When rain falls, the Mangala town of Goa Radu, on the banks of the Nile River in South Sudan, turns into an island. People without boats are at risk of being left behind in the flood.
Radu has transformed the threat of this season into opportunities. With the help of two loans worth $9,240 from Rwanda-based microfinance startup Inkomoko, he expanded the business of making canoes and helped flow the lives of Mangala’s neighbors.
Incomoko dreamed in 2012 by US entrepreneur Julianne Euler and chief operating officer Sarah Reedum while traversing Africa after quitting her job in Silicon Valley.
The company is the fastest growing in East Africa with this year’s FT-Statista ranking and the eighth overall ranking, offering financial training in place of the collateral that most microfinance companies need.
A quarter century ago, Africa’s mobile phone pioneers proved that there was a vast consumer market waiting to be slapped by the continent. Similarly, Inkomoko demonstrates that by investing in many refugees, there are entrepreneurs waiting to be unlocked and profitable in the most often overlooked places by investing in people who have no previous access to the formal banking sector.
“Where others see refugee camps, you see ecosystems of buyers and sellers and people with resilience and skill,” says Nick Daniels, the group’s development director.
Inkomoko recorded a combined annual growth of 211% between 2020 and 2023, increasing revenue from $1,60,000 to $39,990,000 over the period. In five African countries run by the group (Kenya, Rwanda, Ethiopia, Chad and South Sudan), more than 50% of their clients are refugees or people internally displaced by conflict.
Neither Radu sells canoes for about $250 each, but Inkmoko has allowed them to navigate one of Africa’s most internationally recognized business environments and the most challenging business environments in the world.
Access to low-cost loans allowed him to hire 20 extra workers and stock up on materials and tools, but he made a living by building only boats with scrap wood and glue. Each canoe provides a lifeline during the rain, he explains in a video call from Mangala, allowing traders to go to school by markets, families crossing the river, and across school children.
“Since Inkomoko came, I have been able to supply all the customers that come in. “Every family life is better. The kids are happy and I employ people, so I’m more popular in the community.”
According to the World Bank, small and medium-sized enterprises (small and medium-sized enterprises) make up about 90% of all businesses and employ 80% of African workers. However, it points out that there has been a lot of struggle for access to fundraising, leaving the annual fundraising gap of $331 billion.
According to its own data, Inkomoko’s educational approach, which helps plug that gap, is designed to minimize defaults with repayments performed on 97% of the loan book.
When the requirements are low before creating a loan at a rate that is generally more affordable than a bank, the company will first help the customer develop the skills, resources and networks they need to grow their business.
This includes training in bookkeeping, customer service, inventory, tax management, and advice on business plans. It also helps connect clients. Clients are restricted to refugee camps they live in, in their supply chains and local markets.
“We risk risks loans through training,” says Daniels, who calls McKinsey’s services a kind of “microentrepreneur.”
Inkomoko has supported over 100,000 companies so far, with loans ranging from $250 to $50,000. It is currently expanding in West Africa and Central Africa, aiming to increase its customer base to 550,000 by 2030.
“The goal is to create a model that will attract the interest of banks and businesses,” says Daniels.
Muktar Mohamed’s business in the town of Zigziga in eastern Ethiopia offers a strong case. The 47-year-old with six children left many years of government work as he struggled to support his growing family with the small salary he earned.
However, he says initially had a lack of business experience, increased debt, and most of all, he had him close frequently, struggling to ruin his fresh produce without refrigeration.
It’s a familiar story for many Ethiopian entrepreneurs as they struggle to access the funding they need to keep their business up. Inkomoko has promoted $1.5 million in loans to 1,400 entrepreneurs across the country.
Mohamed asked about the company through word of mouth. Working with banks and other local microfinance companies, Inkomoko has arranged a $3,500 loan to allow the generator to be purchased.
Now his AWAYS cafe remains open when the blackouts cause others to shut up the store. Boosted by two other ventures he launched, he employs 21 staff, up 81% in monthly revenues at $15,800. “My cafe doesn’t just serve food anymore,” he says on Jigiga’s phone. “It’s at the heart of the community,” he adds, offering it to all his family and everyone else who works there.
The rationale for this type of lending was strengthened by an accelerated decline in Western aid budgets, particularly by the Trump administration’s USID closure.
Refugees in particular cannot rely on humanitarian institutions to maintain their needs, Daniels said. “They need to supplement their income,” he adds. “That’s really the reason for what we’re doing.”
