Matthew  Schaar

Kenya

Pakistan

South Asia

Sub-Saharan Africa

Tanzania

Access Usage Gap

Challenges and Crises

Consumer Protection

Credit

Delivery Channels

Digital Credit

Digital Financial Services

Enabling Environment

Entrepreneurs of MSMEs

Financial Service Providers

Fintechs

Human Centered Design

Impact Investing

Mobile Banking

MSME/SME Finance

Payments

Responsible Digital Finance

Responsible Investing

Telcos

Underserved Groups

Article

Press Release

Kuunda

The majority of Kenyans have mobile money accounts; their activity demonstrates digital financial services’ potential. Accion helps Kenyan innovators harness emerging technologies to create new financial services.

Around the world, especially across the African continent, people in underserved communities rely on local agents and merchants for basic financial services like cash-in-cash-out payments, airtime top-ups for mobile phones, and bill payments. Though these agents and merchants are the primary way people in these communities make essential financial transactions, up to 20 percent of these transactions fail due to a lack of electronic float (the digital money agents have available to conduct transactions). This is inconvenient for both parties: It means that agents face massive liquidity gaps, limiting their ability to extend financial services to communities, and customers are left without an immediate liquidity option.

This is where Kuunda comes in, and today, Accion Venture Lab is <a href="https://www.accion.org/kuunda-is-proud-to-announce-the-closing-of-2-25-million-in-seed-funding-in-december-2021-to-expand-access-to-liquidity-for-the-underserved" target="_blank" rel="noopener noreferrer">excited to announce our participation in their seed funding round</a>.

<a href="https://www.kuunda.com/" target="_blank" rel="noopener noreferrer">Kuunda</a>, an API-based lender, aims to provide liquidity services to agents, micro-merchants, and consumers across the world. There are currently over 300 mobile money platforms globally, half of which are active in Africa, which host approximately 6 million agents who provide financial services on behalf of larger institutions. Working as an agent can significantly impact the income of families. <a href="https://www.gsma.com/sotir/wp-content/uploads/2020/03/GSMA-State-of-the-Industry-Report-on-Mobile-Money-2019-Full-Report.pdf" target="_blank" rel="noopener noreferrer">One study from 2019</a> found that within a subset of 1.4 million agents, $1.1 billion in commissions was paid to agents, resulting in an average of $841 in additional annual income for each agent.

In addition to supporting mobile money agents, Kuunda’s lending model also supports micro, small, and medium-sized enterprises (MSMEs), primarily focusing on reaching micro-merchants. MSMEs in emerging economies, especially microbusiness owners, struggle to get the financing they need to operate and grow their businesses. Kuunda aims to help close the gap in funding for MSMEs — <a class="Hyperlink SCXW112690076 BCX8" href="https://www.smefinanceforum.org/data-sites/msme-finance-gap" target="_blank" rel="noreferrer noopener">an estimated $5 trillion in unmet financing needs</a> — by providing financial services to underserved microbusinesses.  

Finally, Kuunda’s flexibility and ease of implementation has been applied at an individual customer level: In perhaps its greatest testament to this aspiration, Kuunda’s consumer overdraft product now serves over one million individual customers on the M-Pesa Tanzania network.

Andrew Milne, Sam Brawerman, and Morne van der Westhuizen — all veterans of the African mobile money sector — founded Kuunda in 2018 to reimagine liquidity management for underserved agents and micro-merchants. Kuunda’s solutions, including overdraft for airtime, mobile money, bill payment float, and credit products, address a critical pain point. Kuunda’s APIs simplify access to capital by allowing agents to top up their e-float with exact amounts needed for specific transactions, all seamlessly done at the push of a button within apps they already use to manage their businesses. Kuunda’s technology can also predict when an agent or merchant will need additional liquidity and can pre-determine their ability to repay or transact based on the agent’s credit score.

After initially launching in Tanzania, Kuunda has since expanded into Pakistan and plans to launch in Malawi, Zambia, Uganda, Kenya, DRC, Mozambique, Nigeria, and Egypt in the next 18 months. Kuunda’s model is well-positioned to succeed as the global economy pushes toward digitization and financial inclusion while leveraging the existing networks of mobile money agents and MSMEs in their communities. Accion Venture Lab is excited to invest in Kuunda for several reasons:
<h3>Partnerships that reach agents and MSMEs with critical financing at scale</h3>
Through their partnership model, Kuunda connects to large platforms that reach hundreds of thousands of agents and merchants. Kuunda’s seamless integration allows these MSMEs to gain access to credit and thus better serve their community. These corporate partners are trusted entities that agents interact with daily, so using a white-labeled lending service that sits on their own platform allows Kuunda to leverage preexisting tools that agents already use in a meaningful way. The ability for Kuunda to serve both telco-based agents as well as MSMEs is a key aspect of their growth in Pakistan. While the telecom sector is deeply fragmented in the country, Kuunda is building partnerships with several MSME service providers to build seamless and accessible financial services.
<h3>Superior technology that opens access to financing</h3>
We’ve seen several telcos and platforms attempt to launch their own lending product for agents or merchants and fail due to poor product design, ultimately leading to agent churn and a large loss of capital. With Kuunda’s deep experience in this space and nimble API plug-ins, they can help partners quickly and efficiently embed financing, cutting out the need for new product development on the partner’s side. This approach has helped reduce the time to launch a lending product from years down to a few months, and hopefully soon, it will be done in weeks. Through Kuunda, we’re excited to see embedded financial products managed at scale that ultimately increase retention of MSMEs on partner platforms. So far, we’ve seen that by increasing the number of transactions agents can process (and therefore, increasing the commissions they make), Kuunda increases agent retention and usage on partner platforms, offering a clear value proposition to all stakeholders in its ecosystem.
<h3>Unique, data-driven approach to design, price, and distribution</h3>
Kuunda sits between these B2B corporate partners and lending partners, allowing them to request, capture, and interpret unique data to better design, price, and distribute lending offerings. During the contracting phase, Kuunda works closely with their B2B partners to ensure they are gathering the right kind of data from that client’s platform to design credit offerings for either agents or merchants. From there, Kuunda liaises with the lending partners to ensure that portfolio quality will remain high. Once the product launches, Kuunda feeds data and insights back to their B2B and lending partners for ongoing project management and any future enhancements to the products.

In many communities around the world, MSMEs are the primary way for people to purchase food and essentials, withdraw cash, pay their bills, and purchase airtime for their phones. Solving MSMEs’ liquidity challenges means that more community members can reliably access to these critical financial products and services. We’re proud to support Kuunda’s journey as they leverage technology — and existing, robust networks of mobile money agents and partners — to help agents and MSMEs become more resilient, earn more income, and grow their businesses.

Embedded liquidity solutions unlock growth for microbusinesses

Cape Town, South Africa, 2nd of June 2022 - In line with our recent brand relaunch, Kuunda is pleased to announce that their seed round closed in December 2021 of $2.25 million led by Accion Venture Lab, Finca Ventures, Launch Africa, Seedstars, Mercy Corps Ventures, Greenhouse Capital, Kepple Africa Ventures, Future Africa, The Magic Fund, and other fintech angel investors. Kuunda is a B2B2C embedded digital financial company that provides liquidity to the informal sector through their liquidity API, proprietary credit scoring algorithms, to generate behavioural and transactional borrowing profiles. Kuunda specialises in real-time, transactional based lending solutions. Kuunda is using this seed round to scale up operations in Tanzania and Pakistan, as well as to launch partnerships in Uganda, Malawi, DRC, Zambia, Mozambique, Nigeria &amp; Egypt within the next 18 months.

Kuunda was founded in 2018 by a team of experienced entrepreneurs and digital financial service experts. With a combined 45 years working in the industry, the team realised that despite best efforts, the liquidity challenges faced by agents, small businesses, and consumers in emerging economies were rife and ongoing. Through time spent on the ground and in the field across Africa and Asia, the team came to recognise the pivotal role that agents, small businesses, and consumers play within their respective economies. Developing solutions to solve people’s access to liquidity was therefore key to resolving economic hardships and to help build resilience and improve economic productivity. This is what defined Kuunda’s mission to become the leading liquidity solutions provider to financially underserved users in emerging economies.

Kuunda creates dynamic borrower profiles that are built on real-time behavioural data acquired through its proprietary credit scoring algorithms. These profiles are also built via access to their channel partners’ existing infrastructure and networks. These partners provide insights into the transactional patterns of agents, small businesses and consumers, allowing Kuunda’s channel partners to accurately determine those with the most pressing financing need and the highest propensity to repay. Through these lending channels, Kuunda has been able to distribute tailored financial products that don’t contribute to the large-scale indebtedness that often plagues these economies, but rather build resilience into these user networks by giving them the ability to respond to the friction and flow experienced within their individual income patterns.

Kuunda’s algorithms have been successfully adapted to suit a number of different use cases. Our Hapa Cash product, which is a 1 day facility that funds specific transactions, can be used to finance e-float facilities, airtime advances, short-term financing and fuel purchases. In addition, Kuunda has launched Kazi Cash, a medium-term (7 &amp; 14 Day) set of lending products that are focused on business growth that supports agents &amp; mSME’s. This first-of-its-kind instant liquidity solution is geared towards helping businesses grow by financing stock purchases, working capital facilities, and fixed term loans to help build sustainable businesses.

“Since our inception, we have been on a mission to solve the liquidity challenges felt by many the world over. Not only has the lack of access to liquidity been an economic inhibitor, but it has also been a factor that has negatively impacted the growth of individual productivity within an economy. Our end goal is not to give a loan, our liquidity solutions are tools for all people to grow their businesses and enable individuals to feel free and be more resilient. In short, we offer solutions to enable our users to grow and develop. We envision a world where financially underserved populations have fair access to financial solutions that serve their needs,” Andrew Milne, CEO of Kuunda Holdings Limited.

“Agents and micro businesses are often the main way that underserved populations in Africa and Asia access financial services, but they face massive liquidity gaps that make it harder to serve their communities. Kuunda provides solutions for agents and micro merchants that enable them to grow their businesses while also helping their communities grow and thrive. We are thrilled to welcome Kuunda to the Accion Venture Lab portfolio,” said Michael Schlein, President and CEO of Accion.

<hr />

<h3>About Kuunda</h3>
In Swahili, Kuunda means to create. We build embedded financing solutions to solve liquidity problems for agents, MSMEs and consumers. Through our short-term financing products and our medium-term growth financing solutions, we are creating positive social impact, and financially sustainable economic productivity for our channel partners, balance sheet providers, distribution networks and their users.
<h3>About Accion Venture Lab</h3>
Accion Venture Lab is a leading early-stage impact investor in inclusive fintech startups. We believe that affordable, well-designed financial services enable economic growth and prosperity for underserved populations in the world. Accion Venture Lab invests globally in the most innovative models and technologies delivering quality financial services to underserved households and small businesses with the potential to scale. Backed by commercial and impact investors since the launch of its third-party fund in 2019, Accion Venture Lab has invested in more than 55 early-stage startups that operate in 35 countries worldwide.

Accion Venture Lab is a part of Accion, a global nonprofit committed to creating a financially inclusive world, with a pioneering legacy in microfinance and fintech impact investing. Accion catalyzes financial service providers to deliver high-quality, affordable solutions at scale for the three billion people who are left out of – or poorly served by – the financial sector. For 60 years, Accion has helped tens of millions of people through our work with more than 170 partners in 55 countries. For further information, visit <a href="http://accion.org/venturelab" target="_blank" rel="noopener noreferrer">accion.org/venturelab</a>.

Kuunda is proud to announce the closing of $2.25 million in seed funding in December 2021 to expand access to liquidity for the underserved

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Embedded liquidity solutions unlock growth for microbusinesses

Kuunda is proud to announce the closing of $2.25 million in seed funding in December 2021 to expand access to liquidity for the underserved