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FMO is extending a convertible grant to Kenyan-based FinTech platform Lendable providing a ‘first loss’ backstop that is expected to unlock an additional USD 4.5 million from commercial investors. This will fund loans from Lendable’s alternative lender clients across Africa to small and micro enterprises and low-income consumer borrowers.
Lendable was founded in 2014 and currently provides structured finance facilities to seven fast-growing alternative lenders across African markets, including off-grid energy companies, small and medium-sized enterprise (SME) lenders and asset finance companies.
The USD 450,000 convertible grant is being provided by the Dutch government’s MASSIF fund, managed by FMO. It aims to reach targeted end-beneficiaries through financing local financial intermediaries and institutions that can contribute to their development.
Martin Steindl, FMO’s manager for the convertible grant programme under MASSIF, said:“The ability to harness cutting-edge technology is key to unlocking alternative lending channels in African markets and reducing the financial exclusion of smaller enterprises, which is exactly what Lendable’s proprietary platform and securitization capabilities offer.”
FMO’s grant will contribute to financial inclusion in Africa by catalyzing innovative, technology-driven business models. Alternative lenders in Africa are using Internet of Things (IOT) and mobile technologies to unlock new financial services and improve access to income-generating assets for low income homes.
Lendable’s ‘Maestro’ technology platform allows for direct data integration with these alternative lenders, including loan portfolio data analysis and cash flow predictions. Maestro also provides high quality quality portfolio management information to alternative lenders and investors in Lendable’s SPVs. This is increasingly popular with investors who have traditionally struggled to get detailed price, risk and portfolio quality metrics from impact-focused lenders.
Daniel Goldfarb, CEO of Lendable, said: “By working with FMO we can scale-up the volume of capital reaching SMEs and consumers in our markets as well as to support our partners in implementing the Responsible Finance Guidelines. As we scale, finding parties like FMO that are willing to invest alongside Lendable to de-risk commercial investment is key to our success.”
FMO and Lendable both signed the Responsible Finance Guidelines in June 2018. On top of the grant, the partners will cooperate in responsible lending market capacity building initiatives such as workshops and education programmes in East and West Africa.
Lendable is the first debt platform designed specifically for African alternative lenders – non-banking, asset backed finance providers operating in microfinance, and a range of Pay-as-you-go (PayGo) services including energy. Its platform combines capital from experienced international debt investors from North America and Europe. They include family offices, alternative investment fund managers, high net worth individuals, impact funds and banks. lendablemarketplace.com