the lender to know

The other day, I was talking to a friend who runs a small business in Nairobi, and he mentioned how tough it can be to secure credit as an SME. Traditional banks especially in Kenya often require extensive paperwork, high collateral, and long approval times—barriers that keep many businesses from accessing the funding they need to grow. That’s when I brought up Pezesha, a fintech that’s been making waves in Kenya’s lending space by leveraging technology to bridge the credit gap.

Pezesha isn’t just another digital lending platform; it’s a financial infrastructure that’s tackling one of Africa’s biggest challenges—access to affordable credit for micro, small, and medium enterprises (MSMEs). By using alternative credit scoring and embedded finance solutions, Pezesha is enabling thousands of businesses to access working capital that was previously out of reach. And in June 2024, they took things a step further with a major move: a strategic partnership with Safaricom to launch Mkopo wa Pochi.

For those unfamiliar, M-Pesa Pochi la Biashara is a mobile money wallet specifically designed for small businesses. Through Pezesha’s new credit product, Mkopo wa Pochi, these businesses can now access short-term loans directly via their M-Pesa business accounts. No lengthy applications, no collateral—just fast, data-driven lending designed to meet their real-time needs. This is a game-changer, especially for Kenya’s informal sector, where cash flow challenges often hinder business growth.

One of Pezesha’s key innovations lies in its credit scoring approach. Unlike traditional banks that rely on historical banking data, Pezesha taps into alternative data sources—mobile money transactions, business cash flows, and behavioral analytics—to assess creditworthiness. This not only expands access to previously underserved businesses but also reduces risk by offering a more accurate, real-time assessment of an applicant’s ability to repay. By integrating with M-Pesa, Pezesha can now leverage Safaricom’s vast transaction data to refine its lending models, making credit more accessible and affordable.

Beyond lending, Pezesha is also working to create a sustainable financial ecosystem. Their model connects MSMEs with institutional and retail investors, enabling a peer-to-peer lending framework that ensures a continuous flow of capital to businesses that need it most. By embedding finance into platforms that MSMEs already use, Pezesha is not just offering loans—it’s building long-term financial resilience for small businesses.

The fintech revolution in Africa is often associated with payments, but Pezesha is proving that lending is just as critical. By breaking down barriers to credit and making financing more inclusive, they’re not only supporting business growth but also driving broader economic development. With strategic partnerships like the one with Safaricom, Pezesha is poised to reshape Kenya’s financial landscape, one SME at a time.

So the next time you make a payment via M-Pesa, think about the small businesses behind those transactions. Thanks to Pezesha, many of them now have the credit they need to keep moving forward.