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Anyone who knows about the problems associated with the lending industry in Africa, especially for women enterprenuers or SMEs, would definitely understand what Hilary Clinton was talking about on ‘the Goldman Sachs 10,000 Women: Proving the Case for Women Entrepreneurs’-She said, “It’s a big market and somebody’s gonna serve it”
Lack of funds for Micro and Small Enterprises still remains one of the greatest obstacles to economic growth. It’s not a secret that many SMEs in developing countries are not catered to by banks because they are perceived as high risk category. But that’s slowly becoming a thing of the past, thanks to the power of digital information.
Well, finally someone has decided to disrupt the financial services industry in the emerging markets. A few Silicon Valley-backed start-ups are slowly stepping into the business of lending to micro / small business entities engaged in Agriculture, Farming, and Manufacturing, Trading, Transport and Logistics. They are looking to support SMEs, Microenterprises and grant them access to much needed capital.
So, who are they and how do they work? In Kenya for example, Saida one of them, which uses information collected from Apps to look at how people use their smartphones and in turn analyse the data and the users’ behaviour traits to place them on a credit worthiness scale. (How excatly does Saida work?)
Another similar one is Branch, a for-profit, socially-conscious company based in San Francisco and Nairobi. Branch was co-founded by Matthew Flannery who is also the co-founder of KIVA.Org. Similarly, Inventura and Lendup are other great technologies among many, that are helping to solve the problem of limited access to financial grants in emerging Markets.
More on how these App-based Lending startups operate
Thanks to technology, a report by Omidyar Network suggests that between 300 and 580 million people without a credit rating could benefit from app-based lending.
More depth information about the “Lending Startups Look at Borrowers’ Phone Usage to Assess Creditworthiness” On WSJ
Marvelous. I will be looking for expansion of this development within Africa. It will definitely increase financial inclusion.