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Bridging the Digital Divide for Africa’s Informal Traders

A startup in East Africa has created a digital service that appeals to thousands of small shopkeepers across the region, while finding innovative ways to lend to the traditionally risky sector. While most of Africa’s well-known ventures into e-commerce have been designed to appeal to the continent’s burgeoning middle class, Sokowatch is aiming to bring goods and services to the millions of informal shop owners across the East African region. Raising $14m in Series A funding in February, the fast-growing tech company delivers essential goods like oil, rice and soap to over 16,000 informal shops across Kenya, Tanzania, Uganda and Rwanda. Making the bulk of its money on the margins between the wholesale purchase of items and the sale of those goods to each individual business, the delivery service is free and functions through an app or SMS. Around 15% of Sokowatch’s order book is supported by credit, and although it began as a value-added service alongside its core business the startup is beginning to focus more of its attention on creating various financial products for its customers. In East Africa alone, the size of the essential goods market in the informal sector is around $180bn increasing to $600bn throughout the rest of Africa.