Insight & Analysis

Africa’s cash starved SMEs get a boost from another supply chain finance offering

Published: Oct 2022

One of the most enduring challenges for Africa’s SMEs is access to finance. Standard Chartered’s SC Ventures new spin off Solv offers some respite, as other providers also roll out solutions.

Like many African economies, Kenya’s estimated ten million micro, small and medium sized businesses (MSMEs) employ around 85% of the population and contribute close to 30% of the country’s GDP. These vital businesses are buffeted by headwinds including immature infrastructure, a skills gaps and digital literacy, but access to affordable finance is arguably the most challenging. The latest innovation from Standard Chartered’s fintech and innovation unit SC Ventures hopes to change the situation.

Solv, now launched in Kenya following on from a 2020 launch in India, aims to bring 10,000 Kenyan MSMEs onto its supply chain finance platform in its first year, transforming small businesses’ ability to tap affordable credit. The platform gives access to multiple financial institutions that offer financing solutions based on the MSME’s risk profile.

“We are very excited to go to market following a successful pilot which saw over 3,800 MSMEs and more than ten multinational companies participating and engaging on the platform in ways that have altered the course of MSME business in Kenya. We are looking at signing up 10,000 businesses by the end of this year,” says Sheila Kimani, Solv Kenya’s CEO.

Larger Kenyan companies engaging on the platform include Outlook Index, a transport and logistics group, already benefitting from its tail of suppliers onboarding. “Since enrolling on the SOLV platform, my customers are now able to buy more stock using the working capital solution from Solv,” says Catherine Muchai, General Manager of Outlook Index.

Access to supply chain finance is growing in Africa. Earlier this year, Citi signed a risk-sharing deal with British International Investment, the UK’s development finance institution, to increase its supply chain finance volumes in the region by around US$400m a year.

Elsewhere, African retailer Shoprite Group has partnered with Demica, the UK fintech, to provide supply chain finance to its suppliers in the first deal of its kind in the food retail industry. Demica’s supply chain finance platform gives Shoprite’s suppliers early access to payments and enables Shoprite to extend the programme to a larger ecosystem of suppliers. Demica has also partnered with Afreximbank to bring supply chain finance solutions to the African continent.

Still, according to a 2020 study by the African Development Bank and Afreximbank, the continent’s trade finance gap reached more than US$81bn before the pandemic since when it has increased further.

Solv is the latest spin out from SC Ventures. Promoting innovation, it invests in disruptive financial technology and explores alternative business models. It has incubated over thirty ventures across a number of high conviction themes that includes SMEs, trade and technology, seeking out solutions to real-time payments, financing and liquidity as well as how corporates can integrate ESG into their supply chains. Solv encapsulates SC Ventures belief that technology is changing the role not just of banking but also corporate treasury, and how companies interact with their banks.

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