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APP for the week: Cowrywise Personal Finance

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Cowrywise is a personal finance app that enables people save by making automated deductions from their account. Money saved is then invested in money market securities. Cowrywise is registered with the Corporate Affairs Commission (CAC) and Lagos State Government as a cooperative and multipurpose society.

Cowrywise.com is run by a team of 3 comprising Razak Ahmed, Edward Popoola, and Feyisayo Shonubi. Razak serves as the CEO (Chief Executive Officer) of the company, Edward the Chief Techonology Officer (CTO), while Feyisayo is in charge of product design.

Target market for the app are small savers who the team feels are underserved by the banks. Interest rates by banks are around3-4% per annum, excluding account maintenance fees and other charges. Banks also tend to focus on large deposits which yield a higher return.

Pros

  • Easy to open: Opening a Cowrywise account took me less than 5 minutes. The instructions are also quite simple.
  • Entry amount is quite low: Minimum amount one can start saving is N100. Other competitors in the same space have a much higher entry level.
  • Automated deductions: The selected amount is automatically deducted from the account linked to the ATM card as at when due.
  • No charges: Cowrywise has no charges for deposits/withdrawals/alerts.
  • Interest accrued is displayed: Interest accrues on a daily basis and is shown in a dashboard that’s clearly displayed.

  • Safety of funds: Depositors funds are warehoused with a trustee (Meristem trustees) for safe keeping.

Cons

  • Website is not mobile friendly: I eventually had to complete my registration using a laptop as the website isn’t easy to navigate using a mobile phone.
  • Age Limit: In what appears to be a bug that has not been resolved, the age limit for the profile is put at 1960.
  • One product: Aside saving, Cowrywise offers no other investment options.

What do they do with depositors funds ?

Depositors funds are invested in money market securities. Money market securities are short term assets with a maturity period of one year or less. They include Treasury bills, Bankers acceptances, and Commercial papers. In order to guarantee safety, the funds are warehoused with Meristem trustees.

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How do they make money ?

Operating online means Cowrywise is able to avoid the costs of running a conventional brick and mortar bank.

Alternatives or competition

Cowrywise doesn’t operate alone in this space. Other alternatives include piggybank.ng Piggybank offers a mobile app on IOS and Android, but has a higher minimum amount that can be saved. Piggybank also offers a maximum interest rate of 25% paid upfront, if customers are willing to lock a fixed amount.

Can Cowrywise scale?

In an era where almost every commercial bank has a mobile app and in the case of Alat, a wholly digital bank, this app will have a hard time scaling except there are collaborations with other firms in the financial services sector.
In the event of money market rates dropping to 10%, Cowrywise would be left in a bind, as it would have to offer customers a lower rate.
This is one app im quite excited about as it easy to use and consumers can start saving a small amount and increase progressively. Absence of a mobile app is a drawback as a large percentage of Cowrywise target market access the internet from their phones. Competitors such as Piggybank.ng also have a mobile app.
The app also fails to make provisions for customers the unbanked who do not use conventional banking facilities. Cowrywise needs to look introduce micro lending in order to boost their income and attract a larger customer base.

Response from Cowrywise

Nairametrics reached out to the team behind Cowrywise after reviewing the app, and they responded to the various issues raised.  Cowrywise has improved the user interface on its website to be more mobile friendly. The team does not see commercial banks as a threat, as their focus is on the unbanked.  As for the age limit , the team has taken note and will rectify it.

You can get the app at www.cowrywise.com
Please consult a financial adviser before opening an account.

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Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via [email protected]

4 Comments

4 Comments

  1. Anonymous

    September 2, 2017 at 12:52 am

    Please how can one get the cowrywise app?

    • Owaduge

      May 7, 2018 at 8:17 am

      Simply visit their website or look them up on Playstore.

  2. Anonymous

    January 4, 2019 at 6:38 pm

    How can i open it for my young daughter. Thanks

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FEATURED

COVID -19 saving Nigerians millions in wedding and burial costs 

As long as the pandemic persists, the ‘new normal’ is for ceremonies to remain subdued.  

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It was a sunny Saturday in May and like it had been for the better part of 8 weeks, the new normal was in force in Nosa’shousehold. The lockdown induced COVID-19 meant that all the hustle and bustle of giving attention to side hustles on weekends had all evaporated. Now he spent more time with his kids watching TV and playing video games. Whilst he has had to endure multiple weekends of lost revenue, staying indoors meant that his personal finance was still intact. But things would change dramatically this weekend. 

Nosa got a call that he had just lost his aged mother to a brief illness. He had been battling with a terminal illness for years, but things seemed to be under control so her death came as a surprise. Even as he grappled with the thought of losing his mother, Nosa knew that he had to start making preparations for the expenses that are bound to come with burials in an African setting.  

Thanks to the pandemic, and rules that came with it, Nosa ended up spending much less than he would have for his mother’s burial with most of the funds going towards mortuary expenses, transport and the direct cost of the actual burial itself.  

READ ALSO: Post COVID-19: The Challenges Ahead

“This COVID-19 is bad but it has saved me millions of naira that I would have spent in this burial,” he remarked.  

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“I wanted to give my mom a befitting burial but these are hard times and I may have borrowed money just to fund this. But with COVID-19 and social distancing in place I did not have to do any of this,” Nosa informs our reporter.  

Nosa’s gains translate to massive losses for a whole chain of service providers in the event management industry. Similar occurrences over the last few months have resulted in the loss of revenue for such businesses.  

Events in Nigeria often cost anywhere between half a million naira to over N100 million depending on the financial muscle of those spending. Burials, weddings, naming ceremonies and birthday parties, make a burgeoning industry that spans several sectors of the economy.  

From mortuaries to casket makers, event planners, event Halls rentals, professional mourners, caterers, confectionaries, party rentals, photographers, video editors, tailors, newspapers , etc, its an entire value chain of businesses that provide one service or the other for this industry. 

Each of these events cost millions of naira to organize hosting as many people as the budget can support. According to a CNN article quoting a report from TNS Global, Nigerians spend as much as $9,460 for a wedding ceremony. The report also indicates the party industry could be worth as high as $17 million based on statistics in 2017. 

The math can be easily deducted. Assuming 50,000 ceremonies every weekend at an average cost of N1 million that is a N50 billion per weekend or N2.7 trillion ($6.75 billion) per annum. GDP data from the National Bureau of Statistics indicates sectors that support the ceremonies market in Nigeria, telecoms, transportation, Arts and Entertainment is worth a combined N18.4 trillion. 

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Technology Ceremonies 

Chuks, a Partner at a top consulting firm in Nigeria admits were it not for the pandemic his wedding could have cost him about N15 million personally and another N20 million spent by family, friends, colleagues and well-wishers. He is in his forties and his wedding had been much anticipated. He went ahead with his wedding last weekend with less than a dozen people in attendance and over 140 others logging on via Zoom. He claims while he ended up not spending millions on food, drinks, wedding halls and other logistic costs, he still achieved his goal of getting married.  

Necessity they say is the mother of invention and has millions stay locked in their homes, they have resorted to apps such as Zoom, Instagram Live, Microsoft Teams to hold virtual events. These days Zoom themed parties now have their own rules and conventions. Friends from all parts of the world log in with each person taking turns to say nice things about the celebrants. Games are conducted to spice up the event and stories told by the celebrant. Music is also played by the Zoom host with participants dancing and having fun.  

“It is like watching a live movie and also being part of it as the audience and participant” a wedding planner informed Nairametrics. Whilst one cannot underrate the connection physical socializing brings, virtual meetings are gradually becoming a lifestyle and the longer social distancing continues its cultural significance will only continue to increase.  

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AderonkeAdebamibola, CEO of  Unik Ushering Agency, an Event management firm, confirmed to Nairametrics that business has really slowed down in the last few months. “Even though the NCDC has now given rules to guide weddings and other events, the budget now is way less than it used to be due to the cap on numbers of guests” she explained.  

Now, most events are kept within the premises of family residences, depriving hall rentals, the money they could have made from leasing out their halls. Venue decorators also have much less on their hands to do, as they no longer have to decorate big halls.  

According to Adebamibola, every single business in the chain has been affected, from caterers to ushers.  

“Now, we even have to convince them to use one or two ushers for their events because they believe they don’t need ushers for 20 or 30 guests. Caterers cannot even cook a half bag of rice now because of the number of guests. This means that they are also paid less for their services, even if they expend the same energy and time” she said.  

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The new normal in this industry means that the things that used to be prioritized are no longer priorities. Hand sanitisers, face masks and hand washing equipment are now compulsories in events, while the hand-shaking, and hugs that would have characterized such weddings.

READ MORE: Governor David Umahi of Ebonyi tests positive for COVID-19

Due to the nature of the industry, a large percentage of the staff are kept on contract basis, so the reduction has not really translated into lay-offs. However, the industry revenue has been badly hit. A contract staff with NPU Events, who preferred anonymity, noted that in the last three months, she has only been called twice for events.  

Since this forms a major part of her income, it has caused a major dip in her resources. COVID-19 has brought unwanted hardship to the Nigerian economy with small businesses and workers in the informal sector suffering the most.  

A recent World Bank report indicates the Nigerian economy might contract by as much as 3% in GDP growth rate this year. This informed government’s latest decision to inject about N2.3 trillion into the economy to spur economic growth. The funds will be targeted at small businesses through non-collateralized low-interest loans.  Whilst all these initiatives are geared towards stimulating the economy, the spending power of Nigerians will remain pivotal and as long as the pandemic persists, ceremonies will remain subdued. 

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Business Half Hour

BHH Podcast: What 2020 holds for SMEs (2) – Ugodre

Business Half Hour (BHH) is a weekly podcast targeted at Startups and Entrepreneurs, who are redefining the Nigerian business scene through innovation.

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BHH, Podcast, WAVE, entrepreneurs, business, Nigerian, concept, business, ethics, Goal, Setting, Actualization, Greymate Care, Chika Madubuko,, business ethics Femi Adeyemo, BHH Podcast, Fundall, Swift Medispark, Ugo Nwokoro, technology in healthcare, EazyHire, Data Science, Yvonne Alozie, Gitgirl, Verifi, CAMA and taxes for SMEs, Tayo Lekan-Agbaje, Dclutterng, Business half hour, BHH Podcast, Oluyomi Ojo, Taiwo Obasan, Nigerian shoes business

Business Half Hour (BHH) is a weekly podcast targeted at Startups and Entrepreneurs, who are redefining the Nigerian business scene through innovation.

In this episode of #BHH, Ugodre gave an insight into how business climate would be for SMEs and an overall outlook on the global and national economy. Enjoy!

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Business News

Ikeja Electric, GRA Ikeja residents sign contract to deliver 20 hours daily power supply 

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Ikeja Electric (IE) announced it has signed a Power Purchase Agreement with residents of Ikeja GRA to deliver “up to 24 hours of supply daily”. The company tweeted this on Friday revealing that it is in line with the company’s Bilateral Power Agreement.

However, the company representatives explain that it is a minimum of 20 hours of power supply for residents of the association. Ikeja GRA includes streets like Oduduwa, Isaac John, Joel Ogunaike, Fani Kayode, etc.

In its previous Power Purchase deal with Magodo Residents, it stated that “with the agreement, IE will provide the residents with electricity supply beyond the existing standards, with guaranteed performance levels. In addition, there will also be access to dedicated Customer Care and Technical teams for prompt resolution of queries and/or technical issues within the estate.” 

Also, the Chief Operating Officer, IE, Mrs. Folake Soetan expressed confidence in the success of the trend-setting agreement, which she noted was in line with the Federal Government’s willing seller, willing buyer policy. 

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What this means: The Power Purchase Agreement suggests residents of the Ikeja GRA will enjoy a steady power supply when compared to non-residents. However, they will have to pay tariffs much higher than is provided for in MYTO. Residents in Magodo who currently enjoy a similar arrangement informed Nairametrics that they pay higher tariffs but have enjoyed regular power supply and often go days without a power cut. 

They also explain that even when the power cuts they get messages from Ikeja Electric explaining why the power was cut and indicating when it will return. We understand Ikeja Electric still relies on the grid to deliver this power as such power cuts will still be expected in the transmission and distribution end.

Backstory: In August, Ikeja Electric announced it signed a similar power purchase agreement with residents of Magodo, providing them a power supply of up to 20 hours daily. Residents of Magodo, have enjoyed steady power since then and are thought to be paying about N47 per kilowatt-hour of power compared to the MYTO tariff which is N23.10 for residential customers.

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Sources with knowledge of the transaction indicate Ikeja Electric is likely to extend this arrangement to other estates within Lagos, in a move that disrupts the power sector dynamics. Residents in the Eko Franchise area seeking regular power supply have also demanded a similar deal and are ready to pay for a tariff that is higher than the MYTO approved tariff for general customers.

It is however not clear if the Nigerian Electricity Regulatory Commission, NERC has approved this arrangement.

 

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