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Software enables Kenyans to pay rent via M-Pesa

Kenya , 03 Jun 2013

Software enables Kenyans to pay rent via M-Pesa

A mobile money software application to help cut the time it takes Kenyans to pay their property rentals in cities such as Nairobi is taking off, say its founders.

The startup dubbed ‘Manyatta Rent’ has been founded by Duncan Muchangi and Stephen Ng’ethe and it lets tenants pay their rent through mobile money systems such as M-Pesa.

The product is aimed at agencies with more than 100 tenants. And so far, the startup says it has recorded 1,250 tenants using its system.

Manyatta Rent charges each tenant a fixed fee of just over $1 no matter the amount being transferred. Meanwhile, the fee to use M-Pesa as a means of transfer on Manyatta Rent is $2.

The pair say they saw an opportunity to alleviate the ‘stress’ of paying rent in Kenya and at the same time build a business.

“Paying rent in Kenya is not only a very expensive but also a very time consuming task,” says Muchangi.

“When a tenant has to pay rent at the end of the month, they have to go to the bank to deposit the cash. This means taking a Matatu (taxi) to town and afterwards you have to take the bank statement to your rental agent or your landlord as your proof of payment. This takes no less than three hours on a Saturday morning because you have no time during the week,” Muchangi explains.

With the help of Ng’ethe’s background in developing once-off enterprise resource planning (ERP) systems for real estate agents, the pair looked at this ‘problem’ and came up with what they say is a solution.

“We saw an opportunity for tenants to pay their rent, both securely and conveniently. They are already using the same systems (mobile money) to pay many other bills like water and electricity,” says Muchangi.

“We thought, what about we create a platform where they can easily pay their rent through a mobile money system and the agents on the other side would still get proof of payment through our real estate software?” continues Muchangi.

It was that thinking that resulted in the development of the Manyatta Rent offering.

And in order to develop the idea and build their business, Manyatta Rent applied to become part of the 88mph business incubator based in central Nairobi.

According to Muchangi, joining the incubator was a no-brainer as beginning a business in Kenya is filled with challenges.

“It’s an almost unmanageable task with the capital outlay required and especially if you want to focus solely on your business,” says Muchangi.

Muchangi and Manyatta Rent looked closely at 88mph and decided that the entrepreneurship program was the best environment in which to develop the business while accessing capital as well.

Meanwhile, Manyatta Rent launched its first pilot program at the end of 2012 and its founders say it has since established steady uptake from real estate agents across Nairobi.

“Some agents currently use M-Pesa to collect rent but of they have more than 100 tenants then they can no longer use M-Pesa. This is where we make sense,” says Muchangi.

“When you look at the rental market you find that 70% of Kenyans rent their homes which means you are looking at least two million people in Nairobi alone. Keeping in mind the amount of informal settlements, we could have at least 100,000 users on the platform,” explains Muchangi.

In future, Manyatta Rent wants to offer additional products, including a solution aimed at renters paying above $180 per month.

Muchangi adds Manyatta Rent further plans to use its system to offer a variety of services to the real estate industry, such as online listings as well as the creation of credit histories for its users.

While the platform has found initial traction, Muchangi admits that there are a number of challenges that exist in growing the client base.

Among these obstacles is the issue of the informality of the market, as many real estate agents still only use pen and paper with very few migrating to software solutions.

“There is bit of nervousness to use technology, people are apprehensive when it comes to new technology. You find especially because our product involves money, it takes a bit of time for our clients to warm up,” says Muchangi.

Muchangi, though, says that despite challenges, he thinks that startups such as Manyatta Rent are indicative of mobile money market in Kenya entering its next stage of development.

“I think one of the most impressive things about the products coming out of the country is that it means we have matured because if M-Pesa can actually spawn off multiple products and business then it’s just the beginning,” says Muchangi.

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