January 30, 2024 in Africa, Economic Mobility
Seven years ago, Vwanganji Bowa juggled a banking job and a chicken farm. Faced with the challenge of selling chicken eggs, Vwangaji identified an opportunity to empower women in her community.
Vwangaji recognized that the women she wanted to work with lacked access to capital to start their businesses, so she offered startup support (in the form of eggs) and finance training. As the women began their egg-selling ventures, they were able to earn an income and eventually build their inventory themselves. Vwangaji witnessed the positive impact her initiative had on the women’s lives and the frustratingly long and unfriendly lending market for micro-entrepreneurs within the banking sector she herself worked in, and she seized the opportunity to launch Mighty Finance, with a mission to empower and uplift women business owners through the provision of innovative financial services and solutions.
“Mighty Finance has transformed the way financial services are delivered. Through our commitment to financial inclusion and responsible lending, we have become a catalyst for positive change, developing and uplifting the community as a whole,” shares Vwanganji.
Securing an investment of USD 75,000, the startup stands proudly among the first beneficiaries of the Standard Chartered Bank’s Women in Tech investment facility managed by Village Capital. This facility was purposefully designed to offer essential catalytic capital, enabling women entrepreneurs in underserved markets to access investment and financing. This investment not only validates our vision, but also enhances our capacity to make meaningful impact in bridging financial gaps for women entrepreneurs.
Driving Financial Inclusion in Overlooked Markets
Women in Zambia make up 48% of the labor force and own an estimated 42% of micro-enterprises and 36% of small and medium enterprises (SMEs) in the country. However, a US$168M market gap exists for women-led MSMEs seeking affordable financing. Many of these MSMEs are deemed not credit-worthy due to a lack of collateral or proper financial documentation. Even if they qualify with traditional financial institutions, they are subject to lengthy application processes or need to wait months for a credit line.
“Before starting the business, I had difficulty accessing capital from traditional lenders. It was a hard journey and part of why I empathize with small businesses,” Vwanganji reveals.
Recognizing that small businesses often require access to capital quickly, Mighty Finance offers a fast turnaround time, making a credit decision in minutes and disbursing funds within 24 hours. This reprieves a process that would have otherwise taken weeks or months using traditional lenders. For small businesses, this is often the lifeline needed to stay afloat and grow, as they are able to survive cash flow constraints and mitigate the risks that come with insufficient working capital to drive daily operations.
The startup’s impact is far-reaching. With a primary focus on women-led MSMEs (approximately 90% of the Mighty Finance clientele are women-led ventures), financial inclusion has become a reality for many who were once excluded from traditional financial services.
For Pauline Kalala, a Mighty Finance beneficiary, the impact has been transformative. She has accessed three loans from Mighty Finance since 2022, which have gone a long way in enabling her to expand her business, diversify her offerings, and create new job opportunities. Her entrepreneurship journey is a testament to the power of financial inclusion, as she’s now able to supplement her husband’s income and contribute towards her child's education and the construction of a home for her family. “We are committed to meeting her financing needs as she focuses on growing her business," Vwanganji shares proudly.
Innovating Traditional Financing Processes
Mighty Finance utilizes external data and an in-house credit rating algorithm to assess borrowers swiftly and fund businesses promptly, leaving behind the days of waiting for credit lines for months. This sets them apart from traditional financial institutions.
“We have partnered with financial gateways that allow us to access a company's financial transaction history,” reveals Vwanganji. “This gives us a unique insight into the company's financial performance on both loan origination and during the loan life cycle.”
Despite their remarkable impact, Mighty Finance still faces challenges similar to the small businesses it supports - access to financing. “Some major challenges we have faced have been lack of access to capital. In Zambia, access to funding sources, especially for startups, are relatively limited. Local investors and financial institutions are risk-averse or unfamiliar with the fintech sector, making it challenging to secure the necessary capital. Additionally, the regulatory landscape for fintech in Zambia is complex, and although it’s improving, compliance with regulations and licensing requirements has been costly and time-consuming, making it difficult for us to navigate and meet the necessary legal obligations, especially with investors in our ecosystem,” laments the founder.
The investment from the Women in Tech facility signifies a turning point for Mighty Finance. “This investment will allow us to take advantage of time-sensitive needs we must undertake to get to the next level of growth. It will allow us to increase our loan book, execute our growth strategy, and make key hires to further the business faster.”
Mighty Finance is keen to serve more entrepreneurs, especially smallholder farmers, and expand their support to civil servants. To date, the startup has disbursed loans to over 1800 MSMEs, and demand for their support is growing, with over 3,000 applicants in the pipeline. “We have been granted access to lend to civil servants in Zambia and are working on a partnership with the country’s largest agriculture platform to provide access to financing to over 3 million small-scale farmers,” Vwanganji reveals.
With the backing of the WiT investment facility and plans to join the Zambian Fintech Sandbox to test out a peer-to-peer lending tool, Mighty Finance is well on its way to making a lasting impact on the lives of women entrepreneurs and the financing sector in the country.
