Introduction
The digital lending platform market in the Middle East and Africa is experiencing rapid growth, driven by increasing demand from microenterprises and individuals overlooked by traditional banking institutions. Ghanaian fintech Fido is set to tap into this market opportunity as it expands its services to new markets in East and Southern Africa.
A Growing Market Opportunity
The value of the digital lending platform market in the Middle East and Africa is expected to reach $2 billion in the next five years, a four-fold growth since 2021. This growth can be attributed to the increasing number of individuals and microenterprises seeking alternative sources of credit due to limited access to traditional banking services.
Fido’s Expansion Plans
Fido, a fintech company initially launched in 2015 by three Israeli entrepreneurs, has over the years introduced various products beyond mobile phone-based loans. The company offers savings, bill payments, and smartphone financing, expanding its revenue streams. With fresh $30 million Series B debt-equity funding, Fido is poised to tap into new markets in East and Southern Africa.
The New Funding
The new capital includes a $20 million equity injection from global impact investment manager BlueOrchard and Dutch entrepreneurial development bank FMO. This investment will enable Fido to further expand its services, reaching more customers and driving growth.
The Benefits of Digital Lending Platforms
Digital lending platforms have transformed the way individuals and microenterprises access credit. Unlike traditional banking institutions, these platforms offer instant loans with minimal paperwork requirements. They also use alternative data sources such as mobile money transaction histories to assess creditworthiness.
Fido’s Business Model
Fido offers every loan product with embedded insurance, catering to both individual and business customers. The company plans to introduce additional covers targeting its business customers, including climate insurance for the agriculture sector and tradesman insurance.
Customer Experience
Fido’s customers access loans of between $20 to $500, while businesses receive higher amounts depending on their needs, nature of the enterprise, and credit score. The loans are repayable within six months, attracting interest rates between 7% and 12%. Fido boasts a default rate below 4%, attributed to its advanced credit scoring system.
The Impact of Digital Lending Platforms
Digital lending platforms have significantly impacted the lives of millions in Africa. By providing access to financial services, these platforms have empowered individuals and microenterprises to grow their businesses, create jobs, and improve their standard of living.
Fido’s Milestones
To date, Fido has served a million customers, 40% of whom are small businesses. The company has extended over $500 million in loans across Africa. With its expansion plans, Fido is set to reach even more customers, driving growth and development in the region.
Conclusion
The digital lending platform market in the Middle East and Africa presents a significant opportunity for fintech companies like Fido. As the demand for alternative sources of credit continues to grow, these platforms will play an increasingly important role in driving economic growth and development in the region.
