Stellar Community Fund

By ClickPesa Debt Fund

Making DeFi finance work

SCF #26

$30.0K

Legacy v5.0 Activation Award

Awarded

We provide Web3 end-to-end transparency and accountability promoting access to funding for SMEs and women-owned businesses

Products & Services

Small and medium-sized businesses (SMEs) and women-owned businesses in Africa, crucial for economic growth, struggle to access needed financing primarily due to the stringent requirements of traditional banks and DeFi protocols. The financing gap in Africa is $421 billion, with Tanzania alone facing a $7.5 billion financing gap. Microfinance Institutions (MFIs), financial institutions that are providing credit geared towards SMEs and women-owned businesses, aiming to bridge this gap also face limitations in resources, especially funding access. The inadequate funding access impedes their ability to scale effectively, thereby constraining their potential contribution to the economy, as a result this obstructs the economic growth of SMEs and women-owned businesses. One of the main reasons for inadequate funding access is the limited transparency and thereby limited trust, making it harder to raise funding. This financial landscape is not unique to Africa, as many regions worldwide, particularly in developing economies, grapple with limited transparency and thereby accessibility in funding. This opacity not only obstructs the growth of SMEs and women-owned businesses but also undermines the integrity of the financial system, fostering inefficiencies and fraud.

The ClickPesa Debt Fund introduces a solution that maintains traceability entirely on-chain, making each step in the lending chain—from disbursement to repayment—fully verifiable and transparent. We ensuring that every transaction is recorded and accessible, by leveraging our licensed payment gateway ClickPesa, which is already integrated with the Stellar network for on/off ramp and merchant wallets infrastructure. By utilizing Soroban smart contracts we can further automate and simplify end-to-end traceability in the lending process. The intentions are to bring enhanced transparency to DeFi lending. This approach not only increases confidence among investors by providing clear visibility into the flow of funds but also enhances the ability for SMEs and women-owned business in Africa to secure necessary financing under fair conditions.

Target Audience and Their Benefits: Lenders benefit from increased transparency, which reduces risk and provides clearer insight into how their funds are being utilized. MFIs gain better access to funds through a transparent platform, enabling them to expand their operations and support more SMEs and women-owned businesses efficiently. SMEs and women-owned business benefit from more readily available funding opportunities, facilitating growth and operational stability.

How does it work and how does it uses Stellar and Soroban ClickPesa utilizes the Stellar Network for its robust, scalable, and secure infrastructure, which is ideal for handling cost efficient and reliable transactions. On top of this, we planning to employ Soroban smart contracts with the ClickPesa Debt Fund to automate and secure the lending process: Disbursement and Collection Visibility: Smart contracts track and verify the actual flow of funds to and from MFIs, ensuring all parties adhere to agreed terms. Fee Transparency: All fees charged during the lending process are recorded and made visible through the blockchain, preventing hidden charges and fostering trust. Automated Execution: Our platform automates transactions such as fund disbursements and repayments based on predefined criteria or milestones. For example, when a payment is made, the smart contract automatically executes the necessary actions, such as refunding money back to the appropriate entity.