Jumia is a popular e-commerce company in sub Saharan Africa and currently offering small business loans to a select group of clients. For those unaware, sub-Sahara Africa consists of countries that lie south of the Sahara. Below’s picture highlights all sub-Saharan countries in green.
Although the region consists of a large amount of African countries, the small business market is still growing, albeit slowly. The 2017’s growth rate is slower than last year due to the continent’s largest country Nigeria failing to meet expectations. According to Reuters Africa, “Nigeria escaped from its first recession in 25 years in the second quarter as oil revenues rose following the cessation of militant attacks on energy facilities in the Niger Delta that last year cut crude production by around a third.” Despite the drop, estimates for 2018 and 2019 are better. These positive estimates could also see small business growth in the near future and is a good reason why Jumia is expanding its operations.
Working with the San Francisco-based lender Branch, Jumia has used the company to offer “start-up loan for small businesses” in Africa earlier this year. According to Techcrunch, “the loans were pegged to vendors sales history with Jumia and projections for the future performance of the businesses.
In Kenya, sellers received loans of up to 30,000 Kenyan shillings (roughly $290), with a six-month term on the loan to finance their businesses. Interest rates on the loans are 1.2% per month. The loans are made available in seconds on the Branch app and are disbursed through M-Pesa.
While only 200 vendors have applied for loans, all have received them from the company’s beta version. The idea is still taking shape but seems to be a good place to increase revenues in the short term. Investing in Africa as it gets its footing may be a good opportunity for the future and in my opinion, one that has to be attempted.