What happens when retail SMEs are able to instantly access KES 100K up to KES 10 Million worth of stock financing, for up to 7 days, at fixed interest rates under 0.5%, all from their smartphone?
We are about to find out.
Last week Absa Bank Kenya announced Wezesha Stock, a realtime platform providing digital ordering and instant financing to retail SMEs in Kenya, powered by Finplus Group. Absa Kenya CEO Abdi Mohamed committed to lend KES 100 Billion ($660 Million) to SMEs on Wezesha Stock.
The launch follows a successful pilot in Kenya and approval by the Central Bank of Kenya. This credit will be available to SMEs in the Fast Moving Consumer Goods, Agro-processing, Agro-chemical and Oil marketing value chains for a start, with more to come.
Wezesha Stock’s value proposition to these value chains is simple:
- Retailers can order inventory for their business and pay via their credit line instead of paying upfront, which frees up cashflow for other business activities.
- Suppliers are paid upfront for financed orders which also frees up their cashflow and enables them to sell more without taking on any credit risk themselves.
- Manufacturers & Distributors gain realtime visibility of their entire ecosystem through the Wezesha Stock dashboard.
It’s a win-win-win.
The immediate market response has been overwhelming. Early access requests are growing and targets are already being revised upwards. Seeing customers immediately challenge us to extend our first quarter ambitions by over 10X led me to an epiphany — I have been thinking about this wrong.
For the past few years our stated goal at Finplus has been to help close the $330 Billion credit deficit that African SMEs face each year, but that was the wrong goal. At least the wrong framing. This past week has helped me realise the credit gap can never really be closed. In fact, success in this arena probably means the credit deficit will grow larger in step with access. It turns out that once you make affordable credit abundant, several things happen:
- Otherwise sound businesses facing cashflow challenges can now survive longer, so suddenly there’s more of them to lend to
- Those that do well become more ambitious, grow more aggressively & thus need more credit in the future
- New businesses are started using this credit that might otherwise never have been started
The combined effect is a credit demand curve that always rises in step with the credit supply curve. I’m now convinced it is unlikely the two curves will ever meet.
In light of this, we have reframed our goal to more accurately capture the impact we are creating. We are no longer trying to close the credit deficit — instead our impact will be measured by how many businesses we help access meaningful and affordable financing to grow.
Finplus is on a mission to unlock meaningful & affordable financing for 10 Million SMEs in Africa, and this product along with its KES 100 Billion pool of capital at the ready, marks a step-change in the speed at which we can progress towards that goal in the first of many markets.
3 emotions coexist in me at the moment:
- I’m so incredibly proud of the Finplus Group team for delivering such a compelling solution after years of work.
- I’m grateful to Absa for trusting in our vision for the future and backing it to the tune of $660M.
- I’m excited to see what this kind of access to meaningful & affordable working capital will make possible for SMEs.
This is not just another product running on our platform. It’s fuel for an economic engine that is directly responsible for millions of livelihoods. My parents ran multiple businesses which I observed growing up. Most were low-margin, capital-intensive businesses & every major growth milestone required credit from a bank, always backed by collateral in the form a land title which they were incredibly fortunate to have. Absent the credit, their businesses would likely not have survived multiple waves of economic turmoil as long as they did, or grown beyond the initial stage. Most SMEs are not fortunate enough to have a land title to offer as collateral — we built this for them.
The rocket ship is now leaving the ground and despite the fact that building it took years of work, I believe that was the easy part. Iterating for the nuanced needs of each value chain while scaling it across and beyond Kenya is where the rubber meets the road. We welcome the challenge and cannot wait to look back in 1 year to see how far from the launchpad we will have pushed our retail SMEs.
If you are a retailer, wholesaler, distributor or manufacturer interested in early access to Wezesha Stock, click here and turbocharge your business.
For now, it’s back to the quiet, gruelling grind of putting that dent in the universe.
By Kageni Wilson — CEO, Finplus Group
