Kenyan fintech, Zanifu clinches $1M to close MSME financing shortfall in Africa, plans Ghana and Uganda expansion

Kenyan fintech, Zanifu clinches $1M to close MSME financing shortfall in Africa, plans Ghana and Uganda expansion

Zanifu, a Kenyan fintech startup is set to upgrade its platform and expand the number of micro, small and medium enterprises (MSMEs) it offers stock-financing to after raising $1 million in Seed funding.

This round is the second investment from Saviu Ventures, having earlier invested in the startup’s pre-seed round in 2020. Other investors that took part in the round include Launch Africa Ventures, Sayani Investments, and several angel investors from Kenya and Nigeria. This round has taken the total funding received so far by the startup to $1.2 million.

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%. The startup 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 year.

Steve Biko, Zanifu’s Co-founder and Chief Operating Officer said that the startup stepped in to fill the gap created by the traditional financial institutions in respect to access to loan facilities for the smaller MSMEs.

“Zanifu interest is in the FMCG retailers market, especially the ones that cannot access the traditional bank finance for their businesses. This critical gap in providing stock financing, which enables small businesses to grow their turnovers by more than 40%, is what Zanifu is filling.”

“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.” He added.

Steve Biko and Sebastian Mithika launched the financing business a year after founding the startup in 2017. The startup said 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.

The informal businesses in Kenya are an integral part of the economy contributing 33.8% of the country’s GDP and providing 83.4% of employment outside of small-scale agriculture. However, access to financing remains the main impediment to growth for these micro and small businesses. And thus, over the last few years, fintech companies like Zanifu have introduced products that are tailored to the financing needs of the MSMEs.

Zanifu works with some 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 manufacturers, distributors, and retailers that ensure seamless ordering, payment, tracking, and fulfillment.

Zanifu, which has a presence in Kenya, is considering expanding into Ghana and Uganda. A regional presence will step-up competition for the likes of Uganda’s Numida and Nigeria’s Payhippo, some of the fintech providing unsecured financing to small businesses.