In a recent report by the International Finance Corporation (IFC) and the Central Bank of Nigeria (CBN), less than a third of MSMEs have successfully obtained loans from financial institutions, and that is not for a lack of trying.
Nigeria currently has over 35 million MSMEs and if approximately only 10 million MSMEs have been able to get loans from financial institutions, hence, a credit gap of about 25 million in the country.
Fint, an online peer to peer lending platform intends to simplify access to credit for genuine borrowers while also providing returns to lenders.
Nairametrics was at FINT’s new office in Ikoyi during the week where we had a chat with the CEO, Mr. Chiwete John-Njokanma. Excerpt:
What exactly is FINT?
FINT is an online lending marketplace, basically we connect verifiable income borrowers looking for access to affordable credit with lenders who are looking to fund the loans for attractive returns. We have consumer loans i.e. loans between N60,000 and N2 million at rates as low as 8% for 3 – 12 months, with retail and institutional lenders (banks and asset managers).
For lenders, they can lend in the multiples of N20,000 grows at 26-39% for one-year loan tenures, for 6 months 15-22% for 3 months it is 8-14%.
What is the success story so far?
Our first story is the fact that we launch and became an acceptable product to the public (Lagos) and the most interesting thing is that there is a huge demand for this product for two reasons, one is because investors are looking for good returns for their money while borrowers are looking for ease and quick access to borrow money and that is the problem we are solving.
This offering has made our platform interesting. We currently have 26,000 customer base and average borrowings is like N333,000.
How do you get these lenders?
On the retail side, our strategy is the social media platforms, (twitter, facebook and Instagram) while on institution and HNIs they are mostly offline activities meeting clients and try to access their funds.
Does FINT have footprint outside Lagos?
Currently we are only in Lagos, however, we are pursuing a new licensee that will allow us to expand and move our operations to other states. But importantly, Lagos is a big market, with an estimated population of 22 million and about 60% of this population falls into our target market.
How can borrower access your platform?
So for a borrower simply sign on to our website www.fint.ng and risk assessed by our arithmetic algorithm if you pass the risk assessment test, you will get a score, that score is tied to a particular interest rate and you agree to borrow for certain period of time, risk and interest rate provided, upload proof of ID, statement of accounts at least 6 months.
Once this is done, your loan is made visible on the platform for lenders to invest. Lenders would have selected their risk criteria already, based on their risk appetite as little N20,000.
How do you handle loan defaulters knowing fully that some might want to run away after collecting the loan?
We have not experienced any default on our platform so everyone has paid back. We had people who have paid late, but they ended up paying back. The truth is that the average Nigerian is not trying to scam or cheat the system, that’s a view we hold in this business. Also, loans on FINT are insured against loss of work, permanent disability or death. So if you lend to someone who passes away, you don’t need to follow them to the great beyond to get your money back.
More importantly for us, is to create a system for genuine borrowers willing to pay back, hence, we partnered with the credit bureaus, we also carry out verification services through our third-party partners so that they can verify that if the residential address given is correct also the introduction of BVN into the system has enabled us to know our customers directly.
How secure is your platform?
Our platform is as secured as any mobile banking application and we have the necessary securities certifications and encryption system.
There has been an upsurge in the number of fintech startups in the country, what is the edge for your platform?
We presently don’t have any direct competition, however, there are a lot of strong startups out there. At FINT, our value proposition is the ability to merge value for both sides of the food chain.
A lot of lenders in the ecosystem presently lend to borrowers on their own balance sheet, hence they charge high-interest rate and get high returns but there is another side that is missing that is the investors, there are many people looking to earn income passively rather than take a second job to earn more money. Lenders willing to lend and earn strong returns.
How do you determine returns?
Our pricing model changes and is based on Monetary Policy Rate (MPR), inflation rate and based on how these two mechanism work we can work out beneficial returns for lenders.
Have you raised any funding?
Yes, we have locally from strong financial institutions.
Are you happy with the rate genuine borrowers get access to loans in Nigeria?
No, and it is unfortunate, in 2014 it was about 5%, in 2017 it dropped to 3%, it means only 3% of them have had access to credit facility from financial institutions. But why is this so? It is because the way the current system is set up will not encourage a retail investor to borrow.
What is your latest product on the market?
We have the employment model product where we allow companies to partner with us for staff loans while we directly deduct from their salary and give the loans at a lower rate
Thank you for time.
You are welcome
Zenith Bank and GTBank are considering paying interim dividends despite COVID-19
Analysts earlier predicted that banks may hold off on dividend payments as a way of cutting down on costs in view of COVID-19.
Zenith Bank’s board of directors is set to meet on July 23rd, 2020 to consider the tier-1 bank’s audited financial statements for half-year 2020. The directors will also consider “the proposal for recommendation of interim dividend for shareholders,” said a notice that was sent by the company to the Nigerian Stock Exchange.
In a similar development, Guaranty Trust Bank Plc said in a statement to the NSE that “issues relating to half-year dividend may also be discussed” when its board of directors meet later this month.
Zenith Bank and GTBank, which are two of the most profitable banks in Nigeria, have always paid interim dividends to their shareholders. However, analysts earlier predicted that many banks may hold off on dividend payments as a way of cutting down on costs, in view of COVID-19 and its attendant economic implications. It is, therefore, fascinating to see that Zenith Bank and GTBank are considering interim dividends nonetheless.
Elsewhere, banks around the world have either been warned not to pay dividends at all or to be careful with dividend payouts. In April, The Economic Times reported that the Reserve Bank of India advised Indian banks to suspend dividend payments in order to conserve their capital amid the pandemic. In a similar development, regulators in Europe also banned European banks from paying any dividend in 2020. In Australia, banks were advised to slash their dividend payouts. Meanwhile, over in North America, the US Federal Reserve announced in late June that it will temporarily restrict dividend payouts by some of the country’s biggest banks, the New York Times reported.
As Nairametrics had repeatedly reported, the COVID-19 pandemic is expected to adversely impact different sectors of the Nigerian economy, including the financial institutions. An earlier report by Nairametrics quoted Augusto & Co to have predicted how the pandemic would weaken Nigerian banks’ assets. An April report by PwC also highlighted some of the ways COVID-19 could impact Nigerian banks.
In the meantime, the Banking Industry Risk Indicator (BIRI) in Nigeria stands at a score of 12.14 out of 100, according to a recent analysis by Fitch Solutions, as Nairametrics reported.
Do note that Zenith Bank Plc has declared a closed period for the trading in its stock starting from July 6th, 2020. The closed period will last until 24 hours after the company’s half-year 2020 financial report is released to the public. In the meantime, all persons with inside knowledge of Zenith Bank’s affairs shall be prohibited from buying and selling the company’s stock during the closed period.
GTBank declares closed period as directors meet July 22nd to consider H1 result
GTBank reported a net interest income of N64.28 billion in Q1 2020 as against N53.58 billion in Q1 2019.
Guaranty Trust Bank Plc (GTBank) has declared a closed period ahead of the release of its audited half-year 2020 financial statements.
A corporate disclosure that was signed by the Company Secretary (Erhi Obebeduo) and sent to the Nigerian Stock Exchange said the closed period commenced on July 3rd, 2020. In line with the listing rules of the NSE, the closed period is expected to last until twenty-four hours after the bank’s financial statements have been released to the public.
Note that the implication of the closed period is that all persons with insider knowledge of the company’s affairs are hereby prohibited from trading the company’s stock.
Meanwhile, members of GTBank’s board of directors are scheduled to meet on July 22nd to consider the audited HI 2020 financial statements. A separate notice that was sent to the NSE said:
“Pursuant to the post-listing requirements of the Nigerian Stock Exchange for quoted companies, Guaranty Trust Bank Plc hereby informs you that the board of directors of our bank is scheduled to meet on Wednesday, July 22, 2020, to consider the audited financial statement for the half-year ended June 30, 2020. Issues relating to half-year dividend may also be discussed at the meeting.”
The audited financial statements for half-year 2020 shall be sent to the Central Bank of Nigeria for approval prior to being made public through the Nigerian Stock Exchange.
Recall that GTBank reported a net interest income of N64.28 billion in Q1 2020 as against N53.58 billion in Q1 2019. In the same vein, the tier-1 bank’s profit before tax grew by 2.1% to N58.2 billion, up from N57 billion in Q1 2019. Profit after tax also grew from N49.3 billion in Q1 2019 to N50 billion in Q1 2020.
GTBank closed last week’s trading on the Nigerian Stock Exchange with a share price of N20.80, according to trading reports seen by Nairametrics. Year to date, the stock has lost by more than -19%.
COVID-19: WHO stops hydroxychloroquine, HIV drugs trial after failure
The WHO boss had earlier warned that the worst is yet to come from the coronavirus pandemic.
The World Health Organization (WHO) has announced that it was going to abandon its trials of the malaria drug, hydroxychloroquine and combination of HIV drug, lopinavir/ritonavir on hospitalized patients that have coronavirus disease after they failed to reduce the death rate.
This is a major setback for the WHO in the face of a second wave of the virus outbreak in US, China, Asia and some American countries. The United Nations (UN) health agency reported over 200,000 new cases of the disease globally, the first time in a single day.
According to a statement from the WHO, ‘’These interim trial results show that hydroxychloroquine and lopinavir/ritonavir produce little or no reduction in the mortality of hospitalized COVID-19 patients when compared to standard of care. Solidarity trial investigators will interrupt the trials with immediate effect.’’
The WHO has hinged its decision on the recommendation of the trial’s international steering committee and does not affect other studies where those drugs are used for non-hospitalized patients.
Another aspect of the WHO-led trial is looking at the potential effect of Gilead’s antiviral drug remdesivir on COVID-19. The European Commission gave remdesivir a conditional approval for use on Friday after it was discovered that it helps reduce hospital recovery times.
The trial which is led by WHO started with five branches looking at possible treatment approaches to coronavirus. They include, standard care, remdesivir, hydroxychloroquine, lopinavir/ritonavir, and lopanivir/ritonavir combined with interferon.
The WHO Director-General, Tedros Adhanom Ghebreyesus, disclosed on Friday that almost 5,500 patients in 39 countries had been recruited into its clinical trials and that interim results were expected in the next two weeks.
There are about 18 experimental COVID-19 vaccines that are being tested on humans with almost 150 treatments under development.
A top emergency expert from WHO, Mike Ryan, said it would not be wise to predict when a vaccine could be ready because while a vaccine candidate might show its effectiveness by the end of the year, the challenge might be how soon it could be mass-produced.
The WHO boss had a few days ago warned that the worst is yet to come from the coronavirus pandemic due to lack of global solidarity and the susceptibility of most people to the virus, which still has a lot of room to move. He stated that contact tracing of people that are infected with the virus is the most important step in fighting the coronavirus pandemic.
The UN health agency had also revealed its plans with its partners to buy 2 billion doses of COVID-19 vaccines for the most vulnerable people across the globe. The plan projects that the doses of the COVID-19 vaccine will be distributed to countries with special priority on high-risk persons like people above 65 years, health care personnel and other adults with ailments like diabetes.