Asilimia — Impact Spotlight

What challenge is Asilimia tackling?

MAIN CHALLENGE = Lack of digitized records of business transactions resulting in business inefficiencies and limited access to credit

While African MSMEs (Micro Small and Medium Enterprises) are driving the African economy (they employ 80% of the active population and contribute about 40% to Africa’s GDP — gross domestic product), they continue to miss out from digitalization, negatively impacting their growth.

90% of all their transactions are in cash and recording business transactions is done using pen and paper.

PROBLEM = Lack of business-friendly digital tools designed for MSMEs

This lack of business-friendly digital tools leads to a lot of business inefficiencies (i.e. difficulties in tracking pending payments from their customers and to their suppliers, no proof of payments) leading to all their business decisions being based on intuition.

African merchants are excluded from accessing credit from formal financial institutions as they have no financial track record to prove their ability to repay their loans. Record of transaction data limited to daily transactions does not enable merchants to make small or medium term investment decisions.

What solution does Asilimia provide?

The solution is a simple Android application: Leja — a digital cash book that enables microbusinesses to digitize all their business transactions. This digitization also facilitates access to adapted credit solutions that are made possible by Asilimia. The model is such that it incentives micro businesses to have a digital record of their transactions.

This application has 3 important features to assist small business owners in the day-to-day operations of their businesses:

1. It helps secure and consolidate all business transactions in one place, easily track pending payments and have a clear presentable transaction history
2. Provide upto 90% savings on mobile money transaction fees by using Leja to pay suppliers
3. Data recorded in the application can facilitate access to a monthly $200 loan at 5% interest to grow her business.

Roadmap and Ambition snapshot:

Fast growth due to immense demand for digital business tools. They launched in May 2021 and Leja has already managed to reach 40,000+ businesses in Kenya. In the medium term, they want to Integrate mobile money wallets to enable microbusinesses to pay their suppliers and receive payments from their clients at no additional charge. The long term goal is to develop trade finance solutions and enable a savings account feature.

Why is the project important and what do we like about it?

3 main reasons:

80% of the African economy is driven by microbusinesses but they lack digital tools to scale. There is an immense need for such products and services.

• Accessibility and affordability are the two main issues facing African microbusinesses. There is a $584 billion credit gap and Asilimia is in a position to help bridge this gap with their solution
• A digital cash book helps capture business data and track payments which is vital to reducing business inefficiencies resulting from manual book keeping

Facilitates financial inclusion and is a solution curated specifically for African MSMEs

• Existing digital solutions are not built for African MSMEs, as they are mostly informal and do not have any KYC documents to access business-focused digital tools and infrastructure. Current B2B solutions usually require strong accounting skills, a computer and are often very expensive
• Leja is in a unique position to assist MSMEs who have been strongly impacted by Covid-19 crisis by enabling them to help access financial support services. The product metrics since launch in May 2021 indicate that the adoption rate is high for the application. This is primarily due to:

1. Asilimia’s understanding of the local markets. One of the co-founders of Asilimia is a former informal worker who has capacity and reaches among local microbusinesses. Furthermore, Asilimia believes in reaching a whole market by having “leaders of the market” as ambassadors.
2. Users opting for the utility, and staying for the business data
3. Word of mouth and strong network effect for the application
4. A proprietary credit score engine built on $50M+ business data points

Builds on the digital trends in Africa and leverages the existing infrastructure to reach scale

• Asilimia takes advantage of the mature payment and digital assets APIs across the African continent
• Smartphone penetration is at 65% in Africa and by 2050, more than 615M people in Sub-Saharan Africa will subscribe to mobile services by 2025 — this is equivalent to 50% of the region’s population. As economies recover, mobile technology will be even more integral to how people live and operate businesses. Digital solutions like Leja support the growing use of online channels by consumers and is part of the digital-centric future in Africa

What are the main concerns? Are there any key negative externalities that need to be addressed for this project?

For Asilimia, the main concern is the willingness of microbusinesses to switch to a digital solution as it moves them away from the informal model. A digital solution and added transparency, subjects the micro business to adhere to financial due diligence requirements and taxation regimes.

Facilitating access to capital might increase the number of indebted people among microbusinesses.

The other concern is regarding the financial due diligence of Asilimia. The financing of microbusinesses via loans must meet all KYC/AML requirements and adhere to local financial regulations set out for operating business. Anti-Money Laundering (AML) requirements include KYC but they may also include ongoing transaction monitoring and other customer screening processes. Based on the Financial Action Task Force (FATF) recommendations, it is important that Asilimia complies with regulation on combatting of terrorist financing, money laundering and follow targeted financial sanctions related to terrorism & terrorist financing.

Any follow-up questions? Want to talk directly to the founders?

Please, join their dedicated Discord channel: https://discord.gg/j5XVqeUWg8

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