The Customer Effect

‘When they win, we win’: kountable brings social supply chain financing to Rwanda

  • Africa's burgeoning SMB sector requires more access to trade financing.
  • "We don’t offer working capital, but for some entrepreneurs, kountable’s solution is a better fit than a loan."
close

Email a Friend

‘When they win, we win’: kountable brings social supply chain financing to Rwanda

There is nothing quite as satisfying as a fun-fact mashup, especially when it weaves a compelling financial trend narrative.

Witness the following:

  • Fun fact no. 1: SMEs account for 80 percent of the region’s employment, establishing a new middle class and fueling demand for new goods and services.
  • Fun fact no. 2: The share of bank-intermediated trade finance that is devoted to intra-African trade is limited, and comprises approximately 18 percent ($68 billion) of the total trade finance assets of African banks.
  • Fun fact no. 3: The trade finance gap in Africa is estimated to be between $90 billion and $120 billion.

The Mashup: SMEs are huge in Africa, but they’re not getting the trade financing they need from established financial institutions.

Ttrade financing platform, kountable is helping Rwandan entrepreneurs get the trade financing they need to build their businesses. The company isn’t an online lender. Rather, much like a supply chain financing firm, kountable, and not the entrepreneur, pays the vendor for the goods. The entrepreneur then acts as agent to ensure said goods are delivered to the customer, who then pays kountable. Following which, kountable pays the entrepreneur – minus a fee.

kountable's circles of financing in diagram. Source: kountable.com
kountable’s financing cycles in diagram. Source: kountable.com

Supply chain financing has been experiencing a surge in the U.S., and one of the kountable co-founders saw a need for trade financing when working with Rwandan entrepreneurs. “Our platform allows us to perform the due diligence and underwrite transactions in a fraction of the time a bank would take to process a loan application, particularly for a customer without a credit score,” said Chris Hale, kountable founder and CEO. “Since our risk is mitigated by the structure of our transactions, including having the goods as collateral, we are able to finance at lower rates than banks and other lenders can offer.”

Like other supply chain financiers, such as U.S.-based Behalf, kountable has hopped on the trend bus of developing its own credit score for each entrepreneur and small business. Interestingly, this trend is just as relevant to the under- and unbanked of the U.S. as it is to the under- and unbanked of Africa.

The kountable credit score is sufficiently alternative — it’s based on the entrepreneur’s social media footprint. With the entrepreneur’s permission, the company’s smartphone app collects data points from a number of sources, including Facebook, Linkedin, Google+, and Twitter, which feeds into its calculation of the kscore. “What we see is that a successful, connected entrepreneur has a visibly different data footprint than, say a start-up entrepreneur, or a non-entrepreneur who is well connected,” said Hale.

Of course, kountable isn’t the only fintech solution for SMBs looking for funding in Africa. Marketplace lending platforms for SMBs have sprung up in Kenya, Ghana, Tanzania and Zambia, and microbusinesses have had organizations like nonprofit Kiva to turn to for micro and slightly larger loans for at least the past decade.

But for a certain set of entrepreneurs, a loan isn’t always the answer. Specifically, kountable services reputable entrepreneurs that need short-term financing to purchase goods for customers. So far, the company’s average transaction size has been $90,000 with an average duration of 90 days, which means that for the SMEs that seek kountable out, microfinancing was never an option.

The Rwandan government has so far been cooperative and supportive of kountable’s social platform, and the company is currently contemplating a US offering, though how it will differ from the Rwandan product is unclear. The firm will likely have to fight harder to acquire customers stateside, where online supply chain financing abounds.

Still, it’s hard to deny fun fact no. 4: by bringing supply chain financing to Rwanda and some of its neighbors, kountable is helping further financial inclusion in Africa. As far as Hale is concerned, online and digital platforms that are a variation on the supply chain financing theme are the next generation of SMB fintech solutions.

“The first wave of fintech, like any digital transformation, digitized much of the information and processes related to loan origination,” explained Hale. “The next wave should be to innovate around the product itself and to deliver financial solutions instead of just loans that better fit the small business customer.”

0 comments on “‘When they win, we win’: kountable brings social supply chain financing to Rwanda”

The Customer Effect

It’s 2022 and FIs are still struggling to make their products accessible. Procure Access wants to change that.

  • Americans with disabilities have a total of $490 billion in disposable income. Yet financial services are struggling to meet accessibility requirements, even with basic tools like PDFs.
  • With Procure Access, everyone from Google to Fidelity Investments is getting involved to ensure accessibility is considered at the start of the procurement process.
Rabab Ahsan | September 14, 2022
Sponsored, The Customer Effect

Creating a hyper-personalized banking experience

  • To this day, a lot of financial institutions are using legacy systems that were written back in the '80s and remain the same.
  • Today's digital banking platforms and card services can offer hyper-personalized experiences to create a unique experience for each cardholder.
Zeta | August 25, 2022
The Customer Effect

The reversal of Roe v. Wade: Its impact on economic growth, financial wellbeing, and the financial services industry

  • Roe v. Wade has been overturned, after almost half a century -- what does that mean financially for America?
  • Here's how the ruling may hurt the state economies that will have a ripple effect throughout the economic system of the country.
Sara Khairi | August 02, 2022
Sponsored, The Customer Effect

Finance with a face: How personalization drives engagement, retention, and profitability

  • New technology allows for innovative companies to build banking products that cater to the specific needs of each individual.
  • Personalization is the key to meeting key product metrics and competing in this new landscape of embedded finance.
Q2 | March 14, 2022
Library, Modern Marketing, The Customer Effect

Tearsheet’s 2021 guide for marketers: Gens under the lens

  • We closed off last year with a thorough breakdown of the financial consumer profile of each of the generations.
  • The compiled guide for marketers is now available for download.
Tearsheet Editors | January 24, 2022
More Articles