Small businesses looking for funding to grow their businesses in the Southern African country of Botswana now have some respite on the horizon. Founded in 2019 by Rebatho Moilwa, an investment banker with over ten years experience with the pan-African financial services provider, BancABC, Kika Funding is looking to provide funding solutions to Botswana businesses at any stage of their evolution, including those with no trading history, on condition that they meet qualifying criteria.

“Research has shown us that there are two key things that SMEs want when applying for credit,” he told Afrikan Heroes. “ (i) Time taken to respond to the request; and (ii) Less cumbersome application process.”

 

“The key is simplicity. SMEs are agile and when an opportunity comes along, it is the speed of execution that makes the difference. Timeous extension of credit is also one of those most important elements.”

How Kika Funding Works

According to Rebatho, Kika Funding will be executed through a simple online application process with the whole process taking minutes to complete, a major departure from the methods adopted by other similar startups. Kika Funding also aims to reduce the time spent by small businesses in Botswana applying for credit facilities by allowing them to have access to its loans, at most within three days, granted that all the relevant information required by the company is provided by the SME. Rebatho said the loans would largely be unsecured.

“Kika Funding addresses the specific needs of our customers. The application process which will be done online is heavily customer-centric and less cumbersome,’’ he said.

“We don’t use what I call rear-view mirror approach taken by banks but rather a forward-looking approach. We aim to achieve a friction-less customer experience. The confluence of technological innovation, cloud computing, digitalisation of bookkeeping systems, and financial industry innovation will help to solve information asymmetry which will lead to further reduction of cost, de-risking of SME lending and the resultant reduction in lending gap in Botswana.”

Rebotha said the available market for such service in Botswana is around $50 million. Kika Funding, he said, is however targeting about 5% of that market, which is around $2.5 million.

“The market as it is currently constituted is divided into commercial banks, which by being the largest, have the bulk of the market. But still within that, there are gaps,” he said.

 

“There are currently about 10 commercial banks in Botswana with 5 large, 2 mid-size, and 3 smaller banks. There are also 2 Development Financial Institutions. Within the Non-Banking Financial Institutions (NBFIs) space, there is only one significant institution, and 4 smaller other institutions. The key to being able to compete is to have access to funding and a differentiated offering,” he further added. 

Although Rebatho acknowledges that there are a myriad of challenges facing startups in Botswana such as access to market, competitiveness, as well as access to finance, he however believes that sound entrepreneurial development initiatives, strong incubation, mentoring and accelerator programmes will go a long way in helping startups in the country to succeed. 

“What is required is an ecosystem that will support the creation and growth of startups; that is, a culture where entrepreneurship is seen as a way of life,” he said.

To that effect, Rebatho said Kika Funding is seriously looking at equity financing and/or technical cooperation with the financier having a seat on the board.

“At Kika Funding, we believe we have a product that is scalable and can provide excellent returns and growth for investors. We will be focused on growing the business. We will be looking at not diluting the shareholding of the initial investors in further funding rounds. We will also be looking at debt financing after proving that the model is self-sustaining,’’ he said.

The Right Team And The Right Country

Rebatho said Kika Funding has the right team with the right blend of knowledge and expertise as well as the right go-to-market strategy, with a combination of ingredients to take on competition. He himself has had over ten years of experience in investment banking, including major stints at Bank Gaborene, and at the pan-African financial services provider, BancABC. 

“When the lending is made to SME companies, it is that of a closed loop system as the procuring entity,’’ he said. “The buyer and financing company (in this case Kika Funding) will sign a tripartite agreement thereby reducing the risk of non-payment hence keeping the non-performing loans at a bare minimum. We will be getting into partnerships with suppliers and managing the process end-to-end to mitigate performance risks.”

Rebotha also noted that prospective investors in Botswana will not regret their investments as the country has the following attributes:

• “The highest sovereign credit rating in Africa by all the big rating agencies(Moody’s, S&P and Fitch)
• The second least corrupt country in Africa as rated by Transparency International.
• 3rd Freest economy in Africa.
• Botswana has also been rated the 3rd most profitable country in the world (Baseline Profitability Index, 2015).”

“In most countries in the world, there is a significant funding gap when it comes to SME Funding and Botswana is no different. However, with the above mentioned attributes, when it comes to repatriation of profits, we believe our investors will find this useful,” he said.

Read also: Highest Percentage of Women in Business Globally Are in Uganda, Ghana and Botswana

Advice To Budding African Entrepreneurs

Although Rebatho says the Covid — 19 pandemic (which the world is currently groaning under) will prove to be the most difficult time in human history. It is also a time when entrepreneurs would be most required to be at their most ingenious, he said.

“Entrepreneurs exist to solve problems,and as these unfold right before our eyes or as we anticipate them, it is time to come up with solutions. Entrepreneurship is there to utilise our hidden untapped potential, innovation, creativity, persistence, leadership, learn from our failures and ultimately create a better world,’’ he said.

For budding African entrepreneurs, he has a few advice:

“Be in business in line with what you already know as the knowledge you have acquired in that field comes in handy,” he said.

 

“Do your research in your area of business. Understand the processes, product and people of your chosen business.

 

Continuously seek to learn from those that have gone before you. Have Advisory Boards, Mentors to increase your odds of success,” he further added. 

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer.