Fintech Zanifu gets US$1m funding to bridge MSME financing gap, eyes Ghana, Uganda expansion

KENYA – Zanifu, a Kenyan fintech is set to upgrade its platform and grow the number of micro, small and medium enterprises (MSMEs) it extends stock-financing to after securing US$1 million in Seed funding, reports Tech Crunch.

Saviu Ventures, which invested in the start-up’s pre-seed round in early 2020, Launch Africa Ventures, Sayani Investments and a number of angel investors from Kenya and Nigeria participated in the round bringing the total funding so far received by the startup to US$1.2 million.

Zanifu provides short-term stock-financing of up to US$2,000 to MSMEs in Kenya and is eyeing an additional 15,000 FMCG retailers in the next year.

“We serve FMCG retailers, especially the ones that are too small to access traditional bank finance for their businesses. The only option these MSMEs have has been digital consumer loans, which are not always suitable for them. We are filling a critical gap in providing stock financing, which enables small businesses to grow their turnovers by more than 40%,” said Zanifu co-founder and chief operating officer, Steve Biko.

“The FMCG segment has the highest working capital needs within MSMEs, and the velocity of the goods they sell allows us to safely underwrite unsecured business credit to them.”

Biko and Sebastian Mithika launched the financing business a year after founding the startup in 2017and the startup said it has to date extended 85,000 working capital loans worth over US$13 million to 7,000 businesses in Kenya.

Mithika said that Zanifu is playing its role in bridging the US$20 billion (as estimated by the World Bank) MSME financing gap in the country experienced by 5 million small businesses, most of which are informal.

The informal businesses in Kenya are an integral part of the economy contributing 33.8% of the country’s GDP and providing 83.4% of employment outside of small-scale agriculture.

However, access to financing remains the main impediment to growth for these micro and small businesses and thus, over the last few years, fintech companies like Zanifu have introduced products that are tailored to the financing needs of the MSMEs.

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

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

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 and they have up to a month to pay back the loans, which attract an interest rate of 3.5 to 5%.

Zanifu, which has a presence throughout Kenya, is now eyeing Ghana and Uganda.

A regional presence will step-up competition for the likes of Uganda’s Numida and Nigeria’s Payhippo, some of the fintechs providing unsecured financing to small businesses.

Numida, founded in 2017, extends unsecured credit of up to US$3,500 in less than two hours while Payhippo, in a past interview, said it disburses average loans of US$1,300, with the minimum being about US$200.

As alternative finance providers, these digital lenders are closing the financing gap for small businesses, but at a higher interest rate when compared to formal banking institutions.

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