In Africa, the sources of business capital are usually personal funds, family, friends and loans. The first three are usually the ideal sources while the fourth is the most realistic.
As such access to affordable and readily available credit is key to the success and sustainability of businesses. Big and well-established businesses easily get funds from financial institutions because they have the required documentation and collateral security.
Unfortunately, the same can’t be said of start-ups, small and medium sized enterprises (SMEs). It even gets worse for informal businesses, which are the majority.
But with increasing uptake and advancement in technology, the future is looking brighter. Already, a few institutions are offering affordable digital loans to individuals and SMEs.
One of such organizations is Numida; a digital platform that provides convenient and unsecured working capital loans to African start-ups and SMEs. It doesn’t ask for paperwork, no collateral and the loan is processed within 24 hours. Since 2017, it has so far lent out over USD 16 million to SMEs (about UGX 60 billion), and USD 7 million just in the first half of 2022.
Numida is the 16th participant in the 2022 40 Days 40 FinTechs initiative.
We had a detailed conversation with Ana Grajales, the Numida Uganda Country Director. Below is what she had to say about Credit, FinTech, supporting Small Businesses, Women Empowerment and Financial Inclusion.
QN: To those hearing about you for the very first time, what is Numida and what do you do?
ANS: Numida provides unsecured working capital loans to micro and small businesses through our mobile app. Our loans require no paperwork, no field visits, no collateral, and are disbursed quickly.
We are working to be the first and largest mobile platform in Africa focused on offering digital, convenient, and responsible financial services to semi-formal African micro and small businesses. Our ambition is to enable at least 1 million small business owners on the continent to achieve their dreams by 2030.
QN: Who is eligible for your credit facilities? What does one need to access your credit?
ANS: The people eligible for Numida loans are those that follow in this category; own a business and have some kind of proof of ownership, have a National ID (or Passport or Driving Permit), and have mobile money numbers in their names.
If you meet these requirements, then the next step is to download the Numida APP and fill in details about your business and upload some photos. Numida staff will then contact you and follow up. The loan is then sent to your phone through Mobile Money.
QN: Tell us more about how you are supporting informal and undocumented businesses.
ANS: Our clients are businesses and business owners with different degrees of formality. From the mobile money shop around your corner; to your tailor or your favorite clothes shop or your local pharmacy. We lend them 30-day, working capital loans; starting from UGX 200,000 to UGX 10M; with flexibility that really matches the needs of the business. Our service is all about convenience. First time borrowers can get a loan within 48 hours of applying, and repeat customers can get their loan disbursed to their mobile money account in seconds; due to our efficient operations and proprietary technology.
QN: For the time you have been in business, how many Ugandans and local businesses have you extended credit to? How much credit have you given our so far?
ANS: We started lending to businesses in 2017; since then we have lent to more than 25,000 micro and small businesses. We have disbursed more than USD 16 Million worth of credit to this segment of customers and we are excited to keep helping micro and small businesses grow.
There are 1.1 million micro and small businesses in UG and they contribute about 75% of GDP, so it is about time that micro businesses have the right tech and financing to match their needs.
QN: How is Numida enhancing Women Financial Inclusion?
ANS: Because we tailor our requirements to the business needs, we have been able to serve more informal and undocumented businesses, which are also more likely to be owned by women. Currently women make up 48 per cent of our portfolio, and this has been intentional.
In terms of staff, we are 54 percent female and similarly split on managerial positions. We intentionally seek diverse team members and build an environment that can retain diverse talent and help them thrive.
QN: As an entity actively involved in the FinTech space, are you implementing Level One Project Principles which are Industry Best Practices such as Tiered KYC, Accessibility on Low-Cost User Devices, Real-time/Immediate funds transfer, Same-day settlement, Pricing Transparency and Irrevocability?
ANS: We use the same principles to design our product; though we apply them differently. Tiered KYC is allowing customers to engage with you with minimum requirements or less of a KYC burden; and our whole philosophy is lending to informal businesses that may not have all of the documentation or requirements needed by commercial banks.
Same day settlement is a core principle of our product; we give convenient loans and services, within 24 hours or within seconds; we settle transactions on a near-instantaneous basis. Our application shows customers their outstanding balance, at any time, as well as up-to-date information about their business and maximum loan quote.
QN: In your opinion, how does the 40 Days 40 FinTechs initiative support the industry?
ANS: The 40 Days 40 Fintechs initiative showcases the diversity and innovation in our space; visibility is important in facilitating attention, creating support and nurturing potential collaboration and partnerships. We are happy to take part.
40 Days 40 FinTechs.
Now in its third edition, #40Days40FinTechs has quickly grown into one of the world’s premier showcase events for the innovations that are enabling ever more people to join the digital economy space. That is surely going to remain the case, in large part due to the inspiration and collaboration that HiPipo partners – Level One Project, Mojaloop, ModusBox, and Crosslake Technologies generate, but mostly because of the continuing generous support of the Gates Foundation.
Run under HiPipo’s Include Everyone program that also encompasses other initiatives such as FinTech Landscape Exhibition, Women in FinTech Hackathon, Summit & Incubator and the Digital and Financial Inclusion Summit and Digital Impact Awards Africa; the #40Days40FinTechs platform aptly provides a setting for the various players and stakeholders involved in digital and financial technology to exhibit their products & Services and also share their ideas on how more of us, especially those unserved and underserved by the present financial systems, can be brought into the fold.
“The 40 Days 40 FinTechs initiative offers participants useful tools and an introduction to the industry’s emerging technologies, such as Mojaloop Open Source Software, and guidance from Level One Project foundational material. The skills gained from this initiative cover Level One Project Principles, Instant and Inclusive Payment Systems (IIPS), Inclusive Finance and FinTech in general,” noted Innocent Kawooya, HiPipo CEO.