Generation Start-up: Liwwa targets $240 billion SME finance gap in Middle East

Amman-based company has raised more than $5 million from investors

Ahmed Moor, chief executive officer of Liwwa, a financial services start- up is photographed at his office on January 15, 2018 in Amman, Jordan. ( Salah Malkawi for The National)
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As a journalist Ahmed Moor, the founder of an SME financing start-up, witnessed first-hand during the Arab Spring of 2011 how the lack of opportunities for the young had led to an eruption of discontent and how one of the main barriers to job creation was the lack of financing for nascent enterprises.

"The revolutions in Egypt, Tunisia, that was an expression for me of how badly people need access to capital in this part of the world," Mr Moor says.

"With that in mind, I wanted to start something that could deliver some of that opportunity and that's what this business is about."

The idea of starting a company to help fund other businesses through crowd funding took greater shape while he was a graduate student. Studying public policy at Harvard University later in 2011, Mr Moor met his co-founder, Samer Atiani, who like him originally comes from Palestine. Together, they fleshed out what would become Liwwa, an SME crowdfunding platform-based financing company that since 2015 has lent more than $8 million to small businesses in the region.

Like most successful entrepreneurs, Mr Moor says he didn't get into the business to get rich but to help solve a problem that is hindering the potential of the region, where unemployment is rife and small businesses struggle to get off the ground because banks shy away from lending to SMEs and start-ups. While every businessman dreams of making money, that alone usually isn't enough to make it, he says.

"When you start out, it's far from clear that you will be successful and the costs of failure, financially, emotionally, reputationaly, are enormous," Mr Moor says.

"If you are not in it for something which goes deeper and is more important than just money, it's hard to see how you would get past those first years. The first two years were very difficult years. If money was the motivation, I would probably have failed very early on."

Raising money alone for the business took two years. Mr Moor says he got a lucky break when his friend Sultan Al Qassemi, a fellow businessman and a UAE commentator, made a series of introductions to investors including Fadi Ghandour, the founder of the courier company Aramex and Omar J Sati, the managing director and co-founder of DASH Ventures, an Amman-based venture capital firm. Those investors ultimately ended up taking a bet on Liwwa in March 2015.

In all, in its first round of fund raising, Liwwa was able to raise $500,000. DASH Ventures, the lead investor, put in $200,000 while Bank al Etihad, a Jordanian lender, invested $200,000. MENA Ventures Investments, an angel investment firm founded by businessmen Fadi Ghandour and Arif Naqvi, invested $100,000.

Other investors since then have been the Dutch Development Bank, Silicon Badia and businessman Samih Toukan through SAT Capital. Liwwa has raised over $5m in total and this year, the company plans to raise another $5m.


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In the two years it took to raise funds, the Liwwa founders tested their business model to prove to investors that it worked. The first loan Liwwa made was to Mr Moor, $1,400 to buy a laptop. In all, the company lent $40,000 in a two-year period through its website before it got outside investors on board with the first loan being to a businesswoman who runs a yoga retreat and needed $350 to buy yoga mats. 

Liwwa's business model is two-fold. First, it makes a 3 to 4 per cent fee on every payment a borrower makes to a lender. Second, as a lender, it makes a margin for the Jordanian dinars it borrows from banks at 11 per cent and lends out at 17 per cent.   

Investment into the company aided its ability to grow rapidly, while maintaining a low ratio of non-performing loans. From March 2015, when the company officially started, until the end of 2015, it lent $700,000 and in 2016 it lent $2m. In 2017 it lent out in excess of $5m and it expects same rate of growth this year, Mr Moor says. The company's non-performing loan ratio at 3.7 per cent is better than the global average for non-bank institutions, he points out.  

The amount of money Liwwa lends to small businesses is just the tip of the iceberg of the untapped demand for debt by small businesses with that demand far outstripping the amount of cash he has access to, Mr Moor says. To illustrate that point, he says that the company received requests for loans totalling in excess of  $1bn when it launched its website. 

Filling that demand for debt by small businesses is a problem that governments around the region have been trying to help solve by encouraging banks to lend more, with varying degrees of success. The Arab Monetary Fund says there is a 300 per cent funding gap for SMEs in the region that banks are not filling. The Abu Dhabi-based fund said that while SMEs make up 80 per cent of businesses in the region, only one in five has a loan or line of credit. 

Funding such businesses is a tough proposition everywhere in the world as it is far riskier to lend to such enterprises and, in the wake of the 2008 global financial crash, banks' abilities to take on big risks have been curtailed somewhat. 

In emerging markets, such as those of the Arab world, where risks to businesses are even more heightened, it’s even tougher for smaller businesses to tap debt. 

Mr Moor, however, is not keen to fund just any SME and has strict criteria when it comes to lending. While Liwwa started off funding a diverse range of SMEs, it only focuses now on trade finance lending, which is typically less risky than other types of loans. It also requires its customers to have a bank statement of at least six months and uses behavioural data to guide lending decisions. 

"If you go to Carrefour today in Dubai and you want to buy eggs, it may be a local supplier who sold those eggs to Carrefour," Mr Moor says.  

"But he needs $60,000 worth of chicken feed for the quarter. We'd be more than happy to help him finance that chicken feed but if he needs $60.000 to pay employees' salaries, that's not what we do."   

And to protect the business from the dangers of putting all its eggs in one basket, the company does not have a concentration of more than 20 per cent in any sector. Those sectors include feedstock, car parts, pharmaceuticals and electronics. While they have many competitors, Mr Moor says Liwwa distinguishes itself with a high level of customer service. 

The early investors are happy with the results thus far, with Mr Sati of DASH noting that an estimated lending gap of $240bn for small and medium-sized enterprises in the region gives Liwwa ample room for growth. That it is a dynamic, well-run company gives it potential to be a market leader, he adds.  

"DASH's investment rationale in Liwwa stems from the substantial opportunity in the SME lending market, particularly across the Arab world and emerging markets, coupled with our belief in Liwwa's credit underwriting capability, which is backed by a strong, dynamic team," says Mr Sati. 

"By focusing on predictive assessment and automation technology, leveraging proprietary data to drive business decisions, and a commitment to exceptional customer service, I see nothing holding Liwwa back from establishing itself as the region's most efficient and cutting-edge credit underwriter."  

Company profile 

Founder(s)/CEO: Ahmed Moor, co-founder and chief executive, Samer Atiani  

Based: Amman 

Sector: Financial services sector 

Size: 27 employees 

Investment Stage: Series A 


DASH Ventures 

Silicon Badia 

Bank al Etihad  

The Dutch Development Bank 

Samih Toukan 

MENA Venture Investments