Kenya’s economy is fueled by informal enterprises, which contribute 33.8% of the country’s GDP and provide 83.4% of total employment outside of small-scale agriculture, according to data from the Bureau of country statistics. The contribution of these companies is essential to the country’s economy, but they remain underserved by traditional banking institutions, making it difficult for them to access the financing necessary for their growth.
On the other hand, the funding gap left by conventional banking institutions presented an opportunity for innovation, leading to the birth of fintechs like Asilimia. The Kenyan startup has provided a lifeline for merchants in Kenya over the past three years by enabling them to conduct mobile money transactions without transfer fees through its Leja app.
And now, after securing $ 2 million in pre-seed funding ($ 1 million in equity and $ 1 million in debt), the startup is heading into its next phase of growth, which will involve granting merchant loans offering more relief to this sub-group which is often overlooked. and considered high risk by the traditional banking sector.
Funding came from various investors including Fredrik Jung Abbou; a two-time unicorn founder and Norrsken Impact Accelerator, while the roundtable benefited from the participation of the French public investment bank (Bpifrance) and GreenTec Capital Partners.
Asilimia is set to use the funding to hire talent as it seeks to refine its technology and expand into another market in East Africa. It will also provide loans to micro, small and medium enterprises (MSMEs) based on data from its Leja app.
“We have entered a phase where we are exploring ways to extend much needed credit for traders to purchase equipment or products to support their businesses,” Asilimia co-founder and CEO Tekwane Mwendwa told TechCrunch.
Morgane Kablan, is the other co-founder and COO of the startup.
By providing mobile loans, Asilimia will join a space that has around 100 lending apps, including Branch by San Francisco, Branch International Ltd and Tala, supported by PayPal.
The Digital Lenders Association of Kenya told TechCrunch in a previous interview that about 25 apps it represents spend around $ 40 million per month. The apps offer unsecured loans, which makes them attractive to borrowers looking for quick cash.
In addition to allowing users to conduct mobile money transactions at no cost, Leja also supports accounting, making it easier for merchants to track their income and outflows, without the need for technical or accounting knowledge. The platform provides valuable data that Asilimia plans to use to provide loans to users.
Mwendwa said Asilimia will create credit scoring models from the data collected to determine the amount that will be extended to borrowers.
“We will take into account their b2b transactions, cash flow, sales, debts and expenses, because all of that information is in the app. This is possible because traders love to use our app which unlike other loan apps has inventory management. I like to think of our app as the operating system for informal businesses and we are happy that it is a one-stop-shop for traders, ”Mwendwa said.
“Another thing that traders struggle with is airtime reloading. We interact with them on a daily basis and understand their weak points, and therefore we want to give them all the support they need so that they can continue to do business – we will also extend the interest-free top-up credit, ”he said. -he declares.
Tekwane said a normal user makes about three transactions through the app every day and the business has grown by 30% week after week. Around 27,000 users use its apps, with total transactions made through the Leja app reaching around $ 20 million.
Previously, the startup had gone through the prestigious Station F incubation program in Paris and the Norrsken Impact Accelerator program. In 2019, the startup won the Africa Cup at the 2019 SA Innovation Summit, securing an investment of $ 350,000 from Unicorn Group, a pan-African investment company. He used the funding to fund his growth, which included adding Leja to his portfolio.
Beyond East Africa, Asilimia is exploring growth opportunities in other regions as it seeks to continue to close the funding gap currently faced by traders across the continent.
“MSMEs play a vital role across Africa and facilitating their success is tremendous for the continent as a whole,” said Funda Sezgi, Co-Founder and CEO of Norrsken Impact Accelerator.
“Tekwane and his team have come up with a solution that works and we are delighted to support them as they contribute to prosperity in a key sector for the African economy. “