Micro, small and medium-sized enterprises (MSMEs) across Africa make up the bulk -- over 90% -- of businesses in the continent but are still marginalized in accessing credit from formal institutions because of the nature of their operations; for instance, many often lack the kind of collateral that is acceptable by banks.
To bridge the gap, Uganda-based fintech Numida, has opted to focus its digital lending business on small enterprises as part of its strategy for driving financial inclusion in emerging markets.
Spurred by an increase in demand for its services, Numida is currently eyeing growth opportunities beyond Uganda saying that it has a proven business model that can be adopted across the continent to unlock the potential of MSMEs.
The growth plans come against the backdrop of $12.3 million pre-series A equity-debt funding in a round led by Serena Ventures with participation from Breega, 4Di Capital, Launch Africa, Soma Capital, and Y Combinator, VCs that are all making their first investment in Uganda.
Existing strategic investor MFS Africa also made a follow-on investment, while Lendable Asset Management extended a $5 million debt to the startup.
"I'm most excited about continuing to build and provide financial products for these micro and small business owners who have been forgotten by the traditional financial services industry even though they are hardworking and have viable businesses. There are so many of these businesses across the continent, we really do believe that we've proven a model in Uganda that can be Pan-African and unlock the potential of these businesses to growth and achieve great things," Numida CEO, Mina Shahid, who co-founded the startup in 2017 with Catherine Denis and Ben Best, told TechCrunch.
Numida co-founders (L-R) Catherine Denis, Ben Bes, and Mina Shahid. Image Credit: Numida
Numida plans to extend loans to an additional 10,000 businesses, to hit its 40,000 target, within the next 18 months, a goal that will be brought closer by its entry into two new African markets (selected from Ghana, Nigeria, Egypt, or Kenya).
Businesses on its portfolio receive loans of between $100 to $5,000, an amount that is payable after one month and attracts interest rates of between 10% and 16%.
"We do risk-based pricing but on average, the interest rate is about 11.5%," Shahid said.
For credit consideration, Numida, which is the first startup in the East African country to get into YC (W22), looks at various aspects of businesses, including the sector and cash flow. Repeat clients in good standing get their loans approved instantly, but new applicants, and repeat businesses seeking larger facilities, must wait for up to 24 hours to have the loans approved.
The startup uses its own credit scoring model, which Shahid says, is built off the loans it has extended to customers and business profiles. He added that they operate differently from most digital lenders who usually scrape data from clients' phone books and social media accounts as conditions for lending - many of these lenders reach out to the borrowers' contacts with debt-shaming messaging in cases of default.
"When we started building this business, we saw that a lot of people were getting taken advantage of because they didn't really understand the user terms because most people don't actually read these privacy policies or user agreements to understand what they were giving up. And so, we wanted to be very conscious about our approach, and we only ask for information that helps us determine if it is a business and if the person applying for a loan is the owner of the business," Shahid said.
"The information we use is the one provided by the customer on the app, so we don't snoop or scrape any data…We have a bunch of historical data that helps determine whether or not the information we're collecting is relatively in the right ballpark".
Since raising its seed funding last year, Numida has grown over 7.5 times propelled by the soaring demand for quick loans. The startup has to date issued $20 million in working capital to micro and small businesses, having grown from issuing $250,000 a month to $2 million.
The value of loans is set to grow as the startup continues to receive debt backing from institutions such as Lendable. Shahid said they hope to, in the interim, continue to remodel their products for even more affordability.
"We continue to improve our assessment of risk and our understanding of risk so that we can build a healthy portfolio that can allow us the room to reduce our prices while continuing to provide unsecured working capital loan products to these businesses," he said.
top 10 VPNs(2022-10-15 12:10:11Z)
Thank you so much for the post you do. I like your post and all you share with us is up to date and quite informative, i would like to bookmark the page so i can come here again to read you, as you have done a wonderful job.REPLY
credit score of 680(2022-10-16 12:31:57Z)
You made such an interesting piece to read, giving every subject enlightenment for us to gain knowledge. Thanks for sharing the such information with us to read this...REPLY
Agen Poker QQ(2022-10-17 13:15:42Z)
I admire this article for the well-researched content and excellent wording. I got so involved in this material that I couldn’t stop reading. I am impressed with your work and skill. Thank you so much.REPLY
Really good write-up, Appreciate it intended for giving That expertise. Excellently published document, but only if many blog writers made available identical higher level of information since you, the online world is a significantly better area. You need to thanks!REPLY
This kind of is a wonderful submit My partner and i noticed as a result of discuss that. It is just what I desired to find out desire inside upcoming you may keep on regarding revealing this kind of outstanding submit.REPLY
imp source(2022-10-22 11:40:34Z)
Bless you in the blog post and even very good strategies.. possibly even As i moreover think 6-pack abs is without a doubt a very important facet of gaining achieving success.REPLY
why not try these out(2022-10-24 09:24:58Z)
This is actually the content Now i'm searching for anywhere. Regards for use on your web page, I simply subscribe your blog. They can be a excellent web page. .REPLY
You happen to be permitted to article labels, and not backlinks, until these are accredited along with in theme.REPLY
click to read more(2022-10-24 15:05:18Z)
Wonderful Content, Now i'm a massive believer for offer suggestions relating to internet websites to make sure you let the web page creators understandthat theyâ€™ve incorporated an issue good to make sure you just a couple of!REPLY
Marriage counseling(2022-10-26 11:04:09Z)
This is definitely the knowledge We are acquiring all over the place. Cheers for ones web site, I merely join your blog. This is the wonderful web site. .REPLY
view publisher site(2022-10-27 15:15:03Z)
Compete the great get the job done, As i browse small amount of content articles in this particular websites and even It looks like that your choice of word wide web web log is without a doubt realistic important and allows gotten forums in fabulous tips.REPLY
I am truly pleased to discover this website as well as do appreciate reading through helpful content articles submitted right here. The actual suggestions from the writer had been amazing, many thanks for that reveal.REPLY
Long Distance Moving(2022-10-30 11:29:20Z)
Thanks a lot for sharing this excellent info! I am looking forward to seeing more posts by you as soon as possible! I have judged that you do not compromise on quality.REPLY
Finacial Advisors(2022-11-02 08:37:29Z)
You have performed a great job on this article.It’s very precise and highly qualitative. You have even managed to make it readable and easy to read. You have some real writing talent. Thank you so much.REPLY
dentistry Check This Out(2022-11-05 12:12:03Z)
Love to read it, Waiting For More new Update and I Already Read your Recent Post its Great Thanks.REPLY
see it here(2022-11-06 12:13:57Z)
The audio will be awesome. You might have several extremely skilled performers. My partner and i want an individual the most effective regarding accomplishment.REPLY
my response(2022-11-08 11:51:56Z)
This is certainly hence attractive plus artistic. I like a colorations plus whichever company may get them while in the mailbox might be smiling.REPLY
click here now(2022-11-15 11:38:54Z)
You will be permitted to posting companies, yet not one-way links, except in cases where they can be permitted plus for issue.REPLY
animal removal Lexington(2022-11-29 13:56:04Z)
it is really fine together with meanful. it is really amazing webpage. Back linking may be very important idea. you will have extremely improved lots of individuals what person see webpage and provides him or her useful material.REPLY
Thank you regarding offering latest revisions about the problem, My partner and i enjoy examine a lot more.REPLY
helpful resources(2022-12-10 14:44:18Z)
Used to do delight in examining articles or blog posts placed here. There're outstanding possesses many practical facts.REPLY
picking the right furniture(2022-12-21 14:56:21Z)
I have been impressed after read this because of some quality work and informative thoughts. I just want to say thanks for the writer and wish you all the best for coming! Your exuberance is refreshing.REPLY
I really like this article please keep it up.REPLY
Simple Dress(2022-12-31 19:53:04Z)
Experience the latest Simple Dress online at Highway fashions. Discover the wide range of simple dresses for women at Highway fashions. Grab your favorite dresses online in all over Pakistan at reasonable prices.REPLY
tiny fishing(2023-01-09 03:04:27Z)
I am very impressed with your articles, your content is very engaging and easy to understand. I have read many other websites but I still like your site.REPLY
Numida is currently eyeing growth opportunities beyond Uganda. The company is focused on providing innovative and affordable software development services to small and medium-sized businesses in Uganda and the neighboring countries.REPLY