With all my meetings in Kenya, what I’m hearing most is that lending is capital intensive. No one is raising the saturation issue until I bring it up. It seems appetite is still there but capital is limited. Which is quite interesting given what we’ve been reading.
Whether the loans are predatory is another discussion.
There’s lots of unmet demand. One of the people I met said he could lend $1M today to a waiting list of vetted, good customers if he had the cash. And this is a very small lender.
There’s lots of unmet demand. One of the people I met said he could lend $1M today to a waiting list of vetted, good customers if he had the cash. And this is a very small lender.
What is emerging though is that banks are starting to enter the micro loan game they shunned for so long because it was not worth it. They’re now starting to use AI/ML to credit score and can therefore lend like startups.
The Kenyan market is the most advanced lending market in Africa with over 200 loan apps and MShwari. And there’s still a massive unserved market. The opportunity around lending on the continent cannot be downplayed.
Just think about markets like Uganda where this market is almost totally unserved. Then extrapolate that across the continent.
This is why one of the biggest opportunities on the continent is credit scoring and fraud prevention using machine learning. Literally every lender including banks will be your customer.
Add KYC and identity verification companies to the list of those that will be very successful. This is why I’m bullish about companies like @getappruve, @SmileIdentity and @voyanceHQ.
Africa is opportunity galore if you know how to spot trends. We have a few unicorn companies in the making.
That’s my B2B thoughts. I also have a theory about how B2C fintech will play out on the continent. But the number one rule is: don’t lose money and watch your unit economics.
Regarding lending to informal and formal SMEs as asked by @mwiyas this is indeed one of the other opportunities. Neobanks and other fintech companies will be looking to partner with other players to access markets and borrowers.
Lending to employees, SMEs and marketplaces like Uber or Safeboda drivers will be a big deal in addition to checkout lending as e-commerce picks up. We will unleash a beast in the market with massive capital in unprecedented ways. Imagine we had 30% of US credit penetration.
Thinking that a B2C fintech can acquire users 1X1 through Facebook or Google ads is buffoonery. The winners are the ones who will figure out unpaid and partnership distribution.
Down the road we shall see non fintech companies offer financial services. E.g. Uber lending to its drivers or SafeBoda to riders. Or a news publisher offering remittance services through fintech infrastructure built by the likes of Eversend. Invisible fintech.
