FMO and BlueOrchard Investors Back Ghanaian Digital Lender Fido in $30M Series B Funding Round

Digital lending platforms have turn into a simple and fast alternative source of credit for micro businesses and individuals who’re omitted by traditional banking institutions. These platforms have turn into a lifeline for thousands and thousands of unbanked individuals and the demand will proceed to grow, increasing the worth of the digital lending platform market in the Middle East and Africa to attain $2 billion over the subsequent five years, recording a four-fold increase from 2021.

This is a market opportunity for Ghanaian fintech Fido plans to capitalize by exploring latest markets in East and Southern Africa, supported by a fresh $30 million in Series B equity funding. The fresh capital features a $20 million equity injection from global impact investment manager BlueOrchard and Dutch business development bank FMO.

Originally launched in 2015 by Nadav Topolski, Tomer Edry AND Nir Zepkowitz In order to supply cell phone loans, Fido has through the years introduced other products, including savings, bill payments and smartphone financing, to expand its revenue streams.

The fintech sector is amongst a big group of digital lending corporations in Africa, including venture-backed Branch and Tala, which are using mobile technology and alternative data sources, reminiscent of cell phone transaction histories, to supply easy microloans to individuals and small businesses which are often unable to access credit from formal banking institutions.

Unlike lending apps, banks often lend to lively customers, require collateral, and involve lengthy processes that involve paperwork. This has made microlenders an alternate but expensive source of capital even for small businesses, which Fido CEO, Alan Eitansays that “they are the driving force of economies, especially in sub-Saharan Africa, yet they are given so few tools to develop.”

“The majority of the population in sub-Saharan Africa is unbanked or underbanked, and for many customers who come into our ecosystem, we are probably their first interaction with financial services. We are taking them from zero financial footprint to a point where they have built an entire financial backbone in the ecosystem where they can get credit, insurance, save, buy mobile phones and do business,” Eitan said.

Fido offers every loan product with built-in insurance and plans to incorporate additional insurance aimed toward business customers. This will include climate insurance to cover agricultural borrowers against extreme weather events reminiscent of drought and floods, in addition to insurance for craftsmen.

Fintech customers receive loans starting from $20 to $500, while businesses receive larger amounts, depending on their needs, the character of their business and their credit rating. The loans are repaid over six months and accrue interest starting from 7% to 12%. Eitan says Fido’s default rate is below 4%, which he attributes to the corporate’s credit scoring system.

“We’re able to deliver these industry-leading rates by combining mission-critical AI models across the entire loan lifecycle. From our acquisition model, which scores new customers based on mobile and other alternative data, through our fraud models and AI collections service models,” he said.

To date, Fido says it has served a million customers, 40% of whom are small businesses, and has issued greater than $500 million in loans in Ghana, where it claims to have a nationwide reach, and Uganda, where it has served 50,000 customers because it launched in December last yr.

“We hope to hit $1 billion in total payouts early next year, and the idea is to use the new funds to continue to grow and reach more customers… and make a real impact on them,” he said, adding that the corporate had been profitable for the past 4 years.