Chari, a Moroccan B2B e-commerce and e-commerce startup, has bought Axa Credit, the credit arm of Axa Assurance Maroc, for $22 million.
The announcement follows Chari’s recently completed seed expansion round, which valued the company at $100 million and saw it start providing BNPL services to its clients. It is one of the few African startups that has made its valuation public.
In sections of French-speaking Africa, mainly Morocco and Tunisia, Chari digitizes the relatively fragmented FMCG sector.
It runs a smartphone app that connects small merchants in these two nations with FMCG giants and local producers, allowing them to place orders and get products in under 24 hours.
Karny.ma, a Moroccan credit book, was bought by the YC-backed business last October. About 50,000 retailers use the Khatabook-like platform for credit and bookkeeping. It enables these businesses to manage the credit they extend to their clients.
Chari is one of the rare, if not the only, startups to purchase a local branch of a multinational bank with the acquisition of Axa Credit, the Moroccan credit arm of the French-based Axa Group. According to Chari, the deal is still awaiting permission from Moroccan banking, insurance, and antitrust authorities.
Axa was pulling its credit enterprise to its core insurance business—from Morocco, according to CEO Ismael Belkhayat, who regarded Chari as a good fit to take over.
“I believe they chose Chari because they feel we are the ones who can do financial inclusion,” said the CEO, who co-founded the company with his wife and COO, Sophia Alj.
Unbanked, underbanked, or unable to verify recurrent income are all options. They may find it difficult to obtain a loan since lenders require them to demonstrate financial stability in order to repay, which is nearly impossible for them to do because they do not have bank accounts.
Chari believes it can assist this group of people, but how does it plan to lend to them and be refunded if they have no credit record or database on which to judge their creditworthiness? Belkhayat believes that acquiring Karny is the solution.
Customers in Morocco are typically given minor loans by merchants and store owners. Karny is the tool that these merchants use to keep track of money coming in and out of their store. As a result, purchasing Karny provides Chari with vital information about the loans that these merchants provide to their clients.
Chari provides merchants with a free credit line; the expense of the loans is passed on to FMCG manufacturers in the form of a greater distribution margin.
Suppliers receive data on the SKUs they sell to each retailer in exchange. Chari provides greater credit lines to shop owners who want to offer loans to their end customers, and Chari shares the data collected from Karny (on end customers’ purchasing behavior) with FMCG firms who pay for the higher loans.
With the acquisition of Axa Credit, Chari will be able to begin extending credit to its FMCG B2B clients (which it already does), who will then be able to lend money to their consumer clients. It’s a B2B2C financing model, if you will.
Shop owners, according to Chari, know their customers’ spending habits, where they reside, and when and how they get compensated, and can thus undertake the credit risk analysis that a traditional bank cannot.
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