Start-up builder Africa Internet Holding (AIH) has launched Lendico – a digital alternative to banks that enables investors to directly fund the loans of private individuals – in South Africa.

The NCR-approved Lendico marketplace now offers borrowers cheap loans and investors attractive returns on two continents.

Lendico was launched in Germany in December 2013 – Spain, Poland and Austria followed. The idea of social lending is universal: People with money invest in the projects of people looking for funding. One party benefits from attractive returns, the other from cheap interest rates.

For the analysis of the loan applications, the company uses an algorithm that classes loan projects in real time. At Lendico, affordable loans and attractive returns are not mutually exclusive.

“We have high standards when it comes to selecting borrowers, because we always have the interests of our investors in mind. Due to our cost advantage, Lendico can offer more affordable interest rates and smaller loan sums that for banks usually are not worthwhile,” says co-founder of AIH Jeremy Hodara.

“Lendico has been developed as a digital alternative to banks,” says the MD of Lendico Dominik Steinkühler. “Lendico is very different from a bank as borrowers and lenders benefit from direct interest rates. Lendico as a global marketplace represents a modern way to get a loan and to invest in a new asset class.”

In South Africa, the volume of outstanding consumer credit balances is $150-billion (R1,49-trillion). The costs associated with a loan are extremely important to consumers. Even one percentage point less means $1,5-billion (R15-billion) more in the pockets of consumers. This transformative power of the p2p model can already be witnessed in the United States.

In 2013 alone, the two most important providers of p2p loans procured $2,4-billion worth of loans – a growth of 177% compared to the previous year.

Alongside Lendico, AIH has succeeded in establishing and developing successful ventures including JUMIA, Zando, Kaymu, Hellofood, Lamudi, Carmudi, Jovago and Easy Taxi.

Hodara comments: “We feel it is now the perfect time to expand our focus and vision into the digitalising finance sector by providing Africa with financial alternatives in order to further support the emerging market’s economy.”