New Study Seeks to Identify Entrepreneurs Likely to Pay Back Debt

Nov 11 2020

A new study launching this month seeks to identify suitable candidates for loan and credit services among young entrepreneurs, helping financial service providers lend to small entrepreneurs in the informal sector. The study is a continuation of earlier research that established a methodology to determine the likelihood of success among young entrepreneurs.

A press release from BFA Global, one of the research partners, states that the project will connect “1,500 young micro-entrepreneurs with tailored financial support” to reboot their business after the pandemic. Other partners in the study include Financial Sector Deepening (FSD) Kenya and Shujaaz Inc.

The results of our first study demonstrated that it is possible to discern varying entrepreneurial abilities, based on alternative data. This group of young entrepreneurs would benefit greatly from both financial and non-financial support, but right now they are considered ‘unbankable’ by most financial service providers due to lack of data.

BFA Global CEO Amolo Ng’weno

The previous study by the organization relied on SMS surveys to identify small businesses likely to succeed. The research which sought alternative data from 4,724 respondents, notes that a year later, respondents identified as high potential entrepreneurs recorded 70% higher sales than average and a 140% rise in gross profit compared to their peers.

Further study using validated data from SMS surveys presents financial institutions’ opportunity to leverage alternative data sources to appraise young entrepreneurs. This will allow institutions to lend to young entrepreneurs with a high propensity to pay back, which is especially important now as businesses recover from COVID-19.

Kenyan Wall Street

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