DeFi Lending for Kenyan MSMEs
Developed in partnership with Mercy Corps Ventures
SympliFi, Kwanza Tukule, UTU, and Kotani Pay piloted the used of DeFi lending products to offer a Buy-Now-Pay-Later solution for informal vendors in Nairobi, Kenya.
Website: Link
HQ: Nairobi, Kenya
Active Markets: Africa
Problem Addressed
Informal food vendors in Nairobi experience high costs of goods and limited access to financial products—in particular, financing — impeding their ability to grow and sustain livelihoods. Across emerging markets, Africa included, micro, small, and medium-sized businesses (MSMEs) are the engine for economic growth and job creation, and yet face persistent gaps in financing. MSMEs face a $421 billion financing gap despite accounting for more than 90 percent of businesses and almost 80 percent of employment.
Project Description
In 2022, Mercy Corps Ventures launched a pilot with SympliFi, Kwanza Tukule, UTU, and Kotani Pay seeking to increase access to credit for food vendors in Nairobi. SympliFi’s DeFi lending platform provided inventory financing through global blockchain stablecoin pool liquidity and a Buy-Now-Pay-Later (BNPL) product. Kotani Pay then off-ramped credit payments into local currency for borrowers. Credit was offered at terms of 1 day or 1 week for a flat transaction fee, targeting an APR up to 50% cheaper than comparable traditional digital loan offerings. The blockchain technology is able to reduce several barriers at once, including high transaction costs, long processing times, and collateral requirements, while using stablecoins to reduce the risk of volatility typically associated with cryptocurrencies.
Lenders contributed fiat into a SympliFi digital wallet which was then converted into stablecoin and then Kenyan Shilling through Kotani Pay. Kwanza Tukele facilitated vendor payments on BNPL products, before payments and fees were converted back to stablecoin through Kotani Pay and deposited into SympliFi liquidity pools. Lenders then withdrew principals in addition to accrued yield.
Business Data
Status: Pilot complete
Constituency Served: Micro, small, and medium-sized businesses (MSMEs)
Networks: Circle
Known Investors: Mercy Corps Ventures
Additional References: SympliFi, Kwanza Tukule, UTU, Kotani Pay Pilot Launch Article
Progress to date
The pilot launched in July 2022. 78% of vendors in the pilot saw an increase in purchasing power, 20% of which diversified their product range.
Business Model
The BNPL product was offered for a flat transaction fee targeting a 36-48% APR.
Traction
288 eligible vendors participated in the pilot, receiving a total of USD$244,451 in disbursed BNPL products. 87% used the BNPL product at least once, on average 11 times per month, seeing a 95% month-over-month retention rate. Over 5,500 BNPL products were provided through the pilot, seeing a 75% customer satisfaction rate. 78% of vendors accessing the product reported expanding their business as a result of participation.