FAQ

Can I incorporate my investments in my tax report?

Yes, the money lent to entrepreneurs via Afriwallet should be taken into account in box 3 for private investors. For business accounts, the returns on money lent is charged with company tax.

How much can I invest?

We recommend that you only invest amounts that you can responsibly justify (AFM advices not to invest more than 10% of funds available). Furthermore, we strongly discourage funders from investing with borrowed money.

From which countries can I invest?

From many countries in the world, except Afghanistan, Iran, Iraq, North-Korea and Venezuela. NB: in some countries certain legal requirements may apply to Investors. It is your responsibility to ensure that such requirements are met.

Which currency can I use?

At Afriwallet you invest in euros or American dollars. The risks of currency fluctuations are hedged by our local partners

How much interest do I get?

The annual interest rate on investments varies from 6-12%.

What is the maturity of the loans?

These are 3, 6, 12, 18, 24, 30, 36, 42 or 48 months.

What are the risks?

Our local partners cover the risk of currency exchange rates and loan defaults. They do this by maintaining financial reserves for this purpose. In addition, there is an option to claim their equity if needed. While these measures are intended to minimise the risk to funders, our local partners face risks of their own that could affect their ability to secure a loan. These include:
– bankruptcy
– currency exchange rates
– fraud – operational risks
– political and regulatory changes
– natural disasters or epidemics.

There is also some operational risk at Afriwallet. An example might be that Afriwallet is unable to find shareholders to finance their activities. In such a case, Afriwallet will handle outstanding loans at the best of its ability. At the same time, our ability to legally address non-payment from local partners becomes understandably difficult.

How does Afriwallet minimise the risk?

Local partners must adhere to our mission and work with us to provide loans that are affordable. This insures that local entrepreneurs have access to financing that allows them to grow their business. A local partner must also have a track record. This means (for instance) that the partner must have a solid credit portfolio, along with enough buffers and equity to compensate for unexpected downturns. We also check the organisational structure of the partner. Finally, the loans that a local partner receives via Afriwallet must be in proportion to the partner’s total balance sheet. When currency exchange risks become too high for a local partner, we will urge the local partner to cover these risks. In some scenario’s the local partner is contractually obliged to comply with these demands.

What happens if the local currency devaluates?

Our local partners bear the exchange rate risks. We settle the loan, redemptions, and interest payments in euro and USD.

What happens when a local partner goes bankrupt?

When a local partner goes bankrupt, there will be a chance that you lose (part of) the amount you lend. Obviously we will try to recover outstanding payments, but the success rate will be limited in such situations. For the investor there is no possibility to take action against the financial institution. From a legal point of view the local partners are separated, therefore it is recommendable to spread investments.

What interest rate do local borrowers pay?

Providing micro credits to entrepreneurs in often rural areas is a very labour intense process. A huge number of loans with a relatively small size bring quite some administrative pressure. Also, these loans have to be monitored and obviously repayments have to be collected at the right time at the right place. Furthermore, partners have to pay local taxes and they have to take a provision at their balance sheet for possible non-repayments.

Since our SMEs do not have access to micro credits or bank loans, they often need to borrow from ‘loan sharks’ that may charge more than 300% interest per year. Even if they had access to micro credits, they would still be paying 100-150% annually. On average, our SMEs pay around 7% interest per month.

What criteria should borrowers meet?

At a minimum, the potential client must be or have:

– Good moral character by good standing in the community as well as any associations or organizations of which they are a member;

– At least 2 years in operation with a clear indication of sustainability;

– Able to generate income to repay the loan (business must show at least 2 years of profitability);

– Compliant with legal requirements such as the payment of required taxes, permits etc.;

– Free of any legal process involving non-payment of loans, non-compliance with legal contracts and/or involvement in illegal activities;

– Verifiable experience in debt servicing (no past due loans with any private or government lending institutions or banks);

– Socially relevant: the business offers clear and solid benefit to it’s stakeholders, such as: employment generation, care for labourers and other workers, payment of wages and taxes, adherence to principles of fair trade, care for the environment, concern for the community at large.

Which borrowers can ask for a loan?

1-50 employees, in the area of farming, retail, wholesale, production or services. Applicants should have a ‘moral compass’ and have to prove they want the best for the enterprise, people, the community and the environment.

Are our local partners commercial or social?

One of the most important criteria Afriwallet has with regards to local partners is that they must have a social mission. When commercial purposes are of main importance an institution will not be considered for a partnership.

Why Afriwallet?

Afriwallet contributes to the following Sustainable Development Goals of the UN:

– no poverty
– zero hunger
– clean water and sanitation
– affordable and clean energy
– decent work and economic growth
– By 2030, no more extreme poverty.

Afriwallet is simply the only place where you can invest in SMEs in upcoming economies and/or in sustainable initiatives at an interest rate between 5-10% per year.

Why Afriwallet?

Afriwallet contributes to the following Sustainable Development Goals of the UN:

– no poverty
– zero hunger
– clean water and sanitation
– affordable and clean energy
– decent work and economic growth
– By 2030, no more extreme poverty.