As part of its plan to promote financial inclusion in emerging economies, Uganda-based fintech Numida has chosen to concentrate its digital lending business on small businesses to close the gap.
Numida is currently looking for growth opportunities outside of Uganda due to an increase in demand for its services.
The company claims to have a successful business model that can be implemented across the continent to help MSMEs reach their full potential.
The pre-series A fundraising round, which was led by Serena Ventures and included Breega, Launch Africa, 4Di Capital, Soma Capital, and Y Combinator as participants and totaled $12.3 million, serves as the backdrop for the expansion plans.
MFS Africa, a preexisting strategic partner, also made a follow-on investment, and Lendable Asset Management provided the business with a $5 million loan.
Mina Shahid, CEO of Numida, made a statement saying, “I’m most pleased about continuing to develop and offer financial services and products for these small and medium-sized owners who, while working hard and operating successful firms, have been overlooked by the traditional financial services market.
Since there are so many of these companies operating all over the continent, we firmly believe that we have developed a Pan-African model in Uganda that will enable these companies to grow and accomplish great things.”
To reach its 40,000 target within the next 18 months, Numida intends to lend money to an additional 10,000 businesses.
This goal will be made easier to reach by the company’s entry into two commercial African markets (selected from Nigeria, Kenya, Ghana or Egypt).
Loans of $100 to $5,000 are given to businesses in its portfolio; these loans have interest rates ranging from 10% to 16% and are due after one month.
Numida, the first startup in East Africa to be accepted into YC (W22), considers a number of factors when determining credit, including the industry and cash flow.
Regular customers in good standing have their loans granted immediately, but new applications and regular customers looking for greater facilities must wait up to 24 hours.
The startup utilizes its own credit score model, which, according to Shahid, is based on the loans it has given to clients and information about their businesses.
He added that they function differently from most online lenders, who typically collect data from customers’ phone books and social media profiles as requirements for lending.
It is worthy to note that many of these lenders send out debt-shaming messages to the borrowers’ contacts.
The enormous demand for rapid loans has helped Numida grow more than 7.5 times since it raised its startup capital last year.
African small businesses can prosper thanks to the reliable range of financial and digital products being developed by Numida.
Numida encourages entrepreneurs to abandon pen and paper in favor of digitizing their business processes to transform their survival enterprises into growth companies.
Small business owners may manage their inventory, cash flows, and personnel using their mobile apps while also getting an overview of their business operations, including what they are purchasing, from whom, and for how much, and what they are marketing, to whom, and for how much.
These distinctive datasets are used by Numida to credit score business owners and provide them with simple, tailored, unsecured business loans within 24 hours.
Since its founding, the startup has given $20 million in operating capital to micro and small enterprises, increasing its monthly lending from $250,000 to $2 million.
As long as the firm continues to obtain debt support from organizations like Lendable, the value of loans is expected to rise. Shahid stated that they intend to keep improving their products to make them even more affordable in the interim.
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