Since the introduction of financial technology (fintech) firms to the Nigerian financial services ecosystem, the story has never been the same. These companies came with a special kind of innovation that has broken down many barriers and made a lot of things possible — specifically, financial inclusion. Thanks to these innovative companies, Olumide, who lives and works in Lagos, can now easily send money across to his unbanked mother in Alawaye village, Ekiti. In the same vein, he can also easily access a quick loan whenever he needs one, without having to stake the whole world as collateral.
The Fintechs versus banks narrative
Indeed, fintechs have been phenomenal so far. However, the stiff competition they brought along has caused discomfort for some of the original players in the space, albeit to the benefit of customers.
While some banks have been swift in responding to the “threat” posed by fintechs, the truth remains that these companies remain a source of threat. If not for anything, they keep attracting new customers every now and then; customers who would normally go to traditional banking halls to transact business. It is in light of this that Nairametrics has decided to highlight some of the fintechs, which banks should be wary of.
The basis for the ranking
Before we proceed with this, it is important to note that we used a number of parameters in our analysis. These include:
- Ease of registration
- Conditions of loan
- Cost of loan
- Customer experience
- Presence on social media
It should be noted that each of the five loan platforms featured here are striving, in their various capacities, to use innovation to change the lending game. The conditions of loan are relatively considerate and the same can be said for the cost of loan. Comparatively, customer experience is fair, even as these companies are continuously using adverts to endear themselves to existing and new customers. They also use social media platforms to target their customers, seeing as the majority of their customers in the younger demographic are there.
This is one of the best quick loan companies in Nigeria, and there are reasons to support this. Importantly, it is quite easy to access loans from Kwik Money. You do not even need to present documentation or collateral. Instead, all you need is your phone number which, by the way, must be connected to your bank account.
Kwik Money has a special innovation which can access and rate your credit score by simply using the phone number you provide upon registration. How it works is that the fintech’s automated system will access your financial records and use that to calculate how much you are eligible to borrow. You could be eligible to borrow anything between N500 and N500,000.
In terms of the cost of loan, you will be required to pay back at an interest rate of 15% for a duration of 14 days, and 25% for a duration of thirty days. The interest rates are within the range collected by many other fintech loan platforms.
Kwik Money is relatively active on social media, though it could do more to increase the number of its followers, especially on Twitter and Facebook. The company can also put in more effort in terms of advertising and marketing in order to reach more customers.
Meanwhile, there have been concerns about privacy when using the Kwik Money platform. Customers interviewed in the course of compiling this report complained that the fact that vital customer information can be accessed through their phone numbers is rather problematic. One customer even recalled how his mother and a friend were contacted to help forewarn him to refund his loan. This is an issue for the customers because, as another customer noted, “what if I didn’t want my family and friends to know that I am borrowing money from Kwik money? The fact that they could even contact those people without my knowledge is an issue.”
2. Carbon (formerly Paylater)
Carbon is yet another quick loan fintech that is arguably giving banks headache. Much like Kwik Money, you could become eligible to borrow between N10,000 and N500,000. To access loans via this platform, you will be required to download the Carbon app and register. The platform caters to everyone: from students, to salary earners and business owners.
Carbon’s cost of loan is probably the best when compared to the other platforms herein ranked. This is because, the more money you borrow, the less interest rate you will be required to pay the company. However, before you can borrow a lot of money from Carbon, you must have successfully passed through various stages.
According to the Carbon ladder, the starting point for any borrower is N10,000. This loan is for the duration of 15-30 days at an interest rate of 10%. You will then remain on this stage until you’ve successfully repaid your loans nine times, after which you become eligible to borrow N50,000 at an interest rate of 5%. This is for a duration of 1-3 months. The next stage will accord you the opportunity to borrow N100,000 at 4% interest rate, also, for a period of 1-3 months. However, before you can borrow N500,000 for a duration of 3-6 months at 2%, you will be required to present a list of documents including your letter of employment, a valid ID card, your bank statement, and more.
Zedvance offers assorted loan packages to salary earners, and business owners. If information available on their website is anything to go by, customers can borrow as much as N5million upon registration. Registration requires downloading the Zedvance app from Google Play. The company is present in three other major Nigerian cities besides Lagos – Abuja, Ibadan, and Port Harcourt.
This company’s cost of loan is fixed at a 5.4665% interest rate per any amount you borrow. This makes it one of the most reasonable and attractive interest rates currently being offered by a Nigerian loan fintech.
In terms of marketing/publicity, Zedvance is doing a considerably good job to endear itself to existing and potential customers. It has nearly three thousand followers on Twitter whom it regularly engages, with marketing contents.
Renmoney is one of the most popular and innovative loan fintechs in Nigeria today, though its terms of engagement may not be best out there. The company says that customers can get loans of up to N4 million for a duration of 12 months at an interest rate of 33.9%. Meanwhile, the company has a policy of collecting what it calls “management fees” of N35,700 which is collected alongside the interest. This does not sit well with some customers.
5. Aella Credit
Much like the process for the other fintechs mentioned above, accessing loan from Aella Credit is reasonably easy. There are four basic steps – download the app, register, fill out an application, and receive your money. Based on their assessment, you could be qualified to receive N1,500 to N90,000 for a duration of one to two months. The interest rate varies from 4% to 29%, depending on the company’s metrics.
In conclusion, it is important to mention that banks are already upping their games in the area of quick loans to customers. The activities of these fintechs have been a wake-up call for them to do better. Consequently, the likes of Guaranty Trust Bank Plc and Sterling Bank Plc are making considerable effort by offering reduced interest rates and efficient services.
Nigerian Breweries leveraging, but stacking cash through rising input costs
The marathon continues for Nigerian Breweries with its 2020 financials.
Humanity might need more booze to survive the increasingly daunting intricacies of life, but Nigerian Breweries 2020 financial statement is proof that even the best can get caught up in the reality of changing business lifecycles.
Nigerian Breweries Plc had floored the market providing both alcoholic and non-alcoholic premium quality beverages across the nation. But with brands like Star lager beer launched as far back as 1949, Gulder lager beer launched in 1970, and even the family-friendly Maltina introduced as far back as 1976, it is only natural that both the old and new generation competition gives them a run for their market share.
Much like other old money companies, Nigerian Breweries has done its bit to remain relevant in the industry from creating new variants of existing favoured brands to paying dividends consistently annually for the past few years. Yet within the same period, the company’s financial statements have been a testament to its streamlined market share and reducing profits. The marathon continues with its 2020 financials. The industry giant may as well be setting itself up for a debt quagmire peradventure its projections do not match the true reality of events.
2020 financials: A tale of higher costs & larger debts
2020’s unfavourable financial/ business environment led to the increase in the prices of raw materials and disruptions in logistics for many Nigerian-domiciled businesses including Nigerian Breweries. Raw materials and consumables witnessed a 17% increase despite the marginal growth in revenue.
While the group’s 2020 results revealed a 4.35% increase in revenue from N323 billion in the prior year to around N337 billion, these gains were curtailed by a higher-than-par increase in cost of sales which had risen by 13.9%, from the N191.8 billion expended in 2019 to N218.4 billion as its 2020 financials reveal and interest rates going way up.
The company’s lower operating expenses were not enough to salvage the disruption caused by the raging interest expense following increased charges paid on bank loans and overdraft facilities as well as the significant increase in overall debt. Between 2019 and 2020 alone, long term loans and borrowings increased by 974% from N4.8 billion to as much as N51.8 billion. Even trade and other long term payables increased by 35%.
In its financials, the company noted that it has revolving credit facilities with five Nigerian banks to finance its working capital. The approved limit of the loan with each of the banks range from ₦6 billion to ₦15 billion (total of ₦66 billion) and each of the agreements had been signed in 2016 with a tenor of five years. The Company had also obtained Capital and Working capital finance from the BoI in 2019.
It is no news that the company is involved in diversified lease arrangements. Following reclassifications made in 2019 to some of its lease assets, the 2020 asset base also witnessed significant increase in Right of Use Assets which increased by 288%% from N11.1 billion to N42.9 billion. Yet, the fact that in one year, interest expense on Lease Liabilities rose from N19.7 million in 2019 and to a whopping N4.171 billion shows that the company is taking way more debt than its books require.
But what’s it using all the cash for?
Beyond rising material costs, borrowing costs have been huge and the annual interest payment by virtue of these loans make the possibility of higher profits for the company a mirage. That said, the overall increase in total liabilities might not have been such a bad idea if the funds were being used to increase revenue and profits. But having a huge chunk of all that money in cash creates a different kind of challenge. Cash and bank values in its statement of financial position significantly increased by 377% from N6.4 billion in 2019 to N30.4 billion in 2020.
Is the cash being held to mitigate possible challenges of the volatile economy or are they being used to pay dividends? Even at a share price of N52 per share, the company’s price-to-book value sits at 2.5816, testament of its dire overvaluation. Consequently, there is an ardent need for the company to come up with newer ways to attract the wider market and keep its book in the green with a little less external funding.
Secret behind MTN’s blistering performance
Despite COVID-19 disruptions, MTN Nigeria’s 2020 financials showed marked improvements compared to its 2019-year-end.
MTN Nigeria Communications Plc (MTN Nigeria) released its audited financial results for the financial year ended December 31, 2020.
Despite a challenging 2020 to individuals and businesses caused by COVID-19 disruptions, MTN Nigeria’s financial and non-financial information showed marked improvements compared to its 2019-year-end as well as prior quarters of 2020 results that were impacted by the COVID-19 pandemic.
Indeed, the evolving pandemic which intensified lockdown, remote working, and work-from-home procedures, appeared to have led to increased adoption of MTN Nigeria data and digital services.
Specifically, year-on-year on non-financial information, mobile subscribers increased by 12.2 million to 76.5 million; active data users increased by 7.4 million to 32,6 million while the company’s mobile money business continued to accelerate with a 269.2 % increase in the number of registered agents to over 395,000 and 4.7 million active subscribers from approximately 553,000 in 2019.
Year-on-year on financial information, service revenue increased by 14.7 % to NGN1.3 trillion driven principally by voice (with revenue growth of 5.9 %) and data revenues (rising by 52.2 % led by increased data use and traffic); profit before tax (PBT) grew by 2.6 % to N298.9 billion; profit after tax (PAT) increased by 0.9 % to N205.21 billion; while Earnings per share (EPS) rose by 0.9 % to N10.1 (N9.93, 2019).
Nonetheless, significant increases were noted in its operating expenditure as well as capital expenditure. First, there was a 2.3 % increase in operating expenses arising from the rollout of new sites and the impact of naira currency depreciation affecting the costs of MTN Nigeria lease contracts. Secondly, EBITDA margin declined by 2.5 %age points to 50.9 % (from 53.4 % in 2019) There were also other significant cost rises including a 25.4 % increase in net finance cost, and 19.4 % increase in capital expenditure which had a 11.7 % knock-on increase in depreciation and amortization costs.
On the back of the year-end result, MTN Nigeria has proposed a final dividend per share (DPS) of N5.90 kobo per share to be paid out of distributable income and brings the total dividend for the year to N9.40 kobo per share, representing an increase of 18.7 %. MTN Nigeria paid N4.97 as final dividend for the year ended December 31, 2019. This was in addition to an interim dividend of N2.95, which brought its total 2019 dividend to N7.92 per share.
The proposed dividend implies a yield of 3.4%. Having paid an interim dividend of NGN3.50 in 2020, the proposed dividend, if approved, will bring the total dividend per share to NGN9.40 or c.19% higher compared with 2019. We expect a positive reaction from the market due to the marked improvement in earnings. However, the market’s reaction may be dampened by negative investor sentiments on equities arising from the uptick in yields on fixed-income securities.
We expect that the introduction of additional customer registration requirements requiring subscriber records are updated with respective National Identity Numbers (NIN), and the continued suspension of the sale and activation of new SIM cards will affect subscriber growth.
MTNN share price remains unchanged at the end of trading yesterday at N174 per share.
Tade Fadare PhD, is an economist, and a professionally qualified accountant, banker and stockbroker. He has significant experience working or consulting for financial institutions in Europe, North America, and Africa.
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