Numida: Extending unsecured digital loans to small businesses

In 2015 Uganda was named as the country with the highest number of entrepreneurs per capita in the world. With most of these being small enterprises, access to affordable financing is the biggest impediment to business growth. Many of these enterprises also do not have much collateral to satisfy the requirements of lending institutions. 

Numida technologies, a locally based fintech venture has been bridging the gap between entrepreneurs and access to financing for the last five years.

Now as an integral part of the Ugandan business ecosystem, the firm provides collateral-free loans to small businesses that can be accessed in a little as 24 hours through the company’s Numida App.

“Entrepreneurs who continue tracking their finances while repaying their loans also get better terms on larger principals. Loans are disbursed and repaid via mobile money through the app,” Mina Shahid, one of the firm’s co-founders said in a previous interview. 

Using a proprietary credit score, Numida technologies help businesses borrow as much as $3,500 (shs12,600,000) quickly for working capital. The firm also says it has lent to about 3000 small businesses a total of about $2 million. 

Initially, the company, focused on providing tools to microlenders that would enable them to assess small businesses based on cash flows as opposed to primarily considering collateral for loan approval. When this didn’t pan out as expected, starting in 2017, the firm made a move towards providing the loans itself without asking for collateral. 

For any business, a robust performance monitoring system is a key ingredient to success. Keeping these metrics organized and useable is not easy for many smaller businesses that may not be able to afford highly skilled labour. The Numida App also doubles as a financial supervision App into which entrepreneurs can enter sales data to provide and record general profit and loss information.

The company encourages female-owned business owners to borrow by focusing on lending to sectors that include women. In Uganda, Gender gaps in asset ownership and traditional gender roles make it challenging for female business owners to access capital. 

“Numida has helped my business a lot. I know that I can get money whenever I get a business need. They were also helpful and patient with us through the lockdown when my business was not working.” Ruth Nakiyingi the proprietor of Fashion junkie a clothes store in Ntinda says. 

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