Fintech Zanifu secures Sh113m to finance African SMEs

Financial technology company, Zanifu has closed a Sh113.4 million ($1 million) in second round funding to scale its business of providing working capital to African SMEs in the fast-moving consumer goods supply chain.

The funds will target more than 15,000 FMCG retailers in the next one year.

The round, which was over-subscribed, included Saviu Ventures, which invested in a pre-seed round in early 2020.

Others who participated include Launch Africa Ventures, Sayani Investments and angel investors from Kenya and Nigeria, including founders and executives of some of the top tech start-ups in Africa.

 Zanifu’s co-founder and chief operating officer, Steve Biko, said they are bolstering their team and continuously iterating their platform to enable them to onboard and serve MSME’s faster.

“We serve FMCG retailers, especially the ones that are too small  to access traditional bank finance for their businesses. The only option these MSME’s have been digital consumer loans, which are not always suitable for them,” Mr Biko said.

“We are filling a critical gap in providing stock financing, which is enabling small businesses to grow their turnovers by more than 40 percent.”

Zanifu works with a number of manufacturers and distributors to extend the credit to these small businesses with retailers already sourcing products from the startup’s partners qualifying for the financing.

 Zanifu has created platforms for manufacturers, distributors and retailers that ensure seamless ordering, payment, tracking and fulfillment.

The fintech has been riding on the informal businesses in Kenya which contribute 33.8 percent of the country’s GDP and providing 83.4 percent of employment outside of small-scale agriculture.

Since its launch in 2018, the company have disbursed over 85,000 loans worth over Sh1.31 billion ($13 million) to more than 7,000 MSME’s in Kenya.

Similar companies in the African tech ecosystem include Numida in Uganda and Pay Hippo in Nigeria.

Access to financing remains the main impediment to growth for these micro and small businesses, creating space for such fintechs over the last few years.

Retailers borrow through Zanifu’s loan app, where they upload information that includes historical purchase data. The retailers are then assigned a credit limit, after its algorithm scores them within six hours after signing up.

Retailers have up to a month to pay back the loans, which attract an interest rate of 3.5 percent to 5 percent.

“In Kenya, there are about 5 million MSME’s of which only 1 million are formally registered and World Bank estimates there is a $20 billion financing gap here alone. In Sub Saharan Africa, the theme is amplified with a finance gap of $331 billion and over 44 million formal MSME’s,” added the company.

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