PEZESHA AND FSD KENYA PARTNER TO PROVIDE WORKING CAPITAL AND TOOL FINANCING FOR CONSTRUCTION WORKERS

Pezesha and FSD Kenya are pleased to announce a partnership to pilot appropriate financial products for construction workers to access tools and working capital.?

The product allows workers who are organized in groups, for example, worker cooperatives, to purchase tools from approved vendors on credit.? The loans start with small ticket sizes of KShs 5,000 to KShs 30,000 for access to tools, and upon successful repayment of 2 rounds of these loans, the borrower will be eligible for greater credit limits.?

Pezesha has entered into agreements with the approved vendors who will supply the tools and the Worker Cooperatives who will approve the loan limits to their members. Working capital loans are designed to support workers who have contracts in place and require finance to purchase the required materials to deliver their orders.?

This pilot has been designed in collaboration with Agricultural Concepts International Ltd (ACIL), which undertook significant research to understand the pain points of construction workers in various fields including plumbing, carpentry, electrical work, and masonry.?

An element of financial training specifically on understanding the obligations under the loan is also built into the product process. Pezesha borrowers will also get an opportunity to grow their credit rating and get free financial education on Patascore , Pezesha’s proprietary credit scoring solution as a service, enabling institutions and financial services providers to get a comprehensive assessment of a borrower's creditworthiness and manage credit-associated risks .?

This pilot product was designed following lessons learned from the NgoKamka case study where the SME Advisory Unit, Office of the President, and the State Department of Housing and Urban Development, supported 3 “Jua Kali” clusters to participate in the delivery of housing at Park Road Affordable Housing Estate. One of the key findings of this case study is financial services providers have not prioritized credit to these segments as the risks of default are perceived to be high and small loans make underwriting very costly.??

According to the Africa Association of Entrepreneurs 2022, 80% of Kenyan MSMEs struggle with cash flow management and accessing credit due to insufficient financial knowledge. Lack of data from the MSMEs leads to information asymmetry which locks out this sector from access to formal credit from the mainstream financial institutions. To overcome this information asymmetry and help borrowers build their credit scores, Pezesha is committed to sharing the status of its digital loans on a daily basis. This is an important step towards making credit more accessible, affordable, and sustainable in the long term. As part of FSD Kenya’s Open Access initiative, key learnings from this pilot will be shared with the market.?

About Pezesha:

Pezesha owns and operates a digital embedded finance and credit scoring platform that connects capital and other financial services to underserved Small and Medium-Sized businesses (MSMEs) and value chains to empower them with affordable inventory and working capital that create meaningful impact and growth in their businesses. Pezesha, an accredited digital lender, has been a market leader in designing access to credit for SMEs, particularly in the Food, Health, Manufacturing, and Consumer Market (FMCG) in Kenya, Uganda and Ghana.?

Fuelled by data sets encompassing over 100 million transactions, the platform has already served over 200,000 users, making it exceptionally reliable and robust.

Website: https://pezesha.com/

About Financial Sector Deepening Kenya(FSD Kenya):

Financial Sector Deepening Kenya (FSD Kenya) is an independent trust dedicated to the achievement of a financial system that delivers value for a green and inclusive digital economy while improving financial health and capability for women and micro and small enterprises (MSEs).?

We work closely with the public sector, the financial services industry, and other partners to develop financial solutions that better address the real-world challenges that low-income households, micro and small enterprises, and underserved groups such as women and youth face.

Website: https://www.fsdkenya.org/