South Africa’s Nomanini – connecting micro-retailers with financial services

South Africa’s Nomanini provides a retail point-of-sale device — allowing informal traders to sell digital goods such as electricity and mobile airtime. The startup tracks sales and can connect traditional micro-retailers with financial service providers for loans and credit. It was founded in 2010 by Vahid Monadjem and is based in Cape Town.

The company recently secured a $4 million (R58 million) investment round led by Standard Bank, with participation from Amsterdam-based Goodwell Investments. With the investment, the startup plans to scale their operations in Africa, and expand their product portfolio to include remittances, insurance and other financial services. 

Standard Bank will have access to Nomanini’s platform — allowing them to provide credit and other financial services to unbanked informal traders across the continent. The service will be available in South Africa, Botswana, Lesotho, Eswatini, Zimbabwe, Zambia, Mozambique, Namibia, Angola, Malawi, Kenya, Tanzania, Uganda, Nigeria, and Ghana.

Data collection

Nomanini’s data is collected from prepaid services or bill payments such as airtime and electricity. It analyses transactions and unlocks credit flows from financial institutions. According to Standard Bank, with only prepaid airtime data, they can calculate the risk and create a financial profile for an informal trader.

Financial challenges

Micro, small, and medium enterprises (MSMEs) face a $5.2 trillion funding gap, according to the IFC. Cash strapped informal traders struggle to stock sufficient inventory. Stock-outs create many unhappy customers —  missed sales and often lost customers.

Financial institutions don’t typically work with small retailers, as they mostly trade in cash and have no financial footprint to determine their creditworthiness. Assigning credit scores are difficult and extending loans are risky. 

Often banks require collateral for loans — a challenge for asset poor informal traders. For traders who often require quick small loans, credit terms are mostly too long and high in value, resulting in unmanageable repayment terms according to Nomanini.

This sometimes leaves micro-businesses at the mercy of informal lenders or loan sharks, who charge above-market interest rates — further eating into their profit margins.

Economic opportunity

Sub-Saharan Africa’s consumer spending is expected to reach $2.1 trillion by 2025, McKinsey estimates. The continent’s economy remains largely cash-based, with almost nine in ten retail transactions, according to Deloitte. This is driven by traditional traders, such as micro groceries, kiosks and open-air markets. The traditional retail sector currently contributes 38% of total GDP.

Sub-Saharan Africa is currently responsible for 45% of mobile money activity in the world. Mobile banking holds real potential for the continent, with 57% of adults outside of the formal financial system.

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