Creating Financial Services For African Retailers
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Creating Financial Services For African Retailers

The African continent as a whole presents strong opportunities for its retailers, particularly in financial services.

Karen Adie is Director - Merchant Services at TradeDepot
Karen Adie is Director – Merchant Services at TradeDepot

Karen Adie, Director – Merchant Services at TradeDepot shares her insights. She started off her career at Goldman Sachs as a Technology Analyst and has worked in various capacities at several tech startups in Nigeria. She has a Bachelor’s degree in Computer Science from the University of Nottingham and a Master’s degree in Management from Cranfield University, both in the UK. Her areas of expertise include project strategy and management, design thinking, digital and social media marketing.

Sub-Saharan Africa has the highest rate of female business owners globally. The majority of these female entrepreneurs are in informal retail which makes up 95% of the retail structure serving over 1.2 billion consumers across the continent. Unfortunately, one of the biggest barriers faced by these entrepreneurs is that they are unable to access financial services that will help them scale their businesses, increase their turnover and ultimately earn a living beyond subsistence. These retailers often need fast and flexible loans but the existing mix of microfinance banks and co-operative societies can be complicated, fragmented and inaccessible for those who need these services the most. 

Global goods manufacturers like Nestle, Unilever, Procter & Gamble and the likes are dependent on these small retailers who play a critical role in the supply chain in Africa. These small businesses offer a thriving distribution network and without their support, suppliers are restricted to a limited number of large grocery chains that are not patronised by the mass market. 

With many parts of Africa being quite patriarchal, women’s access to financial services is disproportionately low. According to the World Bank, only 37% of women on the continent have bank accounts. High interest rates by financial institutions and collateral requirements for loans are also major issues that make it difficult for these small retailers to expand their businesses. On the flip side, some women due to low financial literacy, fear of failure and a high aversion for risk limit themselves by not applying for credit and would rather struggle unnecessarily to make more money.

The opportunity presented by COVID-19

In countries like Nigeria, small retailers are the backbone of the economy; the local neighborhood shop in a short period of time reaches more customers than the large grocery store. The restrictions on movement as a result of the COVID-19 pandemic has also presented an opportunity for these retailers to increase turnover as people are spending more time at home and need greater access to food and other essential goods. Unfortunately, without additional financial support, they are at the risk of losing potential customers due to reduced or limited stock availability. 

In times like these, the need for capital to expand is paramount. Take Osato for example, who is the owner of a small retail shop in Lagos, Nigeria. She started the business from the savings she made selling mobile phone airtime and loves selling goods to her customers. She had dreams to increase her stock and open more shops but could not do so due to financial constraints. She would have ordinarily applied for a loan from her local bank but she does not have the collateral or high credit rating needed to get a loan. This is where technology is making a difference, making it easier for businesses like Osato’s to access the funds they need to fulfil their dreams. 

Technology is making a difference

With the rise of technology enabled retail solutions, the power now lies in the hands of the retailers. Goods from the supplier can be ordered by the shop owner on an online platform with quantity and type specifications from the comfort of her shop. This is then delivered either on credit or paid for immediately. Retailers can also leverage their trading relationship with e-commerce companies to access the inventory they need even when they may not be able to pay for it immediately. Some e-commerce businesses also provide inventory management to the retailers and sales trends to the suppliers. It is a win-win for all the parties involved.

The importance of financial literacy

Another way retailers are supported is through business loans with little or no interest that can be repaid within a specified timeframe. In today’s complex and rapidly changing credit market, financial literacy, especially for women and girls, is important for small businesses to expand and scale their operations. Arming these small businesses that make up 95% of the African retail ecosystem with financial literacy skills helps them make informed decisions overall and position them to build better and more durable businesses. 

For such a large and economically viable market, the African retail scene lacks access to financial services that promote inclusion. These retailers have long been the backbone of the African economy but have been overlooked for far too long. By addressing the challenges that hold them back, we are not only addressing a longstanding issue but we will also be setting up the economy of the continent for greater success and prosperity.


  • Executive Economic Development Advisor (Emerging Markets) | Contributor

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