Kotani Pay teams up with Pezesha to enable Blockchain powered merchant Marketplace lending use case
Traditionally, lending between people in emerging markets like Kenya has been strictly informal. It is usually done in cash with little or no documentation and is generally limited to a close network of people in a lender’s community. Table banking groups, SACCOs (Savings and Credit Co-Operative) and cooperatives have formalized some of these lending structures and have a huge following on the continent currently.
New digital marketplace lending platforms allow consumers and small businesses to receive credit via mobile money from the convenience of their mobile phone. When these loans are intermediated by a marketplace platform, they handle credit scoring, loan origination and collections, and share a portion of the profits with the capital provider in this case a lender on the platform.
Alot of the current peer-to-peer lending platforms concentrate on individual lenders and usually charge high interest to make up for the high risk of default. Pezesha is a lending platform that takes a different approach concentrating on Small and Medium Enterprises (SMEs) and enabling these businesses through their marketplace that connects entrepreneurs and small merchants to working capital in a collaborative fashion.
Kotani Pay has teamed up with Pezesha and capital provider Davoa Capital to enable Blockchain powered lending to merchants across supply chain verticals in Kenya and Ghana. In this article we sat down with Hilda Moraa, Founder & CEO of Pezesha Africa Limited to understand Pezesha’s unique value proposition, challenges SMEs in Kenya face in accessing finance, the role Blockchain has played in enabling lending and the partnership with Kotani Pay.
Kotani Pay:So what is Pezesha?
Pezesha:Pezesha is a digital marketplace for business loans. We enable SMEs with access to affordable working capital through productive financing, On the other hand, we take a collaborative approach to utilize capital from lenders (i.e banks and other financial institutions) in the market seeking purposeful returns by lending to creditworthy quality SMEs.
Kotani Pay: What are some of the advantages of using Pezesha over traditional means of lending such as bank financing?
Pezesha: As a result of our robust credit scoring technology, Patascore that leverages on alternative wider data sets, we are able to effectively credit score SMEs who are unbanked and give them access to affordable credit where there is limited data or credit history. More importantly, for those that do not qualify we are able to provide our personalised digital financial education that educates them on how to develop a good credit score and eventually access credit as they grow up the Pezesha ladder. Ultimately, the credit we enable to underserved and excluded SMEs impacts their long term prosperity and growth up the formal financial system.
Kotani Pay: What are some of the challenges SMEs in Kenya face in accessing financing?
Pezesha: Lack of data as most are still operating informally and largely accepting cash payments compared to digital payments. Meaning without proper records and digital history it’s hard to evaluate their creditworthiness. At Pezesha, we have made it our responsibility to empower SMEs with financial education and digital tools that shape their cash flows and digital footprints as we develop and iterate their credit scores to unlock credit limits and financial health at the same time.
Leveraging on Blockchain infrastructure in the short and long term strengthens our marketplace to create a global network effect.
Kotani Pay:So why Blockchain?
Pezesha:Allows us to democratise our loans and ensure they are competitive to our borrowers.We have also been able to receive international funds from lenders in a quicker manner than ever before with cost effective transfers. Leveraging on Blockchain infrastructure in the short and long term strengthens our marketplace to create a global network effect.
Kotani Pay:What excites you about the partnership with Kotani Pay and why is it a valuable partnership to Pezesha?
Pezesha:This partnership allows us to leverage alternative decentralised methods that fuels our mission of driving inclusive finance that is cheaper to the underserved/excluded SMEs in the end benefiting everyone in our Pezesha ecosystem through a shared economy.