Micro, small and medium enterprises (MSMEs) across Africa make up the majority – more than 90% – of businesses in the continent but are still disadvantaged in access Credit from official institutions because of the nature of their operations; For example, many people often lack the type of collateral that banks accept.
To bridge the gap, Uganda-based fintech Numidachose to focus its digital lending business on small businesses as part of its strategy to promote financial inclusion in emerging markets.
Driven by a surge in demand for its services, Numida is now eyeing growth opportunities outside of Uganda and says it has a proven business model that can be applied across the continent to unlock the potential of MSMEs.
The growth plans build on the $12.3 million pre-A-chain equity debt funding scene in a round led by Serena Ventures with participation from Breega, 4Di Capital, Launch Africa, Soma Capital and Y Combinator, all VCs are investing in Uganda for the first time.
Existing strategic investor MFS Africa also made a follow-up investment, while Lendable Asset Management extended $5 million in debt to the startup.
“I am most excited about continuing to build and deliver financial products to micro and small business owners who have been forgotten by the traditional financial services industry despite their hard work and ability. viable businesses. There are so many of these businesses across the continent, we truly believe we have demonstrated a model in Uganda that can be pan-African and unlock the potential to grow and achieve great things. of these businesses”, CEO Numida, Mina Shahidwho co-founded the startup in 2017 with Catherine Denis and Best Bentold TechCrunch.
Numida plans to extend the loan to another 10,000 businesses, to reach the target of 40,000, within the next 18 months the target will be moved closer by entering two new African markets (selected from Ghana , Nigeria, Egypt or Kenya).
Businesses in its portfolio receive loans ranging from $100 to $5,000, payable in one month, and with interest rates ranging from 10% to 16%.
“We have risk-based pricing but on average, the yield is around 11.5%,” said Shahid.
For a credit review, Numida, the first startup in the East African country to join YC (W22), looks at various aspects of the business, including sector and cash flow. Repeat customers in good standing get their loan approved immediately, but new applicants and repeat businesses looking for larger facilities, have to wait up to 24 hours for a loan. is approved.
The startup uses its own credit scoring model, which, Shahid said, is built on loans it has extended to customers and business profiles. He added that they operate differently from most digital lenders, who often pull data from customers’ phone books and social media accounts as a condition of lending – many of them These lenders contact borrower contacts for debt collection messages in the event of default.
“The information we use is information provided by customers on the app, so we don’t detect or collect any data… We have a range of historical data that helps determine if the information is We are gathering there relative in the right ballpark”.
Since raising it seed sponsorship Last year, Numida grew more than 7.5 times thanks to a surge in demand for quick loans. To date, the startup has issued $20 million in working capital to micro and small businesses, growing from a $250,000 a month issue to $2 million.
The value of the loans will increase as the startup continues to receive support from organizations like Lendable. Shahid said it hopes, in the interim, to continue to remodel its products to make it even more affordable.
“We continue to improve our risk assessment and risk understanding so that we can build a healthy portfolio that can allow us the opportunity to lower prices while continuing to deliver,” he said. unsecured working capital loan products for these businesses”.