Kenyan Fintech Zanifu Nabs $1 Million To Bridge The MSME Financing Gap, Eyes Ghana And Uganda Expansion
Kenyan fintech Zanifu nabs $1 million to bridge the MSME financing gap, eyes Ghana and Uganda expansion
Following the receipt of $1 million in seed funding, Kenyan fintech Zanifu intends to upgrade its platform and increase the number of micro, small, and medium-sized enterprises (MSMEs) to which it provides stock financing services.
Participating in the round were Saviu Ventures, which had previously invested in the startup's pre-seed round in early 2020, Launch Africa Ventures, Sayani Investments, as well as a number of Kenyan and Nigerian angel investors, among others. The latest round of funding brings the total amount raised by the startup to $1.2 million.
What Zanifu are into
Zanifu provides short-term stock financing of up to $2,000 to small and medium-sized enterprises (SMEs) in Kenya, and the company expects to serve an additional 15,000 FMCG retailers in the next year.
"We provide services to FMCG retailers, particularly those whose operations are too small to qualify for traditional bank financing options. These small and medium-sized enterprises (SMEs) have had no choice but to rely on digital consumer loans, which are not always appropriate for their needs. The provision of stock financing to small businesses, which allows them to grow their revenues by more than 40%, fills a critical gap in the market "Steve Biko, co-founder and chief operating officer of Zanifu, explained the company's recent growth.
When it comes to MSMEs, the FMCG sector has the highest working capital requirements. However, due to their high velocity of product sales, we can underwrite unsecured business credit to them with confidence.
After launching their startup in 2017, Biko and Sebastian Mithika decided to venture into the financing business one year later. A total of 85,000 working capital loans totaling more than $13 million have been extended to 7,000 businesses in Kenya, according to the startup.
She stated that Zanifu is assisting the country's 5 million small businesses, the vast majority of which are informal, in closing the $20 billion (estimated by the World Bank) MSME funding gap.
Informal businesses in Kenya are important contributors to the country's economy, accounting for 33.8 percent of GDP and 83.4 percent of employment outside of small-scale agriculture. Access to financing, on the other hand, continues to be the most significant impediment to the expansion of these micro and small businesses. As a result, fintech companies such as Zanifu have developed products that are specifically tailored to the financing needs of small and medium-sized enterprises (SMEs) in recent years.
Small businesses can get credit from Zanifu through a variety of manufacturers and distributors. Retailers are already sourcing products from the startup's financing partners, which helps to grow the startup's customer base. Zanifu has developed platforms for manufacturers, distributors, and retailers that make the process of placing orders, processing payments, tracking orders, and fulfilling orders easier.
Using the Zanifu loan app, retailers can borrow money by uploading information about their previous purchases. After registering, retailers receive an automated credit limit assignment based on their algorithm score within six hours of signing up for the service. Until the loans are repaid, retailers have up to one month to pay back the loans, which have an interest rate between 3.5 and 5 percent.
In Summary
Zanifu, which currently operates throughout Kenya, is looking to expand its operations into Ghana and Uganda in the near future. A regional presence will help fintech companies such as Uganda's Numida and Nigeria's Payhippo, which provide unsecured financing to small businesses, to compete more effectively in their respective markets.
A previous interview revealed that Numida, which was founded in 2017, offers unsecured credit of up to $3,500 in less than two hours, while Payhippo stated in a previous interview that it typically disburses loans of $1,300, with a minimum of approximately $200. As alternative finance providers, these digital lenders assist small businesses in closing the financing gap; however, their interest rates are higher than those offered by traditional banks.
