In recent years, digital lending platforms have emerged as a rapid and accessible source of credit, particularly benefiting microenterprises and individuals overlooked by traditional banks. These platforms have become crucial for millions of underbanked individuals, with projections indicating that the digital lending market in the Middle East and Africa could reach $2 billion within the next five years, marking a four-fold increase since 2021.
Capitalizing on this opportunity, Ghanaian fintech company Fido is set to explore new markets in East and Southern Africa, fueled by a recent $30 million round of Series B funding that includes $20 million in equity from global impact investment manager BlueOrchard and the Dutch entrepreneurial development bank FMO.
Founded in 2015 by Nadav Topolski, Tomer Edry, and Nir Zepkowitz, Fido initially focused on providing loans via mobile technology. Over the years, the company has diversified its offerings to include savings accounts, bill payment services, and smartphone financing, expanding its revenue potential significantly.
Fido is part of a growing cohort of African companies in the digital lending field, alongside well-known players like Branch and Tala. These companies are leveraging mobile technology and alternative data, such as mobile money transaction histories, to provide instant micro-loans to those often excluded from traditional credit sources.
In contrast to traditional banks, which typically require collateral and lengthy verification processes, micro-lenders like Fido offer a more accessible, albeit costlier, capital source for small businesses. According to Fido’s CEO, Alon Eitan, small businesses “are the engine of economies, particularly in sub-Saharan Africa, yet they often lack the necessary tools for growth.”
“Most people in sub-Saharan Africa are either unbanked or underbanked, and many who come to us encounter financial services for the first time. We assist them in transforming from having no financial footprint to establishing a robust financial ecosystem where they can access credit, insurance, savings, and more,” Eitan explained.
Fido incorporates embedded insurance with each loan product and aims to introduce additional insurance covers for its business clients, such as climate insurance to protect agricultural borrowers from extreme weather conditions like droughts and floods.
Individuals can receive loans ranging from $20 to $500, while businesses can access larger amounts based on their requirements, type of enterprise, and credit assessment. These loans are repayable within six months, carrying interest rates between 7% and 12%. Eitan noted that Fido maintains a default rate of under 4%, thanks to the company’s innovative credit scoring system.
“We achieve these industry-leading rates through essential AI models throughout the loan process, from acquiring new customers via mobile device data to employing fraud detection models and AI-driven collection strategies,” he emphasized.
To date, Fido has successfully served one million customers, with around 40% being small businesses, and has disbursed over $500 million in loans across Ghana, where it boasts nationwide coverage, and Uganda, where it has reached 50,000 customers since launching in December.
“We anticipate surpassing a billion in total loan disbursement by early next year, using the new funding to expand further and reach more customers, ultimately making a significant impact on their lives,” Eitan concluded, adding that the company has been profitable for the past four years.