Duo seeks to boost Kenyan saving culture

Kenya’s savings rate has remained low a thing blamed on overreliance on loans. An analysis by EFG Hermes, a brokerage firm, in 2021 revealed that Kenya’s saving rate is at 12 per cent, way below Africa’s average of 17 per cent.

The report showed that Kenyans save the least in East Africa, with the neighbouring Uganda and Tanzania crossing the 20 per cent mark even though their per capita income is lower than that of Kenya.

Against this background, Gideon Gitonga and Isaac Thendeu came up with Sortika in late 2018, a solution that would revolutionise the capital markets sector and provide access to investment opportunities not previously accessible to the common mwananchi.

Higher target Gideon, a business analyst and tech enthusiast and Isaac, an investment professional, were passionate about salvaging the savings culture in Kenya and Africa having witnessed the Gross National Savings dwindle through the years.

“The Vision 2030 Blueprint expects we should attain a savings rate of 25 per cent to ensure that a majority of our populace is actively participating in Kenya’s economic growth. Our goal is to develop solutions that marry into the lifestyle of our people in a bid to ensure we are addressing the impediments to savings and investments by the mwananchi,” Gideon begins.

He adds, “With a background in computer science, I turned to technology to develop and distribute the solutions we came up with while employing user feedback to enhance our offerings to fit our growing clientele needs. We hope to build the next generation savings and investment solution that will ensure our clients have the money they need to live the life that they want,” he says.

Numerous challenges While starting Sortika, the partners were members of an investment club that sought to invest in opportunities that offered above-market returns.

Being part of the club brought to light the challenges Kenyans seeking investment opportunities faced including low financial literacy levels, a high barrier of entry to some investment opportunities, dwindling income levels, liquidity needs that couldn’t allow one to hold long term investments, unscrupulous investment managers providing unlicensed products, among others. These challenges inspired the development of Sortika.

“We rolled out our version one in the first quarter of 2019 attracting 2,000 customers who were critical in providing us with crucial feedback that allowed us to enhance our offerings. We released version two towards the end of that year increasing our customer numbers to 5,000. We introduced our automated savings offering on the platform allowing for passive savings. The reception was tremendous, allowing us to release version three app in March 2020, with enhanced features around peer-topeer loans, data analysis and investment

assistant. At this point, we were satisfied with the proof of concept and were ready to commercialize our services,” he says.

Towards the end of 2020, they did a seed round and despite the effects of Covid-19, they were lucky to raise capital to roll out commercially in late 2020. Sortika has grown since serving over 13,000 customers and forming strategic partnerships with the leading fund and investment managers in Kenya such as Altree Capital Kenya, Africa Diaspora Asset Managers, SIB Mansa X and scope markets to distribute licensed investment products to its clients.

The name Sortika comes from the English word “Sort” or “Sorted” meaning to fulfil or resolve one’s problems. Gideon says the Swahili slang word communicates their objective of ensuring that their customers can create sustainable financial plans to ensure they can afford the life they want.

“We offer a couple of products and services with our innovative offerings being passive savings where we allow for automated savings from our client digital transactions; investment assistant (Roboadviser) that helps our clients in creating investment portfolios through asset selection and asset allocation based on their risk appetite and expected return and peer-to-peer loans allowing savers and investors on the app access to affordable credit from peers on the app,” he says.

Building savings He adds, “Our other services and products include goal-oriented savings, group savings, lending, crowdfunding solutions, investment assets, data analysis, budgeting tools, asset finance solutions, fixed savings products, foreign currency savings, emergency savings and financial literacy programmes.”

 The app combines both capital markets products and financial service solutions being a one stop solution for all its client’s financial needs.

Kenyans can check the Sortika services through the website or get the app from the play store or apple store. Gideon says the app works by allowing the client to build up their savings passively through automated savings from every digital transaction they make.

“These savings go towards the clients’ goals (emergency fund, savings, investment and group goals) on the application. The savings earn a return of up to 10 percent, however, the client can invest their funds in other investment options to earn a better return. The funds sitting on clients’ emergency goals can be lent out allowing for users to make more returns from private lending activities.

“Clients can borrow against these savings and investments from peers on the app at affordable rates or no rates at all depending on their negotiation with the lenders. With a guarantor, a user can borrow more than what they have saved. Users can save, invest and lend collectively as a group by subscribing to our group services.” he explains.

With the e-Chama solution, they have made it easy for groups to manage their activities and enhanced members’ recruitment through public listing.

They have gone further to provide a planning and budgeting tool that tracks their users’ expenses and can intelligently notify the client when they are exceeding their budgetary limits.

“Our crowdfund solution allows clients to raise funds for various projects they are undertaking for instance a medical bill, school fees, business funds or a church project. By being able to incentivise the potential funders, it is now easier, faster and cheaper to raise funds,” he adds. Sortika charge as low as Sh20 per month for its users to enjoy the services.

Gideon points out the low financial literacy levels among their clients being the key challenge, especially their retail clients.

“We have had to invest in educating our customers on our services and basic financial knowledge. We are continuously innovating around the distribution of the content we create to make a rather specialised field easier for the common mwananchi to understand and participate actively,” he confesses.

“As a startup, we still have a challenge with capital and we are gearing towards a Series A fundraise to capitalise the business adequately and fund our expansion as we seek to bring one million customers to the application in 2022.”

In the next three years, Gideon is confident that they will have two million active users on the application creating sustainable financial plans and meeting their goals. “The growth and long term prosperity of our clients is our passion and drive to do what we do each day,” he says in conclusion.