After securing $1 million in Seed funding, Zanifu now eyes Uganda and Ghana markets
Zanifu has announced plans to upgrade its platform and grow the number of micro, small and medium enterprises (MSMEs) it extends stock-financing to after securing $1 million in Seed funding.
Saviu Ventures, Launch Africa Ventures, Sayani Investments and a number of other notable investors from Kenya and Nigeria participated in the round bringing the total funding the fintech has raised to $1.2 million.
“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%,” Zanifu co-founder and chief operating officer, Steve Biko told Techcrunch.
“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.”
Zanifu, which was founded by Biko and Sebastian Mithika in 2017, provides short-term stock-financing of up to $2,000 to MSMEs in Kenya and is eyeing an additional 15,000 FMCG retailers in the next one year. It has to date extended 85,000 working capital loans worth over $13 million to 7,000 businesses in Kenya.
Mithika said that Zanifu is playing its role in bridging the $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.
Despite the informal businesses contributing 33.8% of the Kenya’s GDP and providing 83.4% of employment outside of small-scale agriculture, access to financing remains the main impediment for the survival of the businesses in this sector. Zanifu thus is working with a number of manufacturers and distributors to extend the credit to these small businesses with retailers already sourcing products from the startup’s partners qualifying for the financing. Zanifu has created platforms for manufactures, 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. Retailers have up to a month to pay back the loans, which attract an interest rate of 3.5 to 5%. Zanifu is now eyeing to expand its markets beyond Kenya into Ghana and Uganda.