Dutch development bank FMO has extended a convertible grant to Nairobi-based fintech firm Lendable aimed at unlocking an additional Sh450 million ($4.5 million) from commercial investors.
FMO bank said the Sh45 million ($450,000) grant would provide a “first loss” backstop and fund loans from Lendable’s alternative lender clients across Africa to small and micro enterprises and low income consumer borrowers.
Founded in 2014, Lendable offers structured finance facilities to seven currently booming alternative lenders across the continent that include off-grid energy companies, small and medium-sized enterprise (SME) lenders and asset finance companies.
The Sh45 million convertible grant is being provided by the Dutch government’s MASSIF fund that is managed by FMO and aims to reach targeted end-beneficiaries through financing local financial intermediaries and institutions that can contribute to their development.
“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,” Martin Steindl, FMO’s manager for the convertible grant programme under MASSIF said.
Daniel Goldfarb, CEO of Lendable, said that finding parties like FMO willing to invest alongside Lendable to de-risk commercial investment was key to their success.
“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,” he said.