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Demica rolls out supply chain finance programme for South African retailer

African retailer Shoprite Group – the region’s largest fast moving consumer goods company – has partnered with Demica to provide supply chain finance to its suppliers, a deal the fintech says is the first of its kind in the food retail industry in Africa.

The CredX finance product, which Shoprite says “is often cheaper than bank financing”, is being made available to all of the group’s suppliers, but is targeted towards SMEs, for whom cash flow constraints and access to affordable funding are significant business growth obstacles in South Africa.

“There is a definite need in the market, especially amongst small- and medium-sized suppliers who struggle to access finance through traditional routes,” says Jean Olivier, Shoprite’s general manager of financial services. “While there are alternative supplier finance products available, we can provide a better service due to the Shoprite Group’s extensive ecosystem, and we expect this initiative to build even stronger supplier relationships.”

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Using Demica’s supply chain finance platform, suppliers can select invoices for early settlement. CredX will pay the supplier within 24 hours, and Shoprite will then pay CredX on the invoice maturity date.

This development follows Demica’s recently announced partnership with Afreximbank, as the UK-based fintech looks to bring much-needed supply chain finance solutions to the African continent.

“The unique combination of Shoprite’s footprint in South Africa and Demica’s technology will be the basis for a tremendously successful programme that will benefit hundreds of suppliers in the region,” says Johannes Wehrmann, Demica’s managing director of corporate solutions.

Supply chain finance is fast becoming big business in Africa. Earlier this year, Citi signed a risk-sharing deal with British International Investment, the UK’s development finance institution, to increase its supply chain finance volumes in the region by around US$400mn a year.

The market opportunity continues to grow: According to a study carried out in 2020 by the African Development Bank and Afreximbank, the continent’s trade finance gap reached more than US$81bn before the emergence of Covid-19, and the pandemic-induced economic downturn and capital flight has further reduced the amount of trade finance available to businesses in the continent, particularly SMEs.

The post Demica rolls out supply chain finance programme for South African retailer appeared first on Global Trade Review (GTR).

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