Ovamba is an innovative ‘fintech’ solution that bridges the gap between African SMEs in dire need of capital, and a financial sector seemingly unable to provide finance. Club Africa interviewed Ovamba co-founder Viola Llewellyn, who funded more than 120 African SMEs in just over three years.
“The average capital request is €80,000”, says Viola, who is clearly passionate about Africa and the progress the continent is making. With co-founder and CEO Marvin Cole, Viola started Ovamba in 2013. Today, the financial services company employs a staff of 40 and has offices in Cameroon, South Africa, the United States and India. “In 2011”, says Viola, “the World Bank reported a €330 billion credit gap in Africa – money that SMEs require to grow, but do not have access to. Whereas these entrepreneurs are the drivers of Africa’s economic growth, they are the bread baskets of the economy. We care about the fact that this is open territory.
We have seen this solution work in other markets, and feel confident we can use it to empower Africa by funding its entrepreneurs.”
Asset-based funding solution
Ovamba is an asset-based funding solution, Viola explains. “Our customers will either sell us some of personal their assets – a house, or land – or we buy the inventory they need for doing business. This approach releases capital that the entrepreneur can use to finance her business. In either scenario, the entrepreneur will pay us back over time with the proceeds of the sales.”
Ovamba, furthermore, has a very clear picture of business activities that help the African continent, and those that do not. Viola: “Timber, to give an example, is shipped out of the continent, turned into doors elsewhere, and returns to Africa at extremely high retail prices. We rather fund SMEs that boost local employment, and sell products desired by Africa’s expanding middle classes, at affordable prices. The minute Africa can manufacture its own goods for personal consumption; the continent will be able to sustain itself.”
Speeding up the process
SMEs are charged a fee that is equivalent to an interest rate of between 1 and 2.5 per cent. To speed up the process, Ovamba conveniently introduced a mobile app that allows SMEs to apply for funding. With the app, the entire application process is taken care of in an online environment, with the exception of signing the final contract. “African banks aren’t calibrated for the needs of modern-day African SMEs. SMEs may have to wait for up to four months to get their bank loan approved. This is valuable time the average SME cannot afford to waste.”
Viola’s favourite story is that of Ovamba’s first customer. Viola: “Our first client is a pharmacist who experienced extreme difficulty obtaining a bank loan for her pharmacy. Because she is a woman and a scientist, and not a business owner, the bank told her, it did not want to run the risk of funding her. We have been able to honour her request for credit based on a rational due diligence check, and empower a successfully run pharmacy in Douala, Cameroon.”
In dire need of investors
Because of its ability to quantify and price risk associated with a particular SME, Ovamba has an attractive proposition for investors. “Our data points exceed that of local banks by a few hundred”, says Viola. “This is information that helps us estimate a person’s tribal and ethnic influence on their ability to manage a business, and the amount of money we can entrust them with. With a funding pipeline that can stand as high as €44 million at times, Ovamba is in dire need of investors that share its vision for a prosperous Africa!”
As first published on Club Africa