Creating big impact with a small help

The idea to establish liwwa clicked in Ahmed Moor's mind when he as a journalist interviewed Nobel Prize-winning economist Joseph Stiglitz. Stiglitz emphasised that employment among the young generation was crucial for economic stability. Moor became convinced that the growth of small and medium sized enterprises (SMEs) is the key to generate jobs and business opportunities for youth.
It is widely known that the SME sector has a huge problem accessing capital, even though they account for the majority of businesses in the Middle East and North Africa (Mena) region.
According to the World Bank, 63 per cent of Mena SMEs do not have access to capital.
"I was extremely motivated by the idea that helping SMEs grow would improve economic growth, jobs and lead to more stability. I discussed it with my friend and co-founder Samer Atiani, and we decided that we would start something to support SMEs. We started liwwa, our marketplace lending platform, at the Harvard Innovation Lab in 2013, and moved the company to Jordan in 2015," says Moor, co-founder and CEO of liwwa.

In Jordan, SMEs represent 97 per cent of companies and create 70 per cent of new jobs in the kingdom, according to Oxford Business Group, Jordan: Finding Financing for SMEs.
Liwwa is a peer-to-peer lending platform in the Mena region that provides SMEs with trade and asset financing. Liwwa's target audience is divided into borrowers and investors, also referred to as lenders. To date, liwwa has maintained a solid portfolio and delivered annual returns of 10.6 per cent.
Moor says that his ultimate aim is to create a business model that is easily replicated from one country to another in the Mena region. However, he says, Jordan is "our base of operations and will remain so for the foreseeable future. It is a market full of potential."
"We extended our underwriting services in the UAE at the end of 2016 for a few months, with the aim of testing the consequences of a soft rollout. We learned a lot from that trial, namely that credit assessment expertise is market-specific, and we are now better equipped to take on further expansion. We are currently working alongside a team of market experts in Egypt to explore the opportunities and risks that country presents," the CEO discloses.
Disclosing his strategy to remain competitive, Moor says the lending platform is regularly iterating and changing in order to improve and better serve its customers.
"This flexibility will help us offer the best service possible and that's where we see ourselves competing. We are careful to make sure that we address customer pain points and a big one is the urgency of receiving funding. In response to this, we have changed our process and we now review applications for financing within 48 hours and, for those that are approved, we make funding available straight away. Other competitive features of our service are that we do not require collateral and we provide excellent customer service throughout the borrower journey," he explains.
"On the investor side of the business, we do not attempt to compete with other investment options but rather to complement them. We target investors who are financially savvy and will want to test out a new option for growing their returns. The liwwa index delivered 9.45 per cent over the last 12 months, which is attractive. It is important to emphasise that this is an unsecured investment that carries risk," he continues.
Liwwa has raised $5.55 million from investors and $6 million in debt to date. Their investors include Silicon Badia, Bank Al Etihad, DASH Ventures and Mena Venture Investments. Their debt partners include Bank Al Etihad, Capital Bank, Arab Bank and the Dutch Good Growth Fund.
"Yes, we have recently kicked off discussions to raise a Series B round of funding. This funding would go towards investing further in our technology and our team, to help us scale up and expand into new markets," says Moor.

Namek Zu'bi, founder and managing partner of Silicon Badia, says this opportunity is too big to pass up and the market is severely underserved.
"Since 2015, with very limited marketing spend, liwwa has received more than $1 billion in lending demand through its platform. Liwwa is one of the only players in the region building disruptive technology lending infrastructure that will allow it to service this market effectively and efficiently," says Zu'bi.
"From the point of view of our borrowers, our service is differentiated primarily by our focus on speed - we turn loans around, from origination to disbursal, in 2 days or less. A lot of work goes into delivering that standard of service, particularly in developing the tools to make our underwriting team more efficient," emphasises Caroline Vikati, VP of business development at liwwa.
Moor notes that today's environment is more conducive to startups with the fast development on the technology front.
"Governments play a big part in supporting fintech, especially through the development of fintech-specific regulations. We have seen these launch recently in places like Dubai and Abu Dhabi, and Jordan also has plans to create a new set of regulations," he says.
Moor is confident that in 5 years, liwwa will have a highly automated underwriting and securitisation engine in place. "Our goal is to continue to do a lot more of what we've been doing all along."
"With demand for SME funding at $240 billion, there is a significant opportunity to address the need for capital via marketplace lending. But it's only one part of a larger capital markets evolution that's got to occur in Mena. Lenders, marketplace or banks have to be able to distribute risk in a way that supports more lending," Moor concludes.
- riaz@khaleejtimes.com