In the world of high-ticket trade and commerce, there exists a unique challenge – how to finance trade for the vast number of underserved dealers in large-ticket retail SMB segments like Energy and Construction. These are sectors where inventory costs often outweigh available collaterals, and the cost of capital threatens to engulf profit margins.
These sectors bear the weight of massive projects and monumental inventory costs. In these realms, challenges loom large. The volatility of international markets compounds the issue, eroding profit margins and making financial planning a high-stakes gamble. To thrive in this fiercely competitive landscape, traders need to innovate and invest, but the uncertainty surrounding fuel prices and financing often hinders these endeavours. In essence, large ticket sectors face a financial puzzle that traditional solutions struggle to solve.
- Limitations of Traditional Financing
Traditional financing methods, marked by rigid structures and lengthy approval processes, have proven inadequate for the dynamic nature of large ticket SMBs. They often lack the flexibility needed to adapt to changing market conditions and align with the cash flow dynamics of traders. This leaves many traders facing hurdles in securing the capital they need to thrive and expand their businesses.
- TradeGrid’s Vision and Systems-Thinking Approach:
Since 2021, TradeGrid has continued to compound network effects, delivering cutting edge financial technology and unique market advantages. We have emerged one of the most essential distribution infrastructures for energy companies on the continent today, both for supply financing and cash-optimized product distribution.
At the heart of TradeGrid’s transformative solutions lies TradersCARD®. It not only simplifies financing and distribution but also empowers traders to adapt to market dynamics, invest in growth initiatives, and compete effectively in an ever-evolving landscape at zero interest rates.
The solution to the limitation of traditional financing lies in a system de-risked by order visibility and where efficiency gains offset borrowing costs. The core idea is brilliantly simple yet highly effective: inventory itself becomes collateral. Now, with TradeGrid’s groundbreaking TradersCARD®, banks can now finance traders in these sectors with unprecedented ease and efficiency. The features and benefits include:
- Price Stability and Reduced Collateral Pressure:
TradersCARD® delivers much-needed stability to large ticket traders. It enables them to stabilize prices for consumers, even in volatile markets, by providing access to working capital. Importantly, it eliminates the burden of excessive collateral requirements by making inventory itself the collateral – this frees up capital, allowing traders to allocate resources more effectively.
- Enhanced Competitiveness and Growth Opportunities:
In an era where competition is fierce, TradersCARD® gives large ticket traders a competitive edge. With improved financial flexibility and access to best prices in the market via the TradeGrid mobile application, traders can innovate and diversify their offerings, creating added value for customers. The flexibility in repayment, tied to revenue generation, aligns financing with cash flow, reducing financial stress and fueling growth opportunities.
- Inventory as Collateral; Flexible Repayment for Financial Agility.
The genius of TradersCARD® lies in its utilization of inventory itself as collateral. By doing so, it alleviates the burden of external collateral requirements. This fundamental shift empowers banks to provide traders with the capital they need, while also mitigating risk. This significantly reduces the barriers to accessing financing and empowers banks to offer funds with confidence.
- Flexible Repayment Aligned with Revenue:
TradersCARD® further distinguishes itself by offering a flexible repayment structure. Traders can repay the financing as they generate revenue from their sales. This alignment with cash flow dynamics reduces financial stress and ensures that traders can meet their obligations without jeopardizing their operations.
TradeGrid: A most sought-after Digital distribution Infrastructure for Energy Companies
TradeGrid, has embarked on a monumental partnership as a primary digital distributor to Dangote Refinery and several major depots across Nigeria and Kenya. By virtue of this engagement, the customer reach, efficiency, and operations are expected to exceedingly soar. From time immemorial, prices have been determined by the importation of petroleum products from some of the world’s biggest trading firms. However, the commencement of operations at Dangote Oil refinery is expected to bolster change in Africa price dynamics.
In view of the ever-changing market dynamics such as the foreign currency exchange rates, TradeGrid has continued to administer efficiency as an e-commerce B2B platform. As it may, the Dangote and TradeGrid partnership has been a strategic move and a culmination of extensive negotiations ushering in a new landscape in the downstream market.
Solution for East Africa
The emergence of the Dangote refinery underscores the region’s ambitions for energy self-sufficiency and economic growth. Positioned to become the largest refinery on the continent, Dangote’s ambitious project holds immense promise for Nigeria’s fuel industry. However, while optimism abounds for the refinery’s potential, lingering questions persist regarding infrastructural feasibility of consistently exporting beyond West Africa to other African regions.
Currently, the refinery’s capacity is set at 650,000 barrels per day and had initially grappled with numerous teething challenges, notably including the availability of domestic crude supply. Also, the recent Israel-Hamas conflict, for instance, has sent shockwaves throughout the sector, disrupting oil supply chains, inflating prices, and posing logistical challenges for many countries. Despite these uncertainties, the recent announcement of the refinery’s first delivery of product (LLSR) to Europe (Rotterdam), as well its 2,000+ KT of exports since March 2024, raises hopes and makes the prospect of Dangote serving as a viable alternative for the rest of Africa an exciting possibility.
The contrasting landscape in East Africa presents both challenges and opportunities. In Kenya, for instance, regulatory changes such as the raised VAT on fuel from 8% to 16% and a G2G oil supply deal have created a myriad of roadblocks for the industry.
However, TradeGrid’s Kenyan operations is equipped to mitigate these challenges through its innovative e-commerce model, offering a seamless online marketplace for petroleum transactions. Furthermore, with the anticipation of the expansion of storage capacity at the Kipevu Oil Terminal in Mombasa, TradeGrid is poised to facilitate Kenya’s emergence to compete with Tanzania as a primary petroleum hub fostering economic growth and prosperity for businesses in the region.