AkibaDigital: The S.A. Data Analytics Start-Up Poised to Disrupt SME Lending
The International Finance Corporation (IFC) estimates that there is a USD331 billion[1] funding gap for SMEs in Africa and with the majority of enterprises being housed in the informal sector, the reticence by financiers to engage has been a major bottleneck to growth. However, we are witnessing a gradual shift with fintechs offering digital solutions by providing some comfort to lenders, of which South Africa’s AkibaDigital is one.
Filling the Data Gap
Led by female entrepreneur and software engineer, Tebogo Mokwena, Akiba Digital’s recent pre-seed investment of USD1.1m by Yes Capital and accelerator Expert Dojo among others should see the company expand its reach across Africa in support of the SME ecosystem through financial intelligence. Fully aware of the negative bias towards SME lending, often driven by the absence of reliable data or credit history, Akiba Digital uses “inclusive” scores, compiled from financial and non-financial datasets, to score SMEs. Cloud-based software accounting company, Xero SA, conducted a survey of small business decision-makers in South Africa where it emerged that just under half of those surveyed shared that they were unsuccessful in taking out a loan from a bank or traditional lender. The survey also revealed a lack of awareness of alternative forms of lending, with 70% of respondents unaware of what these could be[2]. This context is what makes Akiba Digital’s potential to transform the funding landscape so compelling. Mokwena shares: “We are looking to partner with lenders who want to help SMEs rebuild their businesses. Through this initiative we, as Akiba Digital, will be zero-rating the loans provided by lenders (who fund the loan fees) on behalf of the SMEs. Lenders who partner with us will get the SME leads that we score and vet using our lending intelligence solution[3].”
Outlook - Such a Time as This
Akiba Digital is among the first and few startups in S.A to use intelligent data tools to provide data credit scores for SMEs which have typically been excluded from lending circles because of an absence of robust risk assessments. Yet this innovation which acts as a marketplace to draw in lenders and enterprises has the potential to change this narrative, especially at a time when the imperative for financing SMEs is all the more evident. Indeed, data suggests that the majority of SMEs which applied for C-19 funding in South Africa – 68% - was rejected[4].
*Photo credit: Shahadat Rahman
[1]https://pressroom.ifc.org/all/pages/PressDetail.aspx?ID=17513
[2]https://www.smetechguru.co.za/smes-face-barriers-to-necessary-finance-but-alternative-lenders-offer-hope/
[3]https://www.itweb.co.za/content/KPNG878KmZ4v4mwD
[4]https://www.smetechguru.co.za/smes-face-barriers-to-necessary-finance-but-alternative-lenders-offer-hope/
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