The International Finance Corporation (IFC), the private-sector arm of the World Bank Group, has announced a commitment of up to $45.6 million in debt funding to the Lendable MSME Fintech Credit Fund II (LMFCF II), managed by London-based asset manager Lendable Inc. This funding aims to enhance credit access for micro, small, and medium enterprises (MSMEs), with a particular focus on women-led businesses in Africa, Asia, and Latin America through fintech lenders.
In addition to the IFC’s investment, the Women’s Entrepreneur Finance Initiative (We-Fi) is considering a co-investment of $4.4 million to support digital lenders that cater to underserved communities in emerging markets. The LMFCF II is a seven-year fund that will deploy capital over a period of five years, followed by a two-year repayment phase.
Founded in 2014, Lendable specializes in providing debt financing to fintech companies in developing markets, utilizing data-driven underwriting to manage risks effectively. By the end of 2024, the firm had deployed $576 million across 18 countries, maintaining a low default rate of 2.3% and achieving an annualized net internal rate of return (IRR) of 13.15% since its inception.
Lendable’s proprietary platform, Maestro, integrates with fintechs’ banking and customer management systems to enable real-time loan tracking. This technology has facilitated the funding of rapidly growing African fintechs such as Moove Africa, Planet42, OneFi, and Finclusion Group.
The new fund builds on the success of Lendable’s first MSME Fintech Credit Fund, which raised $110 million in 2023, surpassing its $100 million target. Development finance institutions like the U.S. International Development Finance Corporation (DFC), Japan’s JICA, and the Dutch development bank FMO, as well as commercial investors, backed the fund.
The IFC’s investment underscores the increasing significance of fintechs in bridging credit gaps in emerging markets. With 1.4 billion unbanked adults globally and MSMEs facing a financing shortfall of $5.2 trillion, digital lenders leveraging alternative credit scoring and mobile money systems are seen as a viable solution.
Despite the opportunities presented by fintechs, challenges persist, including higher interest rates and currency fluctuations in Africa and tightening regulatory oversight in countries like Nigeria and Kenya. Lendable’s data-driven approach aims to mitigate these risks while creating value for both investors and borrowers.
As fintech adoption gains momentum in the Global South, Lendable’s latest fund reflects ongoing confidence in the sector’s potential and in blended finance as a crucial tool for unlocking opportunities. Lendable, a tech-focused asset manager specializing in fintech debt financing in emerging markets, has deployed over $340 million across 14 countries and has received support from backers like USAID, the European Investment Bank, and other development finance institutions.
This initiative signifies a significant step towards empowering MSMEs, particularly women-led businesses, in underserved regions through innovative fintech solutions. The collaboration between the IFC, We-Fi, and Lendable underscores the commitment to driving financial inclusion and economic empowerment through technology and sustainable finance practices.
