A fresh innovative project aimed at supporting financial service providers in identifying informal entrepreneurs eligible as candidates for credits and loans is blowing through the Kenyan SME ecosystem
FA Global, Shujaaz Inc, and the Financial Sector Deepening Kenya (FSD Kenya) are rolling this out and the aim of the project will aid in connecting 1500 young micro-entrepreneurs with financial support that will accelerate their businesses post-COVID-19.
FSD Kenya builds financial solutions for low-income households, enterprises, women, and youths, while BFA Global is a firm focused on research, advisory, data analytics, and product innovation.
The solutions built by FDS Kenya will contribute to a more sustainable and inclusive economy by working with tech innovators, development organizations, policymakers, financial service providers (FSPs).
The project is two-year tenured, and already in its second phase, but phase one was centered around a study that was built to identify young entrepreneurs with high potentials that can succeed in an economy.
The use of alternative data sources was applied in the study to make accurate predictions, reporting that 63% of businesses with a better output after one year as their average reported sales rose by 70% and 140% higher gross profit levels.
Amolo Ng’weno, CEO of BFA Global, in an official press release, commented on its aim to guide investors to candidates that bag high potentials and are also young entrepreneurs under the bracket of “unbankable” due to financial service providers having little or no data on them.
“The results of our first study demonstrated that it is possible to discern varying entrepreneurial abilities, based on alternative data.
This group of young entrepreneurs would benefit greatly from both financial and non-financial support, but right now they are considered ‘unbankable’ by most financial service providers due to lack of data.
What we intend to prove in our upcoming study is if micro-entrepreneurs’ propensity to succeed in their business also correlates with their propensity to successfully pay back working capital loans and recover from the impact of COVID-19.
This data has can offer financial services institutions, development organizations, and governments new insights into which individuals they should be investing in to build economic opportunity and growth.”
On the benefit of the project
Young entrepreneurs will be afforded financial aid adapted to their needs throughout the year.
Also, Shujaaz Inc will offer 1500 young entrepreneurs a chance to gain peer-to-peer training which allows them to network and connect with an array of young entrepreneurs through an online platform.
BFA Global, FSD Kenya, and Shujaaz Inc want to jump on the follow-up study to build innovations based on using alternative data to have young entrepreneurs prove they are capable of repaying loans.
The lack of access to finances to accelerate their businesses has eluded three million of Kenya’s young informal sector micro-entrepreneurs from the formal financial sector.
Shujaaz Inc.’s innovative beta-phase venture will do the job of implementing customised financial services for businesses, and it is now one of many social ventures that reach 7.5 million young people across East Africa.
How financial institutions come into play
As young entrepreneurs do not receive sufficient external funding to grow their businesses as they should, financial institutions have a part to play, thus they’re coming into the fray
With COVID-19 hitting businesses with funding restraints and an inability to grow, the study developed by BFA Global, Shujaaz Inc, and FSD Kenya will afford a doorway for young entrepreneurs to receive funding through networking to recover and rebuild their business post-pandemic.
Now here’s the question that prompted the basis for the study BFA Global, Shujaaz Inc, and FSD Kenya was developed to answer… “How can one tell between future successful entrepreneurs and the ones lacking the ability or desire to seek growth and scale?”
Multimedia youth platform, Shujaaz came into play to receive informal skills and ideas via SMS surveys from users to help create an innovative methodology to predict high potential candidates.
The study results were then collected, justified by in-person visits to the entrepreneurs, and then follow-up surveys that, for a year, tracked their progress.
Featured Image: thecommonwealth.org
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