Addressing the challenges faced by African international trade, FrontEdge, a Lagos-based fintech, recently raised $10 million in debt and equity to empower cross-border trade for SMEs. In Africa, only 30% of trade volumes receive financial support from banks, creating a significant financing gap for SMEs. With an annual international trade value of $1.2 trillion in Africa, FrontEdge aims to tap into this vast market opportunity.
Founded in 2021 by Moni Alli, FrontEdge offers working capital and software tools to SME exporters and importers, enabling them to facilitate cross-border and international transactions. Alli, drawing on his experience as a former McKinsey consultant and private equity professional, recognized the financing gap for African SMEs and sought to address it through FrontEdge.
Challenging the traditional financing model, FrontEdge provides upfront capital to exporters based on transaction-based underwriting without requiring collateral. This approach accelerates receivables and allows exporters to engage in more transactions. Additionally, FrontEdge offers software tools, including logistics management, cargo insurance, and document management, to complement its financial services.
The company’s strategic partnerships with JP Morgan and Providus Bank, among others, enable it to act as a vertical bank tailored to the specific needs of African traders, providing financing, cross-border payments, and offshore accounts. As a result, FrontEdge has witnessed substantial growth, with SME exporters experiencing a threefold increase in sales on the platform.
FrontEdge plans to utilize the capital raised to expand its financing product across multiple African countries and diversify its revenue streams. With the backing of lead investor TLG Capital and supporter Flexport, the company aims to scale its operations and continue empowering African SMEs in global trade.