For SMEs, an unconventional route to financing has opened up with fewer hurdles and easier access even for the unbanked. Fintechs now provide them with loans and banking services they can rely on. For a while, SMEs in Africa were left out, but this has changed over the last few years with more Africa-centred startups, and more lenders looking towards emerging markets.
With a greater understanding of how global capital markets exclude small businesses, African Fintechs know the difference small cash loans to traders and small-scale businesses can make. Jumo, a mobile financial services platform that operates in Ghana, Tanzania, South Africa, Gambia, Uganda, and Kenya gives out micro-loans as low as $20 by analysing users’ mobile data. Loan repayment plans are customized to fit each user’s unique circumstances. Branch uses a similar model with users not needing a bank account to access loans. The service is available in Nigeria, Kenya, and Tanzania and is expected to extend to other countries in Africa. Other Fintechs that loan to locations in Africa are Numidia, Tala, OneFi, and Mines.
Many of these platforms also provide opportunities for users to save and improve their credit. With easy access to data, artificial intelligence, and the expansion of mobile money, some of these Fintechs can analyse and provide loans in a few days or instantly.
Ovamba provides a more hands-on approach with both logistical and financial support for SMEs in Africa. For business owners that need to procure equipment for growth, Ovamba will make the payment to the supplier after analysing the business. They collect a one-time fee instead of recurring interest. Ovamba also helps wholesale exporters of coffee, cocoa, and cashews in Cote d’Ivoire and Cameroon, and importers of retail goods coming into these countries. This extends to services like warehousing space for SMEs that have difficulty storing their goods, and technology for these businesses to analyse and leverage their data. They hope to expand into other African countries in 2019 with Nigeria, Mali and Sudan set to benefit in the near future.
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