Problem

Africa is home to a vibrant landscape of micro, small, and medium enterprises (MSMEs), which play a crucial role in driving economic growth, generating employment, and promoting social inclusion. However, despite their immense potential, these enterprises are confronted by a critical challenge: a significant financing gap.

According to estimates, approximately $331 billion is needed to meet the financing demands of MSMEs in Africa, a figure that reflects both formal and informal sectors. This financing gap is primarily due to a lack of access to credit, high interest rates, stringent collateral requirements, and a lack of financial literacy among MSME operators. These barriers have effectively limited the growth potential of MSMEs, causing a ripple effect on the continent's socioeconomic development.

The persistent existence of this financing gap underscores the need for innovative, comprehensive, and inclusive solutions. As it stands, the problem presents a formidable obstacle to the realization of sustainable economic growth and the achievement of key development goals across Africa. Understanding and addressing this gap, therefore, constitutes a significant step towards unlocking the full potential of MSMEs on the continent.

Solution

Umoja is a decentralized credit marketplace that crowdsources debt capital and collateral from investors to finance micro, small, and medium-sized enterprises (MSMEs) in emerging markets.

Umoja’s mission is to use the DeFi ecosystem to provide a risk-tolerant, affordable, and flexible lending infrastructure for business owners and, eventually, retail borrowers.

Umoja intends to provide affordable DeFi lending to finance borrowers in emerging market economies. To maintain this open-source financing, the protocol depends on a community of borrowers, lenders, collateral providers, and capital reserve providers.

Furthermore, to help MSMEs in emerging markets, Umoja is the first lending protocol to support multiple fiat currencies. That way, borrowers can eliminate FX devaluation risks that result from converting from USD to their fiat currency.

Umoja supports African MSMEs in the following ways:

Provides Preferred Terms. Borrowers propose their preferred lending terms.
Provide Affordable Capital. Lower MSME cost of capital by sourcing debt financing globally.
Provides Increased Flexibility. Enables MSMEs to renegotiate loans if needed
Provides Accessible Financing. Umoja was purpose-built for emerging market MSMEs.
Minimizes FX Conversion & Devaluation Costs. Umoja supports multi-currency loan terms, disbursement, and payment.

Impact

Accrued $45M in pre-launch deal-flow
Introducing DeFi's first African FX AMM to support the world's first African synthetic fiat tokens
Accepted into Chainlink's BUILD Program
Accepted into Google's Startups for Sustainability Program
Backed by the likes of Coinbase Ventures, Mercy Corps Ventures, Norrsken, 500 Global & Untapped Capital amongst others

Learn More

You can learn more about the Umoja protocol here.

Umoja Protocol: Closing Africa's $331B Credit Gap