Zanifu, a Kenyan fintech that provides short-term stock financing to enable access to working capital for Micro, Small & Medium Enterprises, (MSMEs), has received seed funding of $1 million (R15 138 30,00).
The funds will be used by the startup to improve its platforms and empower more MSMEs.
Launch Africa Ventures and Sayani Investments participated in the round, which brought the total amount of funding received by the startup to $1.2 million (R18165 9960,00).
We serve FMCG retailers. Digital consumer loans are not always available for these MSMEs. Steve Biko, Zanifu’s co-founder, chief operating officer and chief executive officer, stated that we are filling a critical need in stock financing. This allows small businesses to increase their turnovers by over 40%.
“The FMCG sector has the greatest working capital requirements among MSMEs. The speed of their goods allows us to underwrite unsecured credit to them.
Biko and Sebastian Mithika founded Zanifu in 2018. They launched the financing company in 2018, one year after the startup was established in 2017. The startup has provided 85,000 working capital loans in excess of $13 million (R1 667 979 00,00 to 7,000 Kenyan businesses) so far.
Informal businesses make up 33.8% of Kenya’s GDP. They also account for 83.4%, outside of small-scale farming. Access to finance is still a major obstacle to growth, despite this.
Zanifu’s app allows retailers to upload historical purchases, which the fintech algorithm evaluates before allocating a credit limit. Retailers have up to one month to repay the loan after it is approved. The interest rate ranges from 3.5 to 5.5%.
The World Bank states that “Small and Medium Enterprises, or SMEs), play a significant role in many economies, especially in developing countries.” SME’s make up the majority of all businesses in the world and contribute to global economic development and job creation. They account for approximately 90% of all businesses worldwide and provide more than half of the employment. In emerging economies, formal SMEs can contribute as much as 40% to national income (GDP). These numbers are even higher when informal SME are included.
According to the organisation, “Access to finance is a major constraint to SME growth. It is the second most cited barrier facing SMEs in order to grow their businesses into emerging markets and developing nations.” SME’s are less likely than large companies to get bank loans. Instead, they rely on their own funds or the cash of friends and family to start and run their businesses.
After the successful funding round, Zanifu now plans to expand into Ghana and Uganda. This is the current market for Fintech Startups Numida and Payhippo which both offer unsecured financing for small businesses.