Following a pilot in Kenya, Mastercard and consumer goods giant Unilever are expanding a digital lending initiative designed to help micro-entrepreneurs in developing countries get credit.
In Kenya, the two companies have launched Jaza Duka ('fill up your store'), combining distribution data from Unilever and analysis by Mastercard, on how much inventory a store has bought from Unilever over time.
The results from the analysis are used to provide a micro-credit eligibility recommendation to Kenya Commercial Bank, replacing the requirement for formal credit history or collateral, something which sees many entrepreneurs having to turn to informal lenders charging high interest rates.
If the micro-credit line from KCB is approved, the store owner is able to increase their purchases. For example, if a store is consistently showing weekly purchases of $50 from Unilever they could qualify for an interest-free credit line of $120 to stock their inventory. The credit line from KCB is provided through a secure Mastercard digital payment solution.
As part of the micro-credit, the partners are providing the store owners with training to help them manage their finances, inventory and forward planning for supply against demand. The entrepreneurs are also being trained on marketing tools and techniques to help sell their products.
By the end of April, more than 5,000 kiosk owners in the wider Nairobi area had applied to join the programme and all are expected to be fully enrolled by mid-May. Stores that fully moved to the new platform have grown their sales of Unilever products by up to 20%.
The two firms have now set themselves the target of getting 20,000 kiosks in Kenya on board by the end of the year and are also planning to expand to other African countries and Asia Pacific. They are also encouraging other financial institutions and consumer good suppliers to jump aboard.
Ajay Banga, CEO, Mastercard, says: "There’s an opportunity to set these businesses up for long-term growth by bringing together the tools and data from different industries to change the model of small business financing. We invite other companies and private sector leaders to join us in this collaborative approach and create a true network effect that will bring down barriers and trigger change.”