Exclusive: ClickPesa COO Details Plan to Lend Lenders
We recorded this interview on November 26, 2024.
First, some context...
Every day in Tanzania, thousands of microfinance institutions struggle with basic money movement. They spend hours tracking loan payments on paper, reconciling transactions by hand, and searching for more capital to lend.
Their borrowers, from textile makers to restaurant owners, face similar problems moving money in and out of their businesses.
ClickPesa built a financial services platform that makes those everyday transactions work smoothly for both lenders and SMEs.
Here’s how ClickPesa works
MFIs can now automate payments, track every transaction, and access more capital under one roof.
The startup integrates with their loan management systems and credit bureaus, making it simple to give out loans and collect repayments while staying within Bank of Tanzania (BoT) regulations.
2. Business Payment Services
Customers can pay how they want. Through mobile money (Lipa Namba), bank transfers, or cards. Whether sending payment links for online sales, paying suppliers, or handling staff salaries, businesses get a scalable system that works even without internet (via USSD).
3. Payment & Wallet Infrastructure
For companies building their own financial products, ClickPesa opened up its APIs. This means you can embed banking tools into your platform without starting from scratch. The startup enables seamless payment processing, fund transfers, and e-wallet management.
A Surprising Start
Richard’s journey into fintech was unplanned. It began in 2008, when he was studying abroad in Malaysia. Strict regulations prevented international students from working, and accessing funds from Tanzania was a logistical nightmare.
“Back then, only CRDB had started offering Visa cards in Tanzania,” Lema recalls. “I experienced firsthand how difficult it was to move money across borders.”
This early frustration planted the seed for ClickPesa, which started as a payment processing platform before expanding into lending and financial infrastructure for MFIs.
Navigating the Early Regulatory Environment
Building fintech solutions in Tanzania came with its own set of challenges. In the early 2010s, digital payments were still unregulated, and banks were hesitant to collaborate with new entrants.
“We spent years knocking on doors. We pitched to over 25 banks, but most saw us as just another agent rather than a partner,” Richard says.
One of ClickPesa’s early ventures, Get Paid Africa, allowed freelancers to receive international payments via virtual assets. The platform gained traction but was eventually shut down due to regulatory uncertainty.
“That experience taught us the importance of working hand-in-hand with regulators,” Lema explains. “Getting our payment service provider (PSP) license from BoT took six years of groundwork and eighteen months of processing. But it was worth it. Trust is everything in financial services.”
Spotting the Opportunity in Microfinance
While working with remittance clients, Lema and his team noticed a common problem among Tanzania’s 2,224 microfinance institutions.
Despite managing loan books worth hundreds of millions of Tanzanian shillings, most MFIs struggled to secure additional funding.
Traditional banks demanded physical collateral such as land or property, which many microfinances and their SME clients didn’t have.
To validate their hypothesis, ClickPesa ran a pilot program, lending a total of $100,000 to five small lenders.
“We saw that these institutions weren’t struggling due to poor management. The problem was access to capital. MFIs are well-regulated, yet they were overlooked by banks. That is where we stepped in.”
After all, microfinances play a crucial role in our economy. With 34 commercial banks in Tanzania, financial inclusion remains a challenge, particularly for the 54.3% of SMEs owned by women.
MFIs act as a bridge, but they need more funding to expand.
Building a Better System
One of the biggest operational challenges that microfinance institutions face is tracking transactions. Majority of them rely on outdated systems, leading to mismatched payments and reconciliation delays.
To solve that problem, ClickPesa developed an integrated financial management system that assigns a unique control number to each loan. It allows users to seamlessly track every transaction, improving efficiency and reducing errors.
“Now, MFIs can focus on lending instead of administrative headaches,” Lema explains.
How ClickPesa is Redefining Lending
Unlike traditional banks, ClickPesa does not require physical collateral. Instead, they use a transaction-based risk assessment model.
“If an MFI has a 300-million-shilling loan book, that tells us they have an existing client base and cash flow,” Lema explains.
This model is already yielding results. Since 2023, ClickPesa has deployed $250,000 to microfinance institutions, impacting over 1,800 SMEs.
One inspiring case that Richard recalls involves an entrepreneur who started with a single sewing machine.
With MFI funding, she expanded to 20 machines, launched a textile business, and even opened a restaurant—while continuing to work with the same institution. “This is exactly why we do what we do,” Lema says.
A Debt Fund to Fuel MFI Growth
Richard's team now launching the ClickPesa Debt Fund, designed to bridge the funding gap for microfinances while providing a stable investment opportunity for Tanzanians.
“There is a lot of idle money sitting in savings accounts. At the same time, MFIs need more capital. Our platform connects these two needs transparently.”
Using blockchain technology, they ensure that every loan transaction is traceable and verifiable while protecting borrower privacy.
To avoid confusion with the Debt Fund, remember…
ClickPesa MFI integrates seamlessly with existing loan management systems, mobile money services, and bank APIs. The platform’s core workflows include:
Regulatory Compliance and Risk Management
ClickPesa operates under the Bank of Tanzania’s regulatory framework.
“When handling people’s money, compliance is not optional,” Richard Lema states. “Every transaction is encrypted, and we maintain detailed audit trails.”
Their system is designed to work even in areas with limited internet access through USSD technology. Why? To guarantee seamless transactions in any environment.
Lessons for Fintech Entrepreneurs
Reflecting on his journey, Lema shared the following advice for existing and aspiring startup founders.
Final Thoughts
Tanzania’s lending market needs both innovation and trust. ClickPesa’s impact on 1,800+ businesses shows what is possible when you trust performance over property. As more lenders join the platform, and more businesses access capital through them, Tanzania’s $7.5 billion SME credit gap could finally start closing.