Robert Hornsby, Chief Financial Officer, Jobomax
September 23, 2020
A recent article in Financial Times (Antoaneta Roussi’s “Kenyan borrowers shamed by debt collectors chasing Silicon Valley loans,” September 11, 2020) illustrates the latest sad outcome of the pervasive finance and hi-tech habit of treating humans as numbers rather than as people, and highlights the dangers of applying bleeding-edge fintech without understanding cultural context.
The legions of fintech firms pouring into the continent can parse data points, but how much do they understand about their clients as people? In our work building homes and financing homebuyers in West Africa we have labored to build a viable financial underwriting process that respects both the cultural context of the communities we serve and the financial realities of an international investment arena in which investors demand a premium for perceived (and mostly imaginary) “Africa risk.”
Seeing Customers as People, Not Algorithms
Our work with the African diaspora in OECD countries – a population almost no other entity will finance to purchase a home in West Africa – has been informed not only by one-on-one conversations with thousands of customers, but also by lived experience on the continent and ongoing research with any relevant literature we can find. David Maranz’s “African Friends and Money Matters” has been instructive in many ways, as has an exploration of the changes in underwriting approaches in the US market over the past 70 years.
As it turns out, underwriting homebuyers in the West African diaspora is more like underwriting borrowers at a small community bank in 1950s Iowa than it is like anything today. The small-town banker back then didn’t see the borrower as an algorithmically-derived summary of credit history, salary, net worth and (more recently) cell-phone records, but rather as a family who worshiped at the same church and whose children attended the same school. The lender knew the cultural weight of the obligation to repay a loan: failure would mean much more than a dip in a credit score.
Helping Families Build Wealth
Our process for underwriting buyers in the African diaspora draws on a similar understanding of the personal and family networks behind each individual’s application, as well as a grasp of the cultural significance in that community of the prospect of owning a well-built house “back home.” It is arduous, but respectful, and it enables us to help families build wealth rather than encouraging quick consumption then shaming them with debt collectors – all while delivering above-market returns to investors.