International Finance

IBM extends microfinancing opportunities to Africa’s SMEs

Twiga Foods, IBM Research, blockchain technology, Hyperledger Fabric, machine learning algorithm, vendors, Africa, microfinancing
IBM establishes a new supply chain platform using machine learning and blockchain technology to facilitate microloans to SMEs in Africa

IBM is working in collaboration with a business-to-business logistics platform Twiga Foods to extend microfinancing using technology.

Twiga Foods, which assist farmers to distribute supplies to 2,600 kiosks in Kenya will enable financial offerings and boost its reach through the partnership, reported Global Trade Review (GTR).

Adrew Kinai, the lead research engineer on the project at IBM Research told GTR: “These vendors are quite small, so if they were to go to a bank, the bank would probably want an audited account or collateral and things like that. These small businesses don’t have that. So what we’re trying to do with our solution is to use alternate data, which can give a good idea of how well a business is doing and leverage that to provide credit to these small-scale vendors.”

On the technical front, the machine learning algorithm capabilities will be able to predict the creditworthiness of a vendor, following which the blockchain platform backed by Hyperledger Fabric will handle the lending process from receiving requests to accepting the terms.

“For this pilot, we were doing it with one supplier, but the vendors often have other suppliers. Each of these suppliers has a snapshot of how that business is doing. So in the next step, we’re envisioning we’ll have mutable suppliers, to give an SME or vendor a ‘financial identity’, which is composed of all of these snapshots from various suppliers. A blockchain network would be very important in managing this,” Kinai added.

The two companies plan to address more of Twiga Foods’ vendors and other suppliers by end of the year.

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