CARMA, a Nigerian credit data marketplace with operations in Kenya and Zambia has announced an early-stage venture funding round led by Microtraction, a Venture Capital firm that invests in Africa’s most remarkable teams at the earliest stage of their venture.
CARMA will use the funds to expand its operations across the continent and launch its headquarters in Lagos, Nigeria led by Ted Martynov, co-founder, and CEO.
“Our early-stage venture funding allows us to invest in growing our presence across sub-Saharan Africa and our ability to address the gap in the credit data ecosystem while strengthening our network of clients,” said Ted Martynov, CARMA’s Co-founder and CEO. “We are also focusing on supporting companies with quality data in the credit decision process to avoid non-performing loans. We anticipate on strengthening our services across the region, which will bring us closer to helping companies enhance data sharing to build proper credit assessment procedures.”
The Nigerian office will help reach lending and non-lending organizations monetize their data to create a passive revenue stream. It will also provide a data supply chain for organizations with access to CARMA services, contributing to data-driven business decisions.
Launched in Zambia three months ago, CARMA, aims to provide lending companies with access to real-time credit data on a peer-to-peer basis through a pay-as-you-go service as most players in African markets lack advanced credit reporting systems to serve the unbanked population.
CARMA’s proprietary solution will help firms comply with the demand of unbanked countries in circulating data. In Zambia, CARMA has signed an agreement with NASCU Zambia to provide credit reference services for 1,122 credit unions. The credit unions serve almost 1.5 million credit union members equivalent to almost 15 percent of Zambia’s adult population.
Microtraction supports several great tech teams across the continent and is aware of the gap in access to credit data, which it believes is a fundamental one to fill.
“Providing a solution that addresses this lack of data improves the quality of business processes and also helps the mass populous with access to financing, which of course, is very critical during these times as the world continues to fight a health and economic crisis. We look forward to working with CARMA as we continue to support teams working to address infrastructural challenges across Africa. We are excited to be CARMA’s partner as part of their Africa rollout,” said Chidinma Iwueke, Partner at Microtraction said.”
According to the World Bank private credit bureau coverage 2019, only 14% of adults in Nigeria have a credit history from credit bureaus and only financial institutions are currently submitting data on individuals and commercial entities regularly. As a one-stop-shop for pan-industry data, lenders in Nigeria can now access data on a real-time basis via CARMA’s decentralized technology while data contributors will also have access to monetize their data in a secure data marketplace.
The economic impact caused by the global health pandemic has had a severe impact on the digital lending space across the continent as the number of non-performing loans continue to be on the rise due to job losses and pay-cuts. The major challenge lending organizations have been facing is getting access to aggregated credit data for proper credit assessment. As digital financial services are broadening and speeding up financial inclusion in many African countries, specifically where digital mobile lending has already become advanced, data sharing between organizations remains crucial for lenders to provide high-quality loans and prevent over- indebtedness.