The microcredit feature in the Libera wallet dApp allows entrepreneurs to borrow small, low-interest loans to grow or sustain their small businesses. Using a DeFi approach, this microcredit product aims to disburse the microloans in cUSD cryptocurrency, due to its stability and security, towards a more inclusive financial ecosystem, especially for underbanked/unbanked entrepreneurial networks. It also allows borrowers to repay their microcredit amounts directly to the impactMarket treasury, needing no intermediaries in the process.
It aims to implement the effectiveness of blockchain technology in reducing costs, improving transparency, and enhancing trust in the lending process. Additionally, we aim to assess the impact of microcredit on the economic empowerment of the borrowers, particularly in terms of poverty alleviation, income generation, and entrepreneurial activities. Three major outcomes of the Micro-lending project:
- 1.Access to credit for underbanked business owners
- 2.Empowers low-income women through managerial positions
- 3.Generates revenue for the company to sustain the microcredit ecosystem
- 1.The loan manager, the mobile banker in this case, completes a training withimpactMarket’s team in the field.
- 2.Self-employed individuals or small business owners are identified by impactMarket’s partner NGOs on the ground and the mobile banker.
- 3.The selected borrowers complete an interview with the impactMarket microcredit assessment team and the mobile banker.
- 4.The mobile banker determines the loan amounts and provides information about each business.
- 5.The mobile banker receives cUSD from the principal source of their Libera wallet.
- 6.The mobile banker distributes the predetermined amounts to loan borrowers in monthly installments using cUSD on Libera or fiat money.
- 7.The borrower receives the next month’s installments when they repay their outstanding balance to the mobile banker. The amount is repaid by the borrowers in fiat money.
The microcredit ecosystem has already been piloted and launched in Brazil and Uganda, both in English and in Portuguese, and is in the process of launching in Nigeria, with more geographical scopes to be integrated soon.