Asilimia, a Kenyan fintech firm that is developing a digital infrastructure to connect African MSMEs to the formal financial economy, has received $2 million in funding to expand its workforce, provide additional services, and enter new markets in East Africa. The firm received $1 million in pre-seed capital from a diverse group of investors, including Fredrik Jung Abbou (co-founder of Kry and Lendo), Norrsken Impact Accelerator, and other famous European startups, while Bpifrance and GreenTec Capital Partners helped it raise $1 million in a debt round.
The pre-seed funding will assist team growth and expansion, while the loan finance will allow Asilimia to lend credit to MSMEs, allowing them to scale their operations. “Our objective over the last several years has been to establish a solution that works,” Tekwane Mwendwa, CEO and co-founder of Asilimia, told the press. “This new funding will help us to take it into new markets and influence the lives and livelihoods of more business owners.”
Asilimia claims to be on a mission to improve the digital financial infrastructure of Africa’s highly fragmented and paper-based informal economy and to close the $360 billion credit gap affecting the continent’s 150 million SMEs. MSMEs are classified as high-risk by traditional financial institutions despite accounting for more than a third of Sub-Saharan Africa’s GDP due to a lack of integrated data.
Even in Kenya, which has a higher rate of financial inclusion than the rest of the continent thanks to the introduction of M-Pesa, the majority of MSMEs still use pen and paper to record their transactions, and mobile money transaction fees account for 30% of their earnings. This integrated and verifiable company data lowers the risk of business owners utilizing a variety of financial services, such as insurance, savings, and loans, to meet their individual needs, accelerate growth, and encourage community development. The startup is expanding at a rate of 30% per week, and each user uses the app 90 times per month on average.
“Africa’s informal enterprises are the backbone of its economy,” says Mwendwa. “We aim to unlock their GDP to fuel further growth and development across the continent.” Our focus over the previous few years has been on developing a viable solution, and this extra funding will allow us to expand into other markets and have a greater influence on the lives and livelihoods of more business owners.
Informal enterprises drive Kenya’s economy, accounting for 33.8% of the country’s GDP and 83.4% of overall employment outside of small-scale agriculture, according to figures from the country’s statistics department. These businesses are critical to the country’s economy, but they are underserved by traditional financial institutions, making it difficult for them to obtain the capital they require to expand.
Asilimia intends to use the funding to hire people while refining its technology and expanding into another East African region. It would also lend to micro, small, and medium-sized businesses based on data from its Leja app (MSMEs).
“We’ve entered a phase where we’re looking into ways to provide much-needed loans to help merchants buy equipment or products to keep their businesses going,” – Mwendwa says.
Asilimia plans to join a market of approximately 100 lending applications, including Branch by San Francisco-based Branch International Ltd and PayPal-backed Tala, by delivering mobile loans.
In a previous interview with newsmen, the Digital Lenders Association of Kenya said that approximately 25 apps it represents, disburse about $40 million every month. Borrowers looking for quick cash will find the applications appealing because they provide no-collateral loans.
Leja not only allows users to execute free mobile money transactions but also provides bookkeeping, allowing traders to track their income and outflows without requiring technical or accounting knowledge. Asilimia wants to exploit the platform’s valuable data to provide loans to customers. Asilimia will construct credit scoring models based on the collected data, according to Mwendwa, to determine how much would be extended to borrowers.
“Because all of this information is in the app, we’ll factor in their B2B transactions, cash flow, sales, liabilities, and expenses.” This is achievable because traders enjoy using our software, which, unlike other loan apps, allows them to manage their inventory. “I like to think of our software as the operating system for informal enterprises, and we’re glad it’s a one-stop-shop for traders,” He added
Airtime top-up is another issue that traders face. “We contact them on a regular basis and are aware of their concerns, so we want to provide them with all of the resources they need to continue doing business — we will also provide no-interest airtime top-up credit,” he concluded.
The company has already completed the acclaimed Station F incubation program in Paris as well as the Norrsken Impact Accelerator program. The startup won the Africa Cup at the 2019 SA Innovation Summit and received a $350,000 investment from Unicorn Group, a pan-African investment group, in 2019. It used the money to expand its business, including adding Leja to its portfolio. Beyond East Africa, Asilimia is looking into expanding into other regions to continue bridging the financial gap that traders across the continent are experiencing.
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