Kountable recently announced credit bureau reporting for SMEs (small and medium enterprises) in Rwanda and Kenya based on how well they execute on projects. This stands in contrast to traditional credit reporting which focuses only on bill and loan repayment habits.
“Kountable is pleased to take the lead globally in reporting on good execution behaviors inside of a project with agreed upon milestones,” said Kountable President Catherine Nomura. “Our model is not loan-based, and because we and the entrepreneurs on our platform get paid based on the successful execution of a project, we’re very invested in being able to identify entrepreneurs with great execution capabilities, even under the toughest of conditions. Early on, banks started reaching out to our SME partners because we were working with them, and this is just an effort to formalize that recognition that there’s more to being a great entrepreneur than paying your bills on time.”
A pervasive problem for SMEs across the globe is the absence of a financial footprint or credit history due to the limited credit information gathered for these hundreds of millions of businesses. The result is financial exclusion on a mass scale which leads to difficulties accessing working capital and traditional banking products.
"Some of our partners may have no credit at all because they're not able to obtain traditional financing," said Sheila Ellis, Kountable's Finance Controller of Africa Operations. "Traditional lenders or banks often want collateral that our partners may or may not have on their balance sheet." This is a structural problem that has nothing to do with the entrepreneur’s ability to execute.
Kountable's CEO, Chris Hale, doesn't think that should prevent high-performing SMEs from obtaining commercial credit and operating. In fact, the Kountable platform is capturing plenty of data that that would prove otherwise.
"A lot of our customers do millions of dollars in trade successfully, manage multiple trades at the same time, are communicative, give us the right data, deliver on expectations, meet their customer's requirements and get paid," said Hale. "They get paid for the goods we consign to them as part of our business process. That is us extending them commercial terms. Executing against commercial terms is demonstrating the right kinds of behaviors. Because we have built a technology platform that measures and manages that international trade transaction, sharing that information with the financial ecosystem can help our partners develop their businesses."
Reporting a more accurate credit history for Kountable's clients benefits both banks and SMEs. While it may seem to open up more competition for the technology platform, Hale explained that Kountable's SME partners are scaling and will continue to scale. "We believe it will always take a combination of support from companies like ours that are solving specific problems relating to trade and the formal banking sector that can help them scale their businesses in a more traditional sense."
In addition to the opportunity to earn a credit history based on execution behaviors, SMEs working with Kountable have access to better commercial terms with global suppliers from whom they need to purchase goods. In the absence of Kountable's technology, the marketplace is often unaware of challenges that face SMEs such as delays in payment from their enterprise-level customers.
"All we are doing is sharing our ability to monitor, influence and measure both conscientious and bad behavior," said Hale. "No one has the data we have; we have talked to every partner in the ecosystem. No one sees the full picture like we see it, so it's in the best interest of our enterprise and global trade partners to help create this transparency and share information to make the network run more efficiently."
I recently had an opportunity to catch up with Chris Hale from Kountable. Kountable is doing some real trade finance, providing preshipment...
"The Kountable sourcing process is facilitated through high-volume technology distributors in the US and bing aligned with the largest computer and technology manufacturers in the world," said Santoni. "That's the game-changer for supplying these markets."