CashMe Tanzania the new way to lend and borrow money

CashMe Tanzania (www.cashmetanzania.com), a first of its kind online invoice discounting platform in Eastern and Southern Africa, is a breath of fresh air in Tanzania financial market.  On one side, the platform provides borrowers with an innovative way of financing their working capital and on the other side, it offers investors a new class of investment security (Invoice) and increase investment options that are available in the market. The platform is owned and operated by Sebuys Company Ltd and started operation in 2021.

CashMe Tanzania aims at addressing SMEs access to credit problem. Access to credit is a critical enabler for the growth and development of small and medium enterprises. The SME credit market, however, is notoriously characterized by market failures and imperfections. In emerging markets 55–68% of formal SMEs are either unserved or underserved by financial institutions, leading to a total credit gap of USD5.8m annual MSMEs financing gap in Tanzania according to IFC Financing Gap 2017 Report.

CashMe Tanzania platform provides alternative financing solution to address this financing gap by providing SMEs access to working capital that they need through online invoice discounting.

The platform connects borrowers (SMEs) who want to borrow against their unpaid invoices and investors (both individual and institutional investors) who are able and willing to lend to these SMEs at a return. The registered SMEs can get cash against their unpaid invoice within 48 hours instead of waiting 30 days to 90 days to get paid by their customers. This helps SMEs to chase and fulfill the next order which increases their sales volume and profits.

As of June 2023, the platform has facilitated a total of TZS3.2 billion loans extended by the registered investors to SMEs, just three years since inception.  The demand for invoice discounting facility by SMEs on the platform has been growing at average rate of 292 Year on Year. The company projects over TZS5 billion of loans will be extended by the investors on the platform to SMEs in 2024. Unlike most fintech companies which usually face challenges in revenue generation, the platform became profitable in 2023.

The platform has garnered interests from various local commercial Banks and fund managers who would like to lend on the platform due to various reasons which include, among others,  using the platform as the channel to reach  many SMEs,  and transferring  of SMEs Credit risk underwriting process which may be operationally uneconomical for commercial banks.

How CashMe Tanzania platform operates

The SMEs undergo a vigorous credit due diligence before being approved as the borrower on the platform. This is done through proprietary credit analysis tool developed by CashMe Tanzania and use of external sources such as Credit bureau. After being approved as the borrower, the SMEs can immediately post the invoice for trading on the platform.  Investors registered on the platform will get sms   notification on their phone or email and can login in their accounts and bid on the invoice.

The funding of invoices on the platform is done in a syndication style, whereby, multiple investors can invest in a single invoice. For example, if the invoice discounted value is TZS10million, Investor A can invest TZS200,000; investor B TZS5,000,000; Investor C TZS2,000,000 and so on. In this manner, investors have an opportunity to invest their money based on their risk appetite or other preferences such as sector preference. The minimum amount a person can invest in an invoice is TZS50,000.00. There is no maximum amount to invest. The maximum amount depends on the value of invoice traded on the market.

Benefits to Tanzania financial Market and Economy.

Among others, below are benefits offered by CashMe Tanzania platform in comparison to traditional financing solutions.

• Transparent: investors and borrowers on the platform have knowledge of the cost and returns in advance. No Hidden Costs. 
• Syndication: The platform operates in loan syndication style whereby mmultiple investors can contribute towards financing of a single invoice. This allows investors to invest up to their risk appetite and collect more funds from the economy to support growth of SMEs.
• Small Ticket Size: Borrowers can borrow as low as Tshs.100,000 against their invoice. The borrower is not required to commit to the entire sales ledger.
• No Commitment Fees: Membership to our platform is free. No cost is charged to registered members on our platform.
• Alternative Investment to Public:  We provide a modern alternative investment avenue to the public. The platform offers individual investors, Sacoss, Banks and Microfinance, social security funds and corporate treasury a new class of investment security and earn an attractive return from 4% per month.
• Stimulate financial inclusion. The platform provides an opportunity to SMEs who underserved or marginalized from traditional financial system to access working capital which help to grow their business and GDP of the country.
• Cheaper.  The platform doesn’t charge fees for funds invested on our platform. Investors pay only a regulatory 10% withholding tax on their profit. There is neither registration or membership fees to both borrowers and investors nor ledger management fees to borrowers. The platform charges borrowers only when they use the platform.

I had a chance to speak to Mr. Mchomvu, who has been an investor on the CashMe platform since 2022. He said, “When I joined the platform, I was not sure about how the platform operates because it is new in the country and in this region. I was skeptical so I started small with TZS500,000 and with time I have invested more than TZS215 million to date and I have never experienced any default for the past 2 years. I think people are missing out on this attractive investment. I believe because, as I was, people are skeptical because it is new type of investment. I think it is because recently people have lost their money on online/digital platforms which turned out to be Ponzi Schemes.  You cannot invest in platforms which have no underlying transaction of value. CashMe Tanzania is different, there is real underlying business transaction. As the lender on the platform, you are lending money to real businesses, you can see their invoices, EFD receipts, business contracts, contacts of the borrowers, you can even call them yourself or look for information from Brela etc. You know where your money goes and how you make profit. It is the same as lending to your friend, right? but u know, how many times our friends pay back? But I can tell you, all money that I lent on CashMe Tanzania platform has been paid back.”

I also had a chance to speak to borrowers on the platform who were not short of thanks to the platform. “Since I joined CashMe Tanzania platform, I don’t worry about how I finance my next orders, I don’t worry about selling on credit and wait for 30 or 90 days. I have become more competitive in the market because I can offer attractive credit period to my customers of up to 60 or 90 days because I am sure I can cash out my invoice from CashMe Tanzania within 48 hours. No hustle, I can do that from home or at my office”.

For the individual investor, the benefits are very clear- let your money work for you.

How many of us who are busy employed, and we don’t have time or skills to manage our businesses end up with losses? I think the term Kilimo cha Mpesa or Kilimo Tigopesa ring a bell to you. This is when you send your TZS5 million to guys in Morogoro or Tanga to cultivate Vitunguu or Maize for you, only after 3 or 4 months you end up with bushes of wild grasses in the farm. It is true we all want that extra money, but we don’t have time and sometime skills to manage business.  

CashMe Tanzania offers an opportunity to avoid this problem. Investors on CashMe Tanzania lend to other people (SMEs) who know their businesses and who have time for their business and in return they get attractive profit, no need to hustle with remote management of business. There are many examples which clearly show that not all of us can do business due to many reasons, one of them being time. Instead of venturing to businesses ourselves, we can lend money to others to do the job.  A 4% return per month is the best return on the market so far. Let your money work for you-kind of thing.

Currently, only invoices issued by SMEs to reputable companies, government authorities and other institutions such as embassies are acceptable on the platform due to lack of credit rating or record of many private businesses in Tanzania. CashMe Tanzania recognizes this problem and has committed to develop and improve its proprietary credit score system to cover many businesses which are underserved by the mainstream financial system. This move will help more SMEs who supply on credit to other “Not reputable institutions” to access invoice discounting financing.

You can visit their office located at GSM Salamander Tower, 4^th Floor or call them +255713560288 and learn more about how you can invest or borrow from the platform or you can follow them on their social media accounts ( Instagram, LinkedIn, Twitter and Facebook)  @cashmetanzania.