Women-founded fintech company pioneers financial inclusion solution to reach underserved micro enterprises 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 difficulties in accessing formal financing for their businesses.

Drawing inspiration from her family’s experiences, Sonika has a first-hand insight into the importance of access to finance for these business owners. “This is very close to my heart because my father was a micro entrepreneur himself. He used to drive a three-wheeled tuktuk in Kathmandu and faced many setbacks. Eventually, thanks to a government-supported loan, he was able to save our family from collapse, grow his business, and go on to support my education in computer engineering, which is what’s brought me to where I am today,” she explains.

The two founders identified that one of the main challenges informal sector businesses face 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 because they don’t have any of that, we have to find other ways to build that trust. Aloi uses technology to track income and credit history so that this trust can be built,” explains Tiffany.

Women entrepreneurs, who are disproportionately concentrated in informal business activities, are at a particular disadvantage in this regard. “The traditional banking system always looks for a surety from a borrower, for example, in the form of collateral and immovable assets, which traditionally women don’t own, and even if they do, they are often not the decision maker of the family,” explains Sonika. “Because of these disadvantages it’s very important to develop tools and technologies that put women at the centre of the design.” While Aloi doesn’t support women exclusively with their technology, over 80 per cent of their users are women.

Aloi is among 15 Fintechs and digital startups in the region that received co-financing 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 e-commerce opportunities for women-led MSMEs. The fund was implemented in partnership with UNCDF under ESCAP’s Catalyzing Women’s Entrepreneurship programme, funded by Global Affairs Canada. According to Tiffany, the support from ESCAP and UNCDF marked a turning point for the company. “We had no funding before this, so it was what enabled us to build out our first technology prototype and facilitate our first loans.”

As female founders themselves, Sonika and Tiffany are keenly aware of the unique challenges faced by women entrepreneurs. “Being women founders in tech, particularly fintech, places us in the minority,” says Sonika. “This, combined with the fact that we are designing a product with women in mind and aligning towards green financing, made it more difficult for us to gain recognition as a business when we first started out, and we were often told that we should operate as a non-profit.”

Overcoming this initial hurdle, today Aloi is rapidly expanding, building a wide network of banking partners throughout Nepal, gaining recognition as a leading Fintech company and continuing to support small and micro business owners and aspiring entrepreneurs across the country to get their businesses off the ground.

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Since 2018, the Catalyzing Women’s Entrepreneurship programme implemented by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) with funding from Global Affairs Canada has mobilized over US$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.