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Considerable Increase in Microfinance Deals: Path To Financial Inclusion

Industry: Retail Banking and Lending
Current: Other Industry Indicators

Microfinance is a financial inclusion strategy that enables low-income households to come out of poverty through the provision of small loans, savings, insurance, etc. Increase in the number of deals provides an opportunity for the microfinance sector to register considerable growth.
On April 11, 2022, Datasigns Technologies, an India-based full-stack financial services platform, secured $13.1 million in Series B funding from Gojo & Company Inc, an emerging microfinance company.
In 2021, BlackRock Inc, an investment management corp., invested $90 million in Tricolor Auto Group, a company that harnesses data analytics and technology to improve financial inclusion.

Considerable Increase in Microfinance Deals: Path To Financial Inclusion

Financial inclusion is one of the critical enablers that facilitate the achievement of sustainable development goals; and microfinance is one of the financing tools to improve financial inclusion. Increase in the number of deals provides an opportunity for the microfinance sector to register considerable growth. On April 11, 2022, microfinance firm Gojo & Company Inc invested $13.1 million in Datasigns Technologies (MyShubhLife), a provider of easy and affordable financial services. Tricolor Auto Group, a company that harnesses data analytics and technology to facilitate financial inclusion, received a $90 million investment from BlackRock Inc in 2021. These investments indicate that besides growing firms that evince interest in the microfinance sector, established players too have been trying to acquire a larger market share.

Microfinance: A Necessity for Developing Countries

Microfinance is a type of financial service that provides small loans, savings, insurance, and other financial services to low-income households or groups, which do not have access to traditional banking. It is a financial inclusion strategy that enables poor and low-income households to come out of poverty, improve their income, and improve their overall living standards. It aims at promoting micro, small, and medium enterprises for economic development in low-income countries.

Microfinance could be an important tool that can bring about development in the economy of countries where people are not connected with banks. According to GlobalData, Azerbaijan, Vietnam, Pakistan, Morocco, and Cambodia are among the countries where people are least connected to the banking sector; almost half of the population is unbanked in these countries. Governments there should work on creating awareness among the local people about microfinance, aiding the microfinance sector, and building a transparent model to track financial transactions for building a strong microfinance sector.

Recent Deals in Microfinance

On April 11, 2022, India-based financial services enabler Datasigns Technologies (MyShubhLife) secured $13.1 million in Series B funding from Gojo & Company Inc, a Japanese microfinance provider, to expand its operations with more corporate and large platform partnerships to offer a seamless inclusive financial program for the next half billion, the underserved segment of the population. MyShubhLife is one of India’s largest instant personal loan platforms, which provides services such as personal loans, insurance, investments, etc.

On March 14, 2022, HAKKI AFRICA, a microfinance services provider in Kenya, secured $1.87 million in Series A funding from LaunchPadFund Investment, Saison Ventures, Monex Ventures, Deepcore Inc, Link-U, and SBT Co. The funding will be used to secure human capital for long-term business growth, and to fund the business expansion at local and regional levels.

On March 01, 2022, Arum Holdings, a South Korea-based investment company, announced the acquisition of Belstar Microfinance Limited (BML), an India-based provider of micro-financing and insurance solutions to individual and corporate clients, for a consideration of $1.86 million.

On September 09, 2021, BlackRock Inc, a global leader in investment management, invested $90 million in Tricolor Auto Group, a company that harnesses data analytics and technology to improve financial inclusion in the underserved Hispanic market and offer responsible, affordable, credit-building loans to individuals with no or limited credit history.

On August 05, 2021, FintechOS SRL, a UK-based technology as a service platform (TaaS) for financial services companies, secured $10 million in Series B funding from a consortium led by International Finance Corporation to enhance financial inclusion.

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