FMO and BlueOrchard Join $30 Million Funding Round for Ghana’s Digital Lender Fido
Digital Lending Platforms: A Lifeline for Microenterprises and Individuals
In the Middle East and Africa (MEA) region, digital lending platforms have become an attractive alternative source of credit for microenterprises and individuals who are often overlooked by traditional banking institutions. These platforms have been growing rapidly, with the MEA digital lending market expected to reach $2 billion in the next five years, recording a four-fold growth since 2021.
Ghanaian Fintech Firm Fido Expands into New Markets
One such platform is Ghanaian fintech firm Fido, which has recently received fresh funding of $30 million through its Series B debt-equity round. This new capital includes a $20 million equity injection from global impact investment manager BlueOrchard and Dutch entrepreneurial development bank FMO.
A Brief History of Fido
Initially launched in 2015 by three Israeli entrepreneurs – Nadav Topolski, Tomer Edry, and Nir Zepkowitz – to offer loans over mobile phones, Fido has evolved over the years to introduce other products, including savings, bill payments, and smartphone financing. This diversification of revenue streams has enabled Fido to grow its customer base and extend more loans.
The African Digital Lending Space
Fido is not alone in the African digital lending space. Several other platforms, such as venture-backed Branch and Tala, are using mobile technology and alternative data sources – like mobile money transaction histories – to offer instant micro-loans to individuals and small businesses that cannot access credit from formal banking institutions.
The Challenges of Traditional Banking
Unlike traditional lenders, banks often require collateral and involve lengthy processes that include paperwork. This has made digital lenders an attractive option for microenterprises and individuals seeking quick access to capital.
Fido’s Business Model
According to Fido CEO Alon Eitan, the company’s mission is to provide financial services to underserved communities in sub-Saharan Africa. Eitan notes that a majority of the population in this region are either unbanked or underbanked, and for many customers, Fido is their first-ever interaction with financial services.
Fido’s Products and Services
Fido offers every loan product with embedded insurance, which includes additional covers targeting business customers. This will include climate insurance to cover borrowers in the agriculture sector from extreme weather events such as droughts and floods, as well as tradesman insurance.
Loan Amounts and Repayment Terms
Fido’s customers can access loans of between $20 to $500, while businesses get higher amounts depending on their needs, nature of the enterprise, and credit score. The loans are repayable within six months, with interest rates ranging from 7% to 12%.
Default Rate and Credit Scoring
Eitan emphasizes that Fido’s default rate is low due to its robust credit scoring system, which assesses borrowers’ creditworthiness based on various factors.
Fido’s Expansion into New Markets
With the new funding, Fido plans to expand into new markets in Africa, targeting both individual and business customers. The company aims to leverage its existing products and services to offer a more comprehensive suite of financial solutions to underserved communities.
The Future of Digital Lending in MEA
As digital lending platforms continue to grow in the MEA region, it is likely that we will see even more innovation and disruption in the traditional banking sector. With Fido leading the charge, there is no doubt that this space will be an exciting one to watch in the years to come.
Related Articles
- These fintech companies are hiring in 2025 after a turbulent year
- Robinhood, already a ‘comeback’ stock, has even more aggressive plans for 2025
- Thomson Reuters acquires tax automation company SafeSend for $600M
