NB: Local partner Umati is now focussing more on providing working capital loans to online sales companies in Kenya. Typical customers look to Umati to provide customised and collateral-free working capital using historical transaction data and a lien on their cashflows. Default risk and currency exchange risk still covered.
Mike and his crew make high end, modern furniture from a low-income area of Nairobi. They are now able to use the internet and such platforms to sell to middle-class consumers in richer neighbourhoods. In Mike's case, his first USD 300 loan was used to buy supplies enough to make 15 or so beds.
Mike like other Umati Capital borrowers uses an e-commerce classifieds platform to advertise their products online to a large audience increasing sales opportunities for their usually small and medium scale businesses in the country.
The small businesses will typically be run on a lean basis but have very professional high-quality storefronts and online presence on the e-classified's platform. In this way, smaller shops are able to make a sale to consumers that typically would never have physical contact with under normal circumstances.
It is worth noting that in this group of 400 borrowers, 55% of the borrowers are women. On average, the monthly turnover of the group is about 1000 $ per month per month, translating to an average take-home income/profit of about 100 $ per month.
Products sold on the platform are all legally tradeable goods sold in Kenya with the most popular categories being Mobile Phones and Accessories, Apparel and Home-Living (fixed) goods such as furniture.
The purpose of this loan is to provide short-term working capital USD 300 loans to a group of 400 small business borrowers aggregated on the platform.
In providing efficient, well-timed working capital to these businesses, we approximate that borrowers should see an increase in take-home income as the working capital.
This loan represents the first time these legally operating businesses will be assessed and provided credit based on data of their performance as businesses.
In Mike's case, "The banks allow us to open accounts and to keep the money we have, but as soon as they hear we are from the low-income neighbourhood, even standard small business credit is out of the question."