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Akinwande Ademosu, CEO, Credit Direct Limited
Emeka Iloelunachi, Managing Director/CEO, Fast Credit Limited
Imhoudu Mamudu, Managing Director/CEO, Crystal Finance Limited
Tayo Oviosu, CEO, Paga
Markie Idowu, Managing Director, Xpress Payments Limited
Dele Ige, Managing Director/CEO, PAC Asset Management Limited
Nigeria is a highly business-oriented economy with an estimated 37 million micro, small and medium-sized companies (MSMEs). The entrepreneurial economy contributes roughly 48% of the country’s gross domestic product and employs over 60 million people, making Nigeria the largest economy in sub-Saharan Africa. Meanwhile, financial risk is one of the major risks facing owners of business.
Although these numbers look promising, few businesses are successful in obtaining loans from financial institutions. According to keen watchers, of the 840 MSMEs surveyed in Nigeria, only31% successfully obtained a loan from a bank or microfinance institution. MSMEs are often burdened by a myriad of challenges like multiple taxation systems and high costs. The risks associated with credit access in Nigeria stem from many causes.
Nevertheless, by leveraging new data techniques and capitalizing on strong relationships with consumers, loans and credit firms are expanding their market share. More importantly, while online lenders’ share of consumer credit markets continues to grow, a number of them are delivering a more personalized and efficient borrowing experience via a dynamic blend of digital and human service in loan marketplace.
In this report, The Guardian examines the nation’s business landscape as it is being positively transformed through innovative consumer lending process driven by fintech solutions, and how the market is witnessing a number of well-structured loans and investment products for both private and public sectors, and thereby stimulating the nation’s economy, especially the support being given to struggling businesses during the current COVID-19 crisis.
Credit Direct’s intervention in Nigeria’s financial subsector, enabler for peace of mind – Ademosu
Credit Direct Limited (CDL) – a consumer lending company that came into existence 16 years ago is a trailblazer in the financial subsector of the nation’s economy.
In this brief chat with The Guardian, Akinwande Ademosu, pioneer Managing Director of the company, talked more about the activities of Credit Direct, its innovative and unique products, as well as an overview of the nation’s Credit and Loan market.
The Credit and Loan Industry in Nigeria: An Appraisal
The Nigerian financial sector exists within the Nigerian operating system like an ecosystem that controls the entire environment. The financial system reflects the entire body in the ecosystem, either positive or otherwise. It is an environment for interpersonal and group interactions with two ways to measure how that environment works. These include the efficiency and depth of the system which help to measure workability of the operations of a given company.
In respect to efficiency, we refer to the spread, interest rate (and the way it is managed), bank concentration and the overhead of managing the system. Meanwhile, depth deals with how funding is dispensed to the economy and it is observable in the healthiness of the sector, especially during the current pandemic. Certainly, Nigeria has some positives, as well as, some fundamental negatives.
Credit Direct’s Unique, Impact-driven Products
Through a painstaking analysis, we discovered a wide gap with the so-called “served” and “the unserved” whereby the focus of the financial system has been to the top layer of the middle class neglecting the bigger proportion of the people which constitute the bottom of the economy pyramid.
Although, we still take deposit from the top layer of the middle class, majorly, as a group, we tend to people that are unable to afford commercial bank loan, “the under-banked”, “the unbanked”, and people who have been deprived of full saving commercial bank services – we are a bridge for them. We are all familiar with the operating system.
Everybody needs funding to grow their business, but that was lacking. We saw this gap about sixteen years ago and decided to fill it. We provide solutions to the problem that the economy faced at that time, even till date.
We have a unique, purpose-driven, very robust technology with people who believe and share the same vision with us. . Meanwhile, it was not just about us. Having seen the scale of the market at inception, we invited others to join us in order to salvage a nation that needs help. We have created a competitive market that ensures that more benefits go to the beneficiaries. We do not want to monopolize or manipulate the market and this is reflected in our mission statement “enabling people peace of mind” – we stand for peace of mind.
Reactions to CDL’s Disruptive Innovation, push back from the commercial banks
Christenson who wrote about disruptive innovation said “you don’t come head-on with someone bigger than you.” Hence, we do not compete with the commercial banks. Instead, we do the little things, like stratifying and bringing more people into the fold of bankable individuals. CDL has created a path to be able to migrate into a commercial bank, because when they see your track record, you will be attracted to them.
Since we commenced operation. we have reached over one million people and disbursed over 160 billion naira. Today, the service we created few years ago is now the fastest growing industry. There may not have been rapid fintech application in Nigeria if Credit Direct had not created this industry, because then nobody was willing to take the risk until we came out to do that, on behalf of the consumers and the general public have been the major beneficiaries of that innovation. We disrupted, but in a soft way. Hence, it was a disruptive innovation.
Credit Direct’s future projections
For Credit Direct, it has been one year of trying to understand the market and fifteen years of clear operation, but the space has since changed. It is emotional to say that when we came into the market, it was some level of disruption and we are still the one leading our disruption. In achieving this, we have gone through a lot of cycles: recession and currently, COVID-19, and we are still standing. We have tried as much as possible to continue to re-invent ourselves. All thanks to our team.
We operate a very flat structure. Innovation comes from different parts of the business because our organization gives everybody voice to speak and contribute. We engage ourselves across board, and over the period you can see some of the awards we have received in recognition of the impact we have made in the market. We remain the most innovative non-bank financial institution in Nigeria.
How Paga operations is driven by holistic financial inclusion by Oviosu
“The Fintech sector has experienced significant growth due to the forward-thinking of many young Nigerians. There are still numerous problems to solve that the Fintech sector can address, but also several business ideas that can build upon the success of Fintech by leveraging the Fintech infrastructure. As we have seen across the world, entrepreneurship and small businesses are the engine of growth.” – Tayo Oviosu
Every creature has its own uniqueness, either animate or inanimate. Paga is one organization with great uniqueness and distinction, contributing greatly to the Fintech Sector in Nigeria. When asked about the performance of the key players in the industry, Paga’s Founder/GCEO, Tayo Oviosu, explained that “Overall, Payment Service Providers in Nigeria are doing great and have significant room for growth in Nigeria. Supported by the Central Bank, over the past few years there have been significant innovations in the Fintech Sector.”
He recalled that “not long ago, the only way to pay for anything in Nigeria was cash but today, you can use platforms like Paga to pay and fund that transaction from any of your bank accounts or cards. Even the nontech-savvy individuals can walk into stores and have the storekeeper perform the transaction on their behalf. Innovation has also extended to online payments, stock trading, etc.”
“According to Disrupt Africa, in a study we were part of to showcase the many Nigerian/African start-ups and stakeholders’ landscape and the inroad they have made to transform the continent through Fintech, Paga marked an increase of active fintech startups by 17.3% to 57.6%.
It is important to acknowledge that this growth would not have come this far without the steady influx of investments and acquisitions, from both home and abroad. This only reveals that there is still a long way to go as the majority of transactions in Nigeria are still done in cash. The opportunity ahead is to digitize payments and help Small Medium Businesses to digitize their businesses.”
While stressing the impact of the company in the industry, Oviosu maintained that Paga’s operations is predicated on holistic financial inclusion. We are purpose-driven to make it simple for people to access and use money, wherever the money is stored. We do this by making it simple for people to pay and get paid, shop, and sell. For people who are tech-savvy, we offer our services through our mobile app and allow them to access a variety of financial services from one place.
Customers can link all their bank accounts and use Paga. We started with payment services, then introduced stock trading in partnership with an Asset Manager, and will soon introduce savings and loans, amongst other services.
We also offer our services in communities across the country via our network of agents. With this service, people can trust that their daily savings is with a CBN licensed institution and protected by NDIC. All of these services are aimed at driving access to financial services.
We take a partnership approach in the delivery of those services – we partner with banks, asset managers, and other Fintechs – and the results have been remarkable so far. We have over 17 million unique users on Paga and over 28,000 agents in all states.”
Our next frontier is to bring our innovation to the SMEs in Nigeria by providing them a platform that simplifies payments and access to financial services. We are excited to be partnering very closely with Visa on this and other offerings.
Operators, such as Paga, will continue to benefit from the resultant growth not just in Fintech but broadly as the tech ecosystem grows. We will see increasing digitization of transactions especially as the CBN launches the e-Naira and crypto currency becomes more mainstream in Nigeria. We are excited about this future as Paga will play a significant role in enabling the ease of transactions for all.
Paga has been at the forefront of innovation in the Fintech space and playing a significant role in the industry.
Our company was on this path before the term “Fintech” was created. In the past nine years of commercial operations, we have built a robust payments infrastructure with significant redundancy in Nigeria. We have processed over N3trillion in transactions since we launched and processed N1trillion of that total in the past 15 months! This shows the digital acceleration we have seen since the onset of the pandemic.
A major differentiation with Paga is that we are taking an ecosystem approach to solving the problems of digitizing cash and providing access to financial services. Our singular focus is to make it simple for one billion people to access and use money. By partnering with others, we elevate the industry. By introducing our Open APIs on www.Paga.dev we are democratizing access to payments infrastructure, and enabling endless possibilities.
Beyond the transactions, we have created income for thousands of SMEs (our agents) and in turn over 20,000 jobs. We believe the economic impact of Paga has been significant and we are excited about continuing to scale that here in Nigeria and beyond.
Fast Credit: A Value-Adding Customer-Centric Nigerian Company With Significant Investment in Technology
Fast Credit Limited (FCL) is a leading Finance House licensed by the Central Bank of Nigeria. FCL commenced its operations in 2014 and offers various investment and loan products for public and private sector personnel.
Over the years, Fast Credit has significantly invested in technology and with its migration to Temenos T24 a world class Core Banking Application as well as the deployment of a 360-degree customer onboarding application which focuses on redefining customer experience. Similarly, FCL has embarked on a Fintech journey and has recently launched various customer centric digital banking channels such as the mobile app and the USSD service.
The FCL mobile app and USSD service would offer loans to personnel in both the private and public sectors, investments, and all other value-added services such as airtime purchase and utility payment
The company also launched its “Kiddies Swag” account which is a fully digitized investment product aimed at securing the future of our children and the society in general.
The Kiddies Swag aims is to imbibe into young parents and children the desired savings culture for wealth creation. The “Kiddies Swag” account is designed for children, teens, and young adults from ages 0-19 years. The minimum account opening balance is One Hundred Thousand Naira (N100,000), with an interest rate of 9% per annum and has some exciting incentives and gift items such as a fully paid government approved examination fees for Common Entrance, JSCE, WAEC and Cambridge.
To sign up for the Kiddies Swag Investment account, visit https://fastcredit-ng.com/invest/or call 01-8885046
Crystal Finance: Guided by Integrity, Honesty, Fairness, Providing Value-Added Services to Clients
When the Central Bank of Nigeria (CBN) granted Crystal Finance Company Limited the final approval to operate as a finance company in July, 2015, little did anyone know that the nation’s entire financial landscape was about to change for good.
Envisioned to building an institution that would evolve into a viable finance company and a go-to-place for Small and Medium businesses, seeking financing in Nigeria, Crystal Finance commenced full-fledged operations in January, 2016.
Presently, the company operates as a specialized financial institution dedicated to providing financial services in the areas of Credit, Funds Management and Financial Advisory to Individuals, Small and Medium Scale Enterprises.
Peopled by a team of dedicated and experienced staff with broad based industry knowledge to handle each request, Crystal Finance prides itself in providing bespoke financial services through its flexibility in the consideration and unique treatment of each client’s need.
The company’s core business revolves around lending and funds management. For its lending activities, it has developed client acquisition and lending methodology through a referral model. This strategy has gone a long way to de-risk the company’s clients at the point of intake, thus ensuring a very healthy risk asset portfolio.
The funds management activities comprise of tenured investments from individuals and corporate entities. These investments range from 90 to 365-day instruments, and has also built and enjoyed a significant level of investor confidence over the years. It is earning greater trust through its customer focused and referral-based client acquisition model.
Without a doubt, the company’s operational modalities have contributed to achieving significant success and earning it recognitions from the general public. Some of these include the African Finance Award for the Most Trusted SME Finance Company, 2020, Gold Award for Most Customer-Focused Finance Company, 2018 by the West African Innovation Awards.
According to Imhoudu Mamudu, Managing Director/CEO, Crystal Finance Company “My earlier years in banking exposed me to the rudiments of banking operations, credit analysis, remedial management and risk management. This earlier exposure was very vital in helping me build an institution whose services revolve largely around unsecured lending.”
Mamudu, financial expert with 22 years’ experience in the financial services sector and telecoms, added that he had always bothered about how to help honest and hardworking people maximize the opportunities before them which is what Crystal Finance services are all about – dissecting people’s need and availing them of what would set them up for success.
Concerning the overall assessment of the Credit and Loan business in Nigeria, he described this in two perspectives, namely the customers or demand perspective and players or supply perspective.
He noted that “The financial institution especially, the credit market is the only sector that sees growth in both seasons of ‘boom and burst’. During economic boom, people would seek to borrow to take advantage of emerging opportunities and during an economic downturn, people equally seek more loans to tide them through the rough times. People have taken this simple logic to connote that the credit and loans market is a deep market with infinite demand. This has also attracted all sorts of players into the market but it takes real professionals to ‘’cut the chaff’’ in this market.”
He condemned the erroneous belief of infinite demand for credit and loan products and the influx of so many players to meet the ‘’demand’’ (money lenders, private loan providers, other unlicensed players) which he said “has led to issues of predatory lending – a form of unethical behaviour that involves granting loans to ill-informed borrowers with the intent to expropriate the borrower’s assets or other transactional value. It also manifests in the way some lenders structure their loans such that they keep their clients in perpetual debt through unnecessary long repayment tenures and ease of rollover.”
He explained that Crystal Finance has infused ethics and morality into its lending process with a bid to disabuse the mind of an average borrower who erroneously believes that more money can solve his financial problems.
Speaking further Mamudu said “we owe our clients the moral duty to prevent them from sinking into a debt trap so we provide them with tailor-made loans in its true sense. We do not have product categories into which we box every client instead, we sit and listen to each request and thereafter, fashion out your loan need.”
He added that that Crystal finance “is also big on relationship management by not just giving loans to clients and leaving them to it. We stay with them throughout the process in order to understand their difficulties. This approach was evident during the COVID-19 period and after the lockdown.”
He noted that “as the only company that applies risk factor into loan pricing, the lower we perceive the risk of your transaction, the lower your cost of funds. Finally, we hold on strongly to one sentiment that knowledge, learning and expertise are the lifeblood of our organization. Bearing this in mind, we strive to set ourselves apart from competitors through bold ‘Thought Leadership’.”
Xpress Payments Using Technology, Customer Priority, To Drive Fintech Progress In Nigeria
In 2016, a group of forward-thinking Nigerians decided to respond to a problem they observed in the Fintech industry. Having realized that Nigerians typically went through hassles transferring money and making payments, the team, which would eventually become Xpress Payment Solutions Limited thus set out with a mission to “make stress-free transactions a reality for Nigerians”.
This mission was achievable because they invested in ingenious methods of financial interactions geared towards providing solutions that work. It is thus not surprising that in five years the company has won several awards including ‘The Next Bulls Awards 2021’, ‘Payment Terminal Service Provider of the Year, 2020’, ‘Start-up Fintech of the Year 2019’.
The PayXpress, XpressPOS, and Xpress Payout platforms are some of the biggest platforms that have made bill payments, management of point-of-sale terminals, funds disbursement and other financial transactions seamless for Nigerians.
According to the company “We also understand the place of the right partners in the Fintech Industry. Our partnerships with the Nigerian Interbank Settlement System (NIBSS), major Nigerian banks and telecommunication agencies have been instrumental in our progress so far.
Before now, we found that agency banking as a service channel was not as readily available and accessible to users. It had to undergo multiple modifications till we were able to increase its accessibility and availability for our customers. A testament to this is that we currently process over N5billion weekly in transactions and we have over 12000 agents nationwide.
In barely five years of operations, we have been able to sustain IGR collections for three Nigerian States alongside revenue collections for all the higher institutions of learning in one state, amongst others. Simply put, we have been a strong support system for the educational system in Nigeria.
Notwithstanding our success so far, we are very much aware that the Fintech Industry in Nigeria faces some peculiar challenges. As a company, we have had to navigate certain key areas like recruiting the right personnel, managing the right infrastructures, and collating the transactions.
A big lesson learnt is that, while it is important for brands to chase the bottom line (revenue growth, profit), it is even more important to continuously initiate strategies and tactics that ensure quality service for our customers above everything else.
In 2021, we continue to emphasis customer satisfaction and the use of cutting-edge technology as pillars in driving the Fintech Industry forward and hope to continuously create superior financial experiences for Nigerians by ensuring the delivery of services that ease stress and make life more enjoyable for the citizenry.
PAC Asset: Providing Value-driven Financial Services Across Different Industries
PAC Asset Management Limited (‘PAC Asset’) was licensed by the Securities & Exchange Commission (SEC) to operate as a funds/portfolio manager in 2012. The company is a wholly-owned subsidiary of PanAfrican Capital Holdings Limited – a proprietary investment company with an interest in finance, hospitality, information and communication technology, agriculture, and real estate. PAC Asset has floated and presently manages five collective investment schemes including PACAM Balanced Fund, PACAM Money Market Fund, PACAM Fixed Income Fund, PACAM Equity Fund, and PACAM Eurobond Fund.
In addition, the company provides portfolio management services to HNIs and Institutional Clients. The company’s board comprises of people with varied experience in investment banking, corporate and consumer banking, risk management, fixed income trading, equities research, and relationship management,
Led by Dele Ige, the Managing Director/CEO and a seasoned chartered accountant, who started his investment management career at Financial Derivatives Company Limited before joining PAC Asset, has overseen the introduction of five collective investment schemes in the stable of the company.
As a key player in the financial industry, Ige explained that “although the mutual fund business in Nigeria is in its growth phase, it is believed that when it fully attains its prime will serve a greater purpose of marshalling capital to strategic areas of the economy for growth. We attest to the growth in the industry by the number of new fund managers launching mutual funds and growth in industry NAV – with a total NAV of about N1.5-1.6 trillion. We have seen notable growth compared to where we were five years ago.”
He added that “Fund Managers have a significant role to play in advancing mutual funds knowledge in Nigeria and to be candid, the Fund Managers’ Association of Nigeria (FMAN) has taken up this agenda. What we find from analysis of the market is that patronage for mutual fund products is concentrated in certain segments and cities of the country – specifically, the big cities. A further look reveals a concentration of investors with finance industry work experience. These facts lend credence to the potential scope for the funds’ management industry in Nigeria. Hence, mutual funds education and financial technology need to be enhanced to achieve mutual funds penetration in the country.”
In terms of PAC Asset’s unique products, services and innovation to elevate the industry, Ige maintained that “the firm is big on customer experience. We make flexibility a culture to enable us provide tailored services to each client. As a member of the PAC Holdings Group, PAC Asset Management can provide value-added services across the value chain of the industries where our group operates. These relationships positioned us as a firm to deliver not only financial services but value across different industries.”
He admitted that “it is improper to put Fintech in direct competition with other financial business, but rather it should be seen as complementary and enabling for business. As a financial services provider, the way to achieve financial inclusion is to democratize these services using Fintech as an enabling platform. Fintech is good for reaching a wider array of investing audiences, data analytic that points us to the segments of the market previously ‘under-served’.”
Concerning how the pandemic has affected the money and capital market in Nigeria, the fund expert noted that “considering the equities market, the immediate reaction at the onset of the pandemic was for investors to sell down. Viewed as the ‘doomsday’ prophesy, the markets reacted accordingly, knowing that neither vaccines nor treatment was available to tackle the COVID-19. Since we had also never experienced a global pandemic in our lifetime, the direct impact of the pandemic on business could not be effectively assessed. Nevertheless, this provided buying opportunities and a lower base to assess investment returns.”
In his words, “Eventually, it turned out that regardless of the pandemic and the ensuing lockdown, the financial sector and some others performed well. Of course, the follow-on effect of lockdowns would have significant NPLs on the banking sector which CBN policy had gracefully addressed. The pandemic revealed stocks that can be classified as all-weather stocks.”
Ige concluded that the money market was more influenced by the actions of the regulator, the CBN who has embarked on a strategy for achieving low-interest rates before the pandemic went into full gear. However, the inflation yield disparity forced investors to seek refuge in foreign currencies which resulted in further depression of the exchange rate and compounded the nation’s inflation woes.