Informal Lending Scenario
In Kenya, employment in small and medium enterprises has been estimated to account for more than 20% of adult employment and for 12-14% of national GDP. Less than 20% of small to medium sized enterprises (SMEs) in Kenya have ever received credit from formal financial institutions. A major challenge facing lenders is assessing SME risk in a cost-effective manner. Lenders in Kenya address this risk-assessment problem either by not lending to SMEs at all or by requiring collateral and charging high interest rates. If MFIs choose not to (or unable to) offer saving services to poor people, then the poor are forced to use the informal sector to save; they are left facing decision of relative risk of the various semi-and informal saving systems open to them, on average losing around one quarter of what they save there.
The nature of informal lending requires a high degree of trust and mutual understanding amongst its participants. WishVast ratings could become collateral like a credit rating to reward positive interactions and help individuals get the capital they need. An entrepreneur would simply text the WishVast system stating his capital requirements and business. Lenders would then check his ratings and make offers. The system would then confirm the terms of the contract. Next, the entrepreneur would conduct his business and make repayments. After the interaction, both the borrower and lender would rate the quality of their interaction. The WishVast rating system therefore becomes a means for an individual to access more capital at lower interest rates by building his or her digital reputation.
The nature of informal lending requires a high degree of trust and mutual understanding amongst its participants. WishVast ratings could become collateral like a credit rating to reward positive interactions and help individuals get the capital they need. An entrepreneur would simply text the WishVast system stating his capital requirements and business. Lenders would then check his ratings and make offers. The system would then confirm the terms of the contract. Next, the entrepreneur would conduct his business and make repayments. After the interaction, both the borrower and lender would rate the quality of their interaction. The WishVast rating system therefore becomes a means for an individual to access more capital at lower interest rates by building his or her digital reputation.
Farmer Scenario
80% of the workforce in the Kenyan economy is tied to agriculture. Some of the major products exported from central Kenya include tea, coffee, and macadamia nuts. The journey of these goods is much more complex and convoluted than most people would believe. The supply chains are inefficient and the farmers who grow the nuts receive a very small portion of the money ultimately paid by the final consumers.
Often times, farmers cannot capitalize on the power of the local farming community due to communication restraints. For instance, if a tomato farmer needed to transport goods to a distribution center he would have no way of exploring options within the local farming community. The farmer could send out a single text that would reach the entire WishVast tomato farming community. From there, he could find responses for offers to bundle goods, share transportation costs, or information on current pricing.
Often times, farmers cannot capitalize on the power of the local farming community due to communication restraints. For instance, if a tomato farmer needed to transport goods to a distribution center he would have no way of exploring options within the local farming community. The farmer could send out a single text that would reach the entire WishVast tomato farming community. From there, he could find responses for offers to bundle goods, share transportation costs, or information on current pricing.
Ad Hoc Scenario
In Kenya, there is a 40% unemployment rate. Additionally, those people who are employed experience extremely high turnover rates. Searching for a job involves going through employment bureaus for placement opportunities. The typical job lasts an average of 6 months, which costs the employees 1/3 of their salary for this placement. As a result of this high turnover, many workers turn to the ad hoc labor market. However, due to limited communication ability it is difficult to connect employers with potential employees in a timely manner.
Ad hoc laborers and potential employers can now join WIshVast groups. When an employer has a job opening, he can send a message to the entire ad hoc group. He will specify the skills needed for the job and the compensation he is willing to pay. All interested laborers can now text the employer and allow him to check their ratings and make an informed decision on who to hire.
The WishVast system provides a platform for workers to be connected with potential employers. Giving these ad hoc laborers this tool will increase their job opportunities while lowering communication costs. In time, a network of trust will be built that will be invaluable to the users future employment and economic stability.
Ad hoc laborers and potential employers can now join WIshVast groups. When an employer has a job opening, he can send a message to the entire ad hoc group. He will specify the skills needed for the job and the compensation he is willing to pay. All interested laborers can now text the employer and allow him to check their ratings and make an informed decision on who to hire.
The WishVast system provides a platform for workers to be connected with potential employers. Giving these ad hoc laborers this tool will increase their job opportunities while lowering communication costs. In time, a network of trust will be built that will be invaluable to the users future employment and economic stability.
