The investment will enable Zanifu to upgrade its platform and extend its stock-financing to reach more micro, small and medium enterprises (MSMEs).

Saviu Ventures, Launch Africa Ventures, Sayani Investments and several angel investors from Kenya and Nigeria participated in the round, which brings Zanifu’s total funding received so far to $1,200,000.

Zanifu provides short-term stock-financing of up to $2,000 to MSMEs in Kenya and is set to add 15,000 FMCG retailers within one year.

Founded by Steve Biko and Sebastian Mithika, some of the company’s partners include Unilever, Nestle, Soko, Coca-Cola, P&G and Brookside.

Biko and Mithika founded Zanifu in 2017 and so far, the company affirms to have extended 85,000 working capital loans worth over $13,000,000 to 7,000 businesses in Kenya.

The informal businesses in Kenya are an integral part of the economy contributing 33.8% of the country’s GDP and providing 83.4% of employment outside of small-scale agriculture. 

However, access to financing remains the main impediment to growth for these micro and small businesses. And thus, over the last few years, fintech companies like Zanifu have introduced products that are tailored to the financing needs of the MSMEs.

Zanifu works with a number of manufacturers and distributors to extend the credit to these small businesses with retailers already sourcing products from the startup’s partners qualifying for the financing. Zanifu has created platforms for manufactures, distributors and retailers that ensure seamless ordering, payment, tracking and fulfilment.

Retailers borrow through Zanifu’s loan app, where they upload information that includes historical purchase data. The retailers are then assigned a credit limit, after its algorithm scores them, within six hours after signing up. Retailers have up to a month to pay back the loans, which attract an interest rate of 3.5 to 5%.

Zanifu, which has a presence throughout Kenya, is now eyeing Ghana and Uganda. A regional presence will step-up competition for the likes of Uganda’s Numida and Nigeria’s Payhippo, some of the fintechs providing unsecured financing to small businesses.

Cauris Finance, Lateral Frontiers VC, GreenHouse Capital, SOSV IV LLC, Sayani Investments and Axian Financial Services are investors who participated in Lipa Later’s equity and debt funding round.

Lipa Later is a buy-now-pay-later (BNPL) company founded in 2018. The startup’s expansion into new markets includes countries such as Tanzania, Ghana and Nigeria, as well as strengthening its presence in existing markets such as Kenya, Uganda and Rwanda.

The company targets achieving this growth and expansion plan within the next 12 months.

Lipa Later has exclusive partnerships with retailers across these markets allowing shoppers to pay for products in installments. For instance, Lipa Later’s partnership with French retailer Carrefour (which has a regional presence) allows customers to pay for items including furniture, electronics and even perishables in monthly installments.

Customers pay a monthly interest rate (about 2.3% in the case of Carrefour) on the credit extended to them. The startup is planning to forge more partnerships with merchants in its plan to cover more countries across Africa.

Lipa Later’s proprietary credit scoring and machine learning system allow consumers to sign up and get a credit limit almost instantly.

Also, the startup has built a BNPL API that integrates into e-commerce platforms, enabling merchants sell products directly to consumers and making it possible for consumers to remit monthly installments for items purchased.

In its bid to traverse Africa, where opportunities abound as e-commerce and alternative credit sources grow, Lipa Later will have to contend with competition from South Africa’s Payflex (which was recently acquired by Australian BNPL Zip) and PayJustNow, and Nigeria’s PayQart and Carbon Zero.