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Lessons on building digital supply chain finance solutions for small businesses in Africa

  • In this report, Accion shares lessons from three key African markets on how to enhance and scale digitally-enabled supply chain finance solutions to accelerate the growth of small businesses.
  • Accion lays out six factors that platform providers and other actors in the chain must consider to successfully develop a supply chain finance model that benefits everyone.
  • Accion offers evidence-based recommendations to financial services providers, Fast-Moving Consumer Goods Companies (FMCGs), distributors, and platforms that want to provide supply chain finance to small businesses.

Across Africa, many small businesses often struggle to keep their shelves fully stocked to meet customers’ demands because they lack the working capital they need to restock. Suppliers are reluctant to offer goods on credit and traditional financial institutions rarely offer quick turn-around loans that can help small businesses restock. Today, there is a growing number of providers attempting to meet this specific need by providing small businesses with supply chain financing (SCF) in the form of credit specifically tied to stock.

The majority of SCF models involve various stakeholders, including FMCGs, platforms, product distributors, financial services providers (FSPs), and, at the very end of the chain, small businesses themselves.

Drawing lessons from three African markets — Ghana, Ethiopia, and Nigeria — Accion’s latest publication offers insights on how these stakeholders can work together and leverage their assets (such as data and relationships) to optimize SCF solutions for small businesses.

Nigeria and Kenya, according to Accion, have several SCF solutions targeting merchants through different models, including Jaza Duka (a Strive Community distribution partner), Boost (a Strive Community innovation grantee), OmniBiz, and Wasoko. These solutions are built on two SCF models. In the first, a goods-on-credit model, a digital platform provides credit in the form of goods to the retailer. The retailer is expected to make the repayment through the platform or in cash. In the second, an FSP partnership model, a third-party lender, such as a bank, provides financial credit to a small business for stock purchases with repayment conditions.

Accion suggests six important factors that can significantly contribute to the success of a small business-centered SCF model supported by the various actors in the chain. Accion notes that platforms, in particular, play an important role because they are the heart of any SCF ecosystem. Platforms consolidate data produced along the supply chain, which the rest of the stakeholders rely on to cater to the financing needs of small businesses.

1. Build the right foundation from the very beginning.

Having the right foundational building blocks before starting out is key. Providers must be intentional about how to approach the different stages of the process: from onboarding to the mechanics of managing several elements including credit, payments, data, stock management, relationships, value-added services, analytics, and authentication. To support this thinking process, Accion provides a set of questions that a provider should answer as they build an SCF program, from onboarding to analytics. For example, questions on what the minimum KYC requirements should be or how distributors and merchants can be authenticated to ensure safety and minimize fraud during transactions.

2. Value proposition matters to all stakeholders along the SCF chain.

Stakeholders in a supply chain have differing interests. These interests must not only be identified from the onset but also aligned to how each actor in the chain will benefit from the process. For example, for FMCG companies, the value proposition could be that access to retailer-level data from small businesses would lead to improved insights on markets and consumers, expanding sales and leading to growth. Similarly, FSPs could grow their customer base by leveraging the data generated by small businesses and using it to assess credit risk. Platform providers can have an opportunity to scale, while distributors can use this as a chance to digitize their operations and transform their business in the process. For small businesses, platform providers must show how SCF solutions could lead to better access to credit, more stock, and more sales.

3. A multi-partnership approach is better.

For SCF platform providers, integrating various players in the chain creates more value for small businesses because they will have access to multiple sources of both stock (multiple FMCG companies) and credit (from microfinance, banks, and fintechs). The onus is on platforms to facilitate the relationships among these players, highlight the value proposition for each, and demonstrate the capability to manage risks along the way.

4. Stakeholders should be clear about their roles.

Providers should use the foundational blocks of the SCF model (mentioned above) to build out the roles for each stakeholder. Some components, like onboarding, stock order management, and customer relationship management, for example, require all three actors (FSPs, FMCG companies, platform providers) to play a role, but other components will be distinct to some providers.

5. Platform providers must have viable and scalable business models to appeal to other stakeholders.

It’s critical that platform providers ensure that their businesses are sustainable and can drive scale if each actor is to reap the benefits from the process. To achieve this growth, platform providers can consider financial and nonfinancial levers. These include increasing the number of active merchants by extending the platform’s geographic reach, offering merchants data to help them better predict demand cycles, providing more financing options to merchants through multiple FSPs, and reducing operational costs of onboarding by getting merchant referrals from FMCG companies and distributors. Providers will also need to negotiate favorable rates (fees and commissions) with the various actors.

6. Have a well-defined implementation strategy.

A well-defined implementation strategy that pulls in different partners at various stages can help to ensure the success of small business-centered SCF models. Accion outlines a variety of activities across various stages to better enableplanning, preparation, engagement or pilot, expansion, and performance monitoring.


Based on the above six factors, Accion emphasizes the following recommendations for platform providers:

  • Build stronger partnerships with FMCG companies to create more efficient options to onboard, handhold, and support small businesses that will be interacting with the platform, many for the first time.
  • Encourage small businesses to order stock via the platform so that transactional data generated can be utilized by other partners for credit scoring, analytics, and better decision-making.
  • Platform providers should strive to develop and migrate merchants onto their digital channels and position human touch points as an alternative option for small businesses that are slow to adopt, using on-the-ground sales agents or call centers.
  • Move small businesses from cash to digital payments. Platform providers should leverage the growth in digital payments in these countries and adopt widely used digital payment infrastructures such as mobile money, bank-led wallets, and cash-in/cash-out agents.
  • Platform providers must demonstrate and showcase their effective credit management supported by good relationship management. Upon successful disbursement of credit to small businesses, monitoring, repayments, and collections should be the joint responsibility of the FSP and the platform provider.
  • Financial services providers also need to secure working capital to be able to provide SCF to small businesses. Accion suggests that this funding could be a combination of low-interest loans, credit guarantee schemes, and grants provided by governments or development finance institutions.
  • Platform providers should go beyond only lending. Value-added services such as loyalty schemes, capacity building, and insurance resonate strongly with many small businesses and could help drive adoption. The platform provider will need to form partnerships to validate, design, test, and evaluate the viability of these sorts of value-added solutions. Partnering with FMCG companies, for example, can unlock formalized discounts for merchants on the platform.

Through our work at Strive Community, we have also found that any digital solutions that target small businesses must also consider the time and effort it takes to adopt the platform itself. Any productivity benefits have to far outweigh the total adoption cost for the small business. Gains also have to be predictable and swift for MSEs, as they rarely have the patience or resources to deeply explore a platform’s functionalities.

We are currently working with various partners with innovative digital solutions that can help small businesses build financial resilience to boost savings, accept digital payments, and access insurance. We will be sharing the various learnings from these new partnerships on our blog.

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Grace Natabaalo

Grace Natabaalo

Grace is Caribou Digital’s research lead. She conducts research, creates content and collates insights for various projects.