Speaking during an interview on the FiZ show, CEO of Pangaea ADD Capital, as well as a board member of Pangaea securities and Vice President of Ndola Chamber of Commerce and Industry, Diana Simpungwe Kabaila said Pangaea ADD capital is a supply chain finance specialist, with it’s head office in Ndola and branch sales office in Kitwe, the company has been around over just 4 years. It was founded by herself and her business partner, Arthur Moenga and later they sold a part of the business to Pangaea securities and it became Pangaea ADD Capital. The company focuses on invoice discounting and order finance. She said the supply chain finance for Pangaea ADD capital is simply invoice discounting and order finance, this is easy financing in that there is no performance risk and discounts are guaranteed by the off takers who they have memorandums of understanding with, these collect on their behalf when the invoices mature, for order finance they fund due specific transactions which is meant to bridge the finance gap for SMEs. Their target markets are SMEs in the mining, agriculture and manufacturing sectors. She also added that it is difficult to collect debt from individuals but with the involvement of off takers, it makes it easier and reduces on the operational cost of debt collection.
She said the nature of the business is very capital intensive, she noted that the first couple of years it was not easy to get working capital as Zambian banks seem to have a one-size-fits-all type of qualification criteria, however, she said that does not work for most SMEs as they started out as one. Pangaea growth was organic until last year when they signed with NATSAVE on their invoice discounting which was a very good deal, she noted. This year they’ve signed with Trade Development Bank (TDB) which is Zimbabwean based, asked on how they managed to get international financing when here in Zambia there are many financing entities, she said they went looking as they had approached practically all commercial banks in Zambia to which they got turned down with the response being that they were too new, and also because most banks in Zambia do invoice discounting and order finance. Therefore, they landed on TDB which happens to have operations here in Zambia, financing a number of institutions. The negotiations took over a year as they did due diligence on them, and also the banks interest is in female led organizations. Pangaea takes keen interest in the mining sector, especially that it contributes 12% to the economy’s GDP, it’s CEO and partner are also Copperbelt based.
The issue with SMEs is operating the mining sector, they lack working capital to scale their businesses, which inspired Pangaea to invest in the mining sector as they saw as an opportunity to help SMEs bridge the gap and scale up their businesses. She said for the longest time, doing business with the mines, especially Mopani and KCM was with the hope that everything would be sustainable in the future. In the government’s recent announcement in Q1 of this year, they said they found funding for Mopani, and the ownership of Mopani and KCM will soon be resolved. This has created a lot of confidence in the sector, and has also had a trickle down effect on the suppliers as well, as such Pangaea hopes to invest more money in the mining sector. She also said that in the next couple of years the mining sector is going to be huge, also noting that Zambia’s economy benefits a lot from the foreign direct investment into the mining sector. Speaking on TDB, she noted the bank loans out money at very low interest rates which are affordable and when they came into Zambia their main focus was female led businesses which in Zambia are very few as most of them lack working capital to scale up their businesses and to sustain them. Pangaea was a very good fit so TDB placed their money with them and told them to make it their mission that female led businesses have a huge benefit in it, hence Pangaea’s first point is that women in mining and agriculture get a huge benefit from this funding. She said, there’s a lot of women in the mining and agriculture sector and Pangaea will ensure that they reach out to them to tap into the numbers and get their dat base and make it deliberate to make phone calls and invite them to go through to their offices to check out their products, this will make a huge difference with their working capital.
In closing, Pangaea CEO said, being part of the Chamber of Commerce, they advocate for SMEs and work with government to influence policies that will help SMEs with cheaper working capital and advocate that banks cut down on the long list of requirements as most SMEs do not meet the requirements list, they also advocate for commercial banks and the government to work together in supporting local SMEs to thrive, they’re working majorly with the Ministry of Commerce and Ministry of SMEs.