B2B Marketplace Operators Offer Credit to Keep African SMBs Liquid

A wave of platforms that enable digital sales and procurement are revolutionizing the way African companies do business, contributing to an all-round more efficient trading system and helping to eliminate frictions that have long-plagued traditional supply chains.

Increasingly, these platforms are not just middlemen connecting buyers to sellers; they find themselves ideally placed to provide African businesses with payment and credit services.

On the movement from pure marketplace to payment processor, Tunde Kara, CEO and co-founder at restaurant procurement platform Vendease, explained to PYMNTS that incorporating payment became necessary after the platform grew to a certain size.

“When you build your vertical deeply enough, the horizontal platform of payments almost becomes inevitable for you to harness,” he said.

He added that the Vendease team realized within the first year of launch that it would need to build its own payment solution as vendors weren’t getting paid on time, and that was holding up deliveries.

Once the company had expanded into payments, Kara said that introducing a buy now, pay later (BNPL) solution that enabled restaurants to buy goods on credit was a natural next step to further drive growth in the industry. With BNPL, “there’s more capital for people to play with in terms of building their businesses,” he noted.

See also: Food Brands Tap Digital Supply Chain Platforms to Streamline Logistics

For Wasoko, another African B2B marketplace, the introduction of credit has been a catalyst for payment digitization, the company’s founder and CEO, Daniel Yu, told PYMNTS.

Although in regular upfront transactions Wasoko’s informal and small- to medium-sized business (SMB) clients typically choose to pay cash upon delivery, Yu explained that digital repayment is one of the conditions for accessing BNPL loans.

“Through value added services we’re finding that there are ways to drive digitization of payments and help shops move into digital payments ecosystems,” he said.

Read also: African B2B Marketplace Wasoko Takes on Supply Chain Inefficiencies

Africa’s Working Capital Challenge

Branching out into the lending game isn’t always straightforward. Only a year after launching its own BNPL service, African eCommerce giant Jumia discontinued it in 2021 due to low traction.

Whatever the reason may be that Jumia Flex failed, there are some distinct differences between Jumia and B2B platforms like Vendease and Wasoko.

Both online marketplaces provide an important service that helps keep their clients’ businesses running. And for restaurants and small retailers, opening a line of credit with a major supplier can massively increase working capital, helping them to invest in growth and protecting them against an unexpected drop in cash flow.

For this reason, African B2B payment companies like Duplo are also starting to offer BNPL, leveraging their position between buyer and seller to introduce trade financing in markets that have previously had limited access to credit options.

As Yele Oyekola, Duplo’s co-founder and CEO, told PYMNTS in an interview, providing BNPL services injects much needed liquidity into African supply chains.

See more: BNPL Is the Working Capital Bridge for African SMBs

But it isn’t just buyers who can benefit from access to credit.

Dooka, an African platform that enables large enterprises to procure goods from local suppliers, is looking to provide financing to SMB suppliers that have limited credit options which might prevent them from entering trade deals that could threaten their cash flow.

With supply chain financing, “we can inject liquidity into the market, and that is going to drive further growth,” Dooka CEO Toby Sparrow told PYMNTS.

Read more: African Corporates Turn to Marketplaces to Control Strategic Spend

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