· Since July 2017, 645 working capital loans worth >$78,357, were disbursed
· 85% of SME’s repeated loan process
· Only 3% NPL rate, 6% better than industry average (9%)
· Participating SMEs recorded an average 82% increase in revenue
25th July 2018, Nairobi: At the Smart Duka Stakeholder’s Forum in Nairobi, TechnoServe and 4G Capital today announced results from a year-long pilot partnership in which TechnoServe’s Smart Duka program integrated 4G Capital’s Kuza working capital retail credit service to blend business training with small enterprise loans.
The pilot scheme began in July 2017 and sought to address the barriers to growth faced by small retail business owners across 10 neighbourhoods in Nairobi.
Kenya’s informal retail sector is predominantly populated by Micro-SMEs. Although ‘small’, according to research provided by Nielsen (2015), they generate 70% of Kenya’s retail revenue with 95% of shoppers frequenting these businesses (known as ‘Dukas’) to stock up on day-to-day products.
Despite their critical role, many Dukas face challenges resulting in low earnings. These include poor record keeping and inventory systems, financial management and customer relationship skills, as well as limited access to appropriate financial services.
It is almost impossible for Duka owners to receive loans from commercial banks without providing substantial collateral and satisfying vigorous data requirements. This finance gap contributes to the stifling of growth and opportunity.
4G Capital offered TechnoServe’s Smart Duka business education program an SMS based credit service designed specifically for the micro-retail sector. Kuza, (which means “growth” in Swahili) supports the needs, business cycles and cost base of micro-retailers.
Historic performance data from each participating Duka was fed into 4G Capital’s unique algorithm to assess loan affordability. Duka owners were given expert advice that enabled them to increase stock of items that carried higher margins and greater revenues. Once customers repaid their loans, they qualified for repeat credit to match their business cycle and growth.
645 working capital loans, worth >$78,357, were disbursed over the period, at a timescale and price-point designed around clients’ business dynamics. Average loan size was $120. Interest rates were capped at a maximum of 8% of the amount borrowed. 85% of Smart Duka beneficiaries accessing Kuza took repeat loans.
TechnoServe’s Smart Duka survey reveals an 82% increase in revenue for Kuza customers, whereas those who did not use Kuza saw a 12% increase in revenue.
This partnership has broken new ground in financial inclusion and enables us to set new standards in the way African enterprises are supported. Our approach of blending training with access to credit makes a tangible and positive impact to our customers’ financial wellbeing. We are now able to partner with almost any distributor to provide the right credit solution for small businesses, boosting sales across the entire value chain.
- Wayne Hennessy-Barrett, CEO & Founder of 4G Capital
Kuza offers a safe way for informal traders to really grow their businesses while serving consumers at the bottom of the pyramid more effectively. Kuza offers a sustainable way for the micro-retailer sector to grow and be a vital cog in raising standards of living for a large number of Kenyans.
- John Logan, TechnoServe Country Director for Kenya
Further to the success of the pilot scheme, 4G Capital will continue to support Smart Duka beneficiaries in Kenya and other partnership programmes in Uganda.