Derrick Kachisa and Samuel Moyi, full-stack developers based in Kericho, Kenya, noticed that locals didn’t have access to the traditional finance information they needed to invest wisely. So they founded Clixpesa, a payments app that aims to simplify finances.
Clixpesa creates easy-to-understand financial tools for savings, loans and insurance, co-founder Kachisa said in an interview. The app will include elements of Venmo and Web3, enabling peer-to-peer payments and loans, as well as interest-bearing savings accounts.
Clixpesa is finalist in CoinDesk’s Web3athon. The winners will be announced on the IDEAS conference 18 and 19 Oct
“If we look at the financial products that are being offered now, like loans, savings and insurance, these things are complicated because they are developed by traditional financial institutions,” Kachisa said. “The Kenyan community is put off by these services because they are not explained or implemented in a simplified way that a normal person can understand.”
Up until this point, the two-man team had been developing Clixpesa in their free time without any financial support. As participants in the Web3athon (a joint effort by CRADL and CoinDesk to support community-focused crypto projects), Kachisa and Moyi aim to have a Minimum Viable Product by the end of the year to test in their local community. At this point, they will consider how to get the funding.
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The project’s name derives from one of the most successful peer-to-peer payment systems without crypto called M-PESA. M-PESA has simplified digital transactions in Kenya but has yet to provide more complex financial tools.
The first product developed by Clixpesa is a digitized version of a Kenyan community saving tool called Chama – more traditionally known as ROSCA, or Rotating Savings and Credit Association.
When a community member has something that requires a lot of capital, like medication, their peers come together to save together. Once the goal is met, the person receives their money and the chama starts saving for the next person until all needs are met.
This is a great way to raise money within a community, but there are problems, Kachisa said. First, once someone received money from Chama, they could just leave and never contribute again. Second, who do you trust to manage the funds? Again, that person could just walk away with all the money.
Clixpesa aims to fix these problems by bringing this cooperative storage technique to Web3. Instead of cash, users can use M-PESA or one of Clixpesa’s other payment options. And instead of a person holding the Chama’s funds, it’s a smart contract.
Funds are released when at least three participants authorize the transaction – creating a trusted Chama money storage system. Over time, Clixpesa will also release a trusted payment system, a group insurance fund, and an implementation for third-party services.
However, there is still the problem of someone leaving after receiving their payment. Clixpesa tries to fix this by addressing the reasons someone might leave. As a result, users can skip payments and split them into smaller contributions.
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This first stage of development was completed during the Web3athon, which will announce the winners of the six-month hackathon at the upcoming IDEAS conference. The project will enter its second phase of development at Celo’s Mobile Hackathon.
Clixpesa’s second product will allow Chamas to lend his funds to others for a small amount of interest. This allows Chamas to increase her funds but also makes it easier for ordinary Kenyans to obtain credit.
“In Kenya, lending is very expensive. The APY for loans is in the 200th percentile,” Kachisa said. “So we want to use peer-to-peer to lower interest for regular users.”
As a long-term goal, Kachisa and Moyi want to bring investments in stocks and crypto to Kenya. In the medium term, the aim is to make their Chamas service as smooth as possible – by transferring a traditional investment technique to Web3.