| MSME START UP |    1123 VIEWS  |
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Monday, January 17, 2022 / 06:04 PM / by Nomanini / Header Image Credit: Nomanini
A collaborative
partnership between Nestle Eastern and Southern African Region, Nomanini and
Standard Bank is providing MSMEs with access to working capital via Trader
Assist
The informal economy in sub-Saharan Africa accounts
for 38% of the region's GDP[1]. What's more, according to the International
Labour Organization, retail and wholesale is the second biggest employer across
the region after agriculture. However, informal retail Micro, Small,
Medium-sized Enterprises (MSMEs) are largely underserved and underbanked. Plus,
they face a distinct challenge: their scarce working capital must be balanced
between various products that need to be stocked, or else they lose customers.
With these retailers typically generating 80%-85% of
their revenue through the sale of fast-moving consumer goods (FMCG)[2], a
collaborative partnership between Nestle Eastern and Southern African Region,
Nomanini and Standard Bank is providing MSMEs with access to working capital
via Trader Assist, a digital finance solution that enables retailers to
sufficiently stock up their shops. With Trader Assist, Standard Bank provides
much-needed access to responsible working capital while Nestle enables quality
products to be delivered to the retailers, helping them to offer a wider range
of quality products and attract more customers.
Since launching the solution, Standard Bank has been
able to onboard more than 20 merchants per week per branch with minimal
back-office staff. More than 70% of retailers who were onboarded were eligible
for credit after the initial 30-day period, and over 80% of those retail
merchants who used credit once went on to become repeat borrowers. This credit
has funded between 60%- 80% of retailers' trading volumes.
Vahid Monadjem, CEO and Founder of Nomanini, says, "Access to finance has been a major obstacle for MSMEs in Africa. Trader Assist
connects the informal retail ecosystem by integrating payments, working
capital, and data analytics to help ensure small retailers continue to thrive".
Retailers who access working capital credit have an
approximately 30% higher activity rate than those who do not. Alex Chalwe, the
owner of Edua Grocery in Lusaka, Zambia, shares that prior to the arrival of
Trader Assist, things were tough. "We couldn't stock up adequately and we only
carried a few goods. From the time Trader Assist came, the number of products
we stock has gone up".
Proprietor of Freshways Grocery, Moses Lungu adds that
he was struggling to balance his stock, but now he is able to split the capital
on different products. "As I sell the products, I'm able to get other things
even while I'm preparing to repay the advance".
Trader Assist proved particularly helpful to retailers
during the COVID-19 pandemic. Esther Mpamba owner of Lusaka-based CTV Grocery,
says, "When COVID-19 came, a lot of businesses were affected. Many goods from
abroad were not entering the country because of the lockdown. Although I was
affected by the pandemic, I was still able to order goods and Nestlé was able
to deliver their products to me. Trader Assist grew my capital, which enabled
me to buy more products".
John Ashley, Chief Financial Officer at Nestle East
and Southern Africa Region, concludes by saying, "Informal retailers require a
holistic solution that leverages technology and partnership to enable and
sustain their business growth in the long term. With the Trader Assist
programme, we aim to support 10,000 traders in growing sustainable businesses
in Zambia. We plan to expand our partnership across eastern and southern Africa
thereafter".
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