trust—and trust is everything when money’s involved.
MoneyFellows then makes money by managing the spread between borrowers and savers. Early collectors—basically loan takers—pay a fee. Late ones save and collect at the end of a circle’s tenure. That spread, multiplied across millions of users on the platform, is where the business makes sense.
A business model like MoneyFellows’ is not risk-free; but what makes it work is the structure. Some fintechs that have tried to digitise ajo in Africa have provided no means to contain the risks which create a trust deficit.
Now, it’s taking that playbook to Morocco, a market that already knows a thing or two about digitised group savings.
