Zanifu, a Kenyan fintech firm has secured US$ 1 Million in seed funding that it intends to stock-finance micro, small and medium sized enterprises in Kenya as it also eyes expansion into Uganda and Ghana.
Saviu Ventures, which invested in the startup’s pre-seed round early 2020, Launch Africa Ventures, Sayani Investments and a number of angel investors from Kenya and Nigeria participated in the round.
This latest round brings the total funding so far received by the startup to US$1.2 million.
Zanifu provides short-term stock-financing of up to US$2,000 to MSMEs in Kenya and is eyeing an additional 15,000 FMCG retailers in the next one year.
“We serve FMCG retailers, especially the ones that are too small to access traditional bank finance for their businesses. The only option these MSMEs have has been digital consumer loans, which are not always suitable for them. We are filling a critical gap in providing stock financing, which enables small businesses to grow their turnovers by more than 40%,” said Zanifu co-founder and chief operating officer, Steve Biko.
The FMCG segment has the highest working capital needs within MSMEs, and the velocity of the goods they sell allows Zanifu to safely underwrite unsecured business credit to them.
Zanifu co-founders are Steve Biko and Sebastian Mithika.
Biko and Sebastian Mithika launched the financing business a year after founding the startup in 2017.
The startup has to date extended 85,000 working capital loans worth over US$13 million to 7,000 businesses in Kenya.
Mithika said that Zanifu is playing its role in bridging the US$20 billion (as estimated by the World Bank) MSME financing gap in Kenya experienced by 5 million small businesses, most of which are informal.
Zanifu financing model
Zanifu works with a number of 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 manufactures, distributors and retailers that ensure seamless ordering, payment, tracking and fulfillment.
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%.
A regional presence will step-up competition for the likes of Uganda’s Numida and Nigeria’s Payhippo, some of the fintechs providing unsecured financing to small businesses.