Fintech
A women-founded fintech company pioneers financial inclusion solutions to reach underserved microbusinesses in Nepal
In 2019, Sonika Manandhar and Tiffany Tong teamed up to found Aloi, a Kathmandu-based fintech company that supports informal micro-entrepreneurs in Nepal to overcome challenges in accessing formal financing for their businesses.
Drawing inspiration from her family’s experiences, Sonika has firsthand insight into the importance of access to finance for these entrepreneurs. “This is very close to my heart because my father was also a microentrepreneur. He was driving a three-wheeled tuktuk in Kathmandu and faced many obstacles. Ultimately, thanks to a government-backed loan, he was able to save our family from collapse, grow his business, and continue to support my education in computer engineering, which is what got me to where I am today,” explains.
The two founders identified that one of the main challenges facing informal sector businesses in Nepal lies in gaining the trust of formal financial institutions to lend to them. “Traditionally this trust is gained through proven collateral and credit histories, but since they have none of that, we need to find other ways to build that trust. Aloi uses technology to track income and credit history so that trust can be built,” explains Tiffany.
Women entrepreneurs, who are disproportionately concentrated in informal businesses, are particularly disadvantaged in this regard. “The traditional banking system always seeks collateral from the borrower, for example in the form of collateral and real estate, which women traditionally do not own, and even if they do, they are often not the ones who decide about the family,” explains Sonika “Due to these disadvantages it is very important to develop tools and technologies that put women at the center of design.” Although Aloi does not exclusively support women with its technology, more than 80% of its users are women.
Aloi is among 15 fintechs and digital startups in the region that have received co-funding and technical support from ESCAP and the United Nations Capital Development Fund (UNCDF) to test and scale innovative digital solutions that improve access to financial services and to e-commerce opportunities for women-led SMEs. The fund was implemented in partnership with UNCDF under ESCAP’s Catalyzing Women’s Entrepreneurship program, funded by Global Affairs Canada. According to Tiffany, the support from ESCAP and UNCDF marked a turning point for the company. “Before this project we had no financing, so this was what allowed us to build our first technology prototype and facilitate our first loans.”
As founders themselves, Sonika and Tiffany are keenly aware of the unique challenges faced by women entrepreneurs. “Being female founders in the tech industry, especially fintech, puts us in the minority,” says Sonika. “This, combined with the fact that we are designing a product with women in mind and aligning with green financing, made it harder for us to gain recognition as a company when we started, and we were often told we needed to operate as a non-profit .”
Overcoming this initial obstacle, today Aloi is expanding rapidly, building an extensive network of banking partners across Nepal, gaining recognition as a leading fintech company, and continuing to support small and micro business owners and aspiring entrepreneurs throughout the country to get their businesses off the ground. .
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Since 2018, the Catalyze the women’s entrepreneurship agenda implemented by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) with funding from Global Affairs Canada has mobilized over $90 million in capital for women-owned and led businesses and directly supported over 178,000 women entrepreneurs through access to finance and enhanced skills to grow their businesses.