Africa is seen as the next trade frontier, following the coming into force of The African Continental Free Trade Area (AfCFTA), which created the single largest unrestricted trade region in the world. However, while trade liberalization is meant to spur intra-regional commerce, its take-off is dependent on key infrastructure investments to ensure supply chain efficiency. More progress is linked to how quickly market information circulates to key stakeholders, including traders, regulators and financiers.
Realizing emerging opportunities, Xetova, a Kenyan startup, is deploying technologies that make information on market opportunities accessible to traders. It is now building a network of large, medium and small enterprises, which will be tapped to draw insights and foresights on market opportunities and risks.
“We are building a trust network that, for example, allows a company in Kenya to know who to work with in a country like Nigeria, South Africa. This trust network can only be built with the ability to collect verifiable data,” said Bramuel Mwalo, Xetova founder and CEO, adding that his company is working on the largest trade intelligence and supply chain support network.
To ensure that trade trends, reports and highlights are authentic, Xetova, which was founded in 2019, is positioning its network on data from its insights service, which businesses use to interpret data on supply chains, spend, revenue and general management performance into actionable insights.
The insights service is the first in Xetova’s suite that clients sign up before subscribing to others that include trade financing and linkages to wide trade networks.
Mwalo’s interest in African trade was driven by research he was part of that showed that entrepreneurs have a high chance of success if they gain access to large procurement deals and less fragmented distribution channels.
“That finding made me curious about B2B trade, large supply chains and how entrepreneurs in Africa access large procurement opportunities. I developed this theory that data can significantly drive trade and how businesses access opportunities, manage risk and relate to each other,” said Mwalo.
“Then my PhD thesis explored ways of getting B2B data accessible in the sense that everybody in Africa who’s trying to do business should actually access data on opportunity, and risk and network. This information should be readily available to the market and where it is available, it significantly changes how trade is done, because at the end of the day, we perceive risk differently,” he said.
Mid his studies, Mwalo took time off to join Kountable, a financier that provided loans to SMEs that are locked out of formal institutions because of lack of collateral.
In his two years as a Kountable executive, he says, they financed $32 million worth of deals, supporting 200 entrepreneurs in several countries including Kenya and Rwanda. It, however, proved hard for them to scale lending, even with a $150 million line of credit, due to lack of verifiable data on the operations of many enterprises.
“Initially, business went really well, and the uptake was fantastic. The challenge came when we needed to scale beyond the 200. Every time we started engaging businesses outside our network, we lost money. Their needs were growing too fast, faster than our ability to do due diligence,” Mwalo said.
“That point is when I realized the biggest issue in trade within Africa is not capital, it is information asymmetry in terms of where value, security and returns are,” he said.
This experience drove him to launch Xetova to ensure that businesses understand and unlock the value of the data they possess, use it to inform solutions for their challenges and demonstrate how it can be harnessed at scale for trade intelligence that can open up new partnerships and bigger markets. This is in addition to making it possible for businesses to access loans based on their own data and insights, which are used by lenders within Xetova’s networks to offer tailor-made loans.
Besides serving enterprises, Xetova counts government agencies among its clients, with whom it is working to improve efficiency in healthcare. For such entities it provides insights on consumption, distribution, procurement spending, supplier and payment performance.
The company claims to have booked $2.45 million in revenues by December last year, and facilitated trade finance to the tune of $7 million.
Xetova is looking to grow its clientele base from the current 60 large enterprises to 300 in the next 18 months.
The firm is targeting to sign up 10 major distributors in Africa, to increase access to over 10 countries from the current seven and to facilitate $20 million in trade finance.
Xetova, which raised $4 million in an equity-debt seed round last year led by South Africa’s TRT Investments, is also launching a fellowship program for potential investors.
This article originally appeared at https://techcrunch.com/2023/01/13/xetova-exploring-market-data-gaps-in-africa-to-boost-trade-insight-access/ on January 13, 2023.