MFS Africa Leads Ugandan Fintech Startup Numida To Close A $2.3m Seed Round

Numida, a Ugandan startup has announced a close of its $2.3 million seed round and aggressively plans to expand its services and launch new products in Uganda and to the West African region.

The startup is believed to favor Ghana for the expansion because they both have similar mobile money penetration, issues with traditional financial service providers, and similar businesses that make an enticing market.

The seed round was led by MFS Africa, with participation from DRK Foundation, Equilibria Capital and Segal Family Foundation, and other angel investors.

Launched by Mina Shahid, Catherine Denis, and Ben Best in 2017, Numida began life enabling traditional MFIs to provide unsecured credit to semi-formal businesses but pivoted 18 months ago to begin lending to micro and small businesses directly.

Through the Numida mobile app, business owners can access unsecured working capital loans of up to US$3,500 in less than two hours. Thanks to a proprietary credit score, Numida offers risk-based pricing on an applicant’s first loan such that every business owner is treated uniquely.

According to the startup, it has provided more than $2 million in unsecured credit to 3,000 micro and small businesses in Uganda, disbursing around $250,000 per month.

Asked on what informed their business model, the founders said they initially didn’t plan to provide credit for businesses when they set out, as they were focused on creating a bookkeeping tool that will enable traditional microfinance institutions (MFI) to provide unsecured credit to semi-formal businesses.

However, after conducting a pilot study on bookkeeping for small businesses in Uganda, they were surprised to find that MFIs were still obstinate in providing credits to small businesses because they lacked collateral. It was at that point they decided to pivot into providing credits to small businesses.

The development gives Numida access to MFS Africa’s pan-African experience and uses its infrastructure, including its recent acquisition of digital payments aggregator Beyonic, to launch new digital financial products for micro and small businesses.

Patrick Gutmann, a managing director at MFS Africa who led the deal, said the acquisition of Beyonic had significantly expanded MFS Africa’s business in the East African region and broadened its portfolio of services by adding a cutting-edge payment proposition targeting the SME segment.