When Partech Africa disclosed in March 2019 in its report that at least 33% of total funding raised by African tech start-ups in 2018 was in the fintech sector, a lot of critics wondered where the funds are meant for.
No doubt, part of the fund must have been invested in their operations including infrastructure development. But some of the financial technology (fintech) startup firms have used their funds to disrupt the lending industry as they are determined to ease the burden of lack of access to fund experienced by several millions of Nigerians.
The good news is that a lot of them offer cheap, affordable loans, which come quite fast as they are disbursed a few minutes after application, without collateral.
Some of them are Carbon (former Paylater), Paystack, Okash, Kudi, TeamApt, OneFi, Lidya, Kwikmoney, Page and Renmoney, among others.
These firms have broken the norm, putting the commercial banks on their toes as they offer loans at interest rates as low as between 5% and 12% monthly, depending on the risk involved. Some of them offer loans on USSD platforms.
Nairametrics looks at these fintechs’ loan products and their interest rates, to help depositors make informed decisions while taking the facilities across the nation, at cheaper rates than most banks.
Carbon, one of Nigeria’s foremost digital financial services companies, launched a digital platform, Carbon for Business, last month to provide startups, small and medium-sized enterprises (SMEs) with credits and technology required to build and scale their businesses.
What it means: The company’s clients can now access uncollateralised credit, secure online payments, reliable funds transfer and fast know your customer (KYC) compliance obligations. Businesses can take advantage of Carbon’s infrastructure to achieve business objectives and strategic goals, boost their value offerings and get to market faster.
- Offers adequate security for its users.
- It has Carbon IV, which is an identity verification system that enables businesses perform KYC and anti-money laundering services on prospective staff or other parties.
- It is integrated with all major identity databases including passport, Bank Verification Number (BVN), driver’s license and voter’s card.
- It offers Optimus, an affordable and reliable funds transfer platform that provides low-cost transfers.
- For qualified businesses, it provides an overdraft facility that allows customers short-term funding needed to make critical payments during short-term cash shortages.
- Businesses will be able to accept online payments from Visa, Verve and MasterCard in over 40 currencies.
- All transactions are PCI DSS compliant, 3D Secure enabled, and processed through an SSL encrypted channel.
- Users can access up to ₦20 million uncollateralized flexible repayment loans.
Kwikmoney is a product offered by Mines, a global technology company which has developed a digital platform that enables institutions in emerging markets to offer credit products to their customers with ease and minimal risk.
It offers loans on the USSD platform in partnership with banks like GTBank, Fidelity Bank, and technology companies. Kwikmoney is one of the most effective and convenient ways of getting quick and instant loans in Nigeria.
- Documentation – None
- Interest – From 5%
- Tenure – 14 – 30 days
- Borrow, repay before end of loan tenure, earn increased loan offers, lower interest rates.
Renmoney’s existing and potential customers can get loans up to N4 million that can be repaid within a period of nine months without tendering collateral or a guarantor, or post-dated cheque leaflets.
To access loans from Renmoney, there are certain conditions to meet. They are:
- Applicants are expected to be between the ages of 22-59.
- Have a steady source of income with a functional current or savings bank account and a valid means of identification.
- Provide verification of monthly income and a report of previous loans from a credit bureau.
- Interest rate of between 4% and 4.5% per month. For instance, a N70,000 loan would be worth N83,690 in a 4-month repayment plan.
- BVN, Bank statement, Valid ID card, Employment letter.
- Loan tenure: 3 to 12 months.
- Repayment channels: Quickteller, cheque, POS, Cash and Online transfers.
Page Financials is an innovative retail financial institution offering various quick personal and salary advance loans to meet the financial requests of customers.
Here, it requires six steps to request a loan and the first one is inputting your BVN details. For its loan, Page Financials at a competitive interest rate. that is not all. Page Financials also has a sister company, Pledge Salary Advance Virtual Wallet, which also offer loans.
The initiative is a financial product that bridges unexpected expenses and short-term financial needs. It is acceptable on all POS and ATMs in Nigeria. Interested patron can access funds via our mobile app as the virtual wallet is convenient and solves all quick financial needs.
- The interest is charged daily based on what you use – you won’t be charged for not using the wallet
- We do not require utility bill, just office ID, any Govt issued ID and passport photograph
- Repayment channel is Remita and Direct Debit
- There’s no loan tenure (You pay monthly when you use the wallet & gets credited again – Pay As You Use)
In its case, Opera acquired the service from OPay in December 2018 for $9.5 million, but the service is still being promoted in Nigeria on the OPay app.
“OKash’s business (in Kenya, Nigeria, and everywhere) which relies heavily on mobile processors as Opay is also helping OKash disburse and collect loans at cheap interest rates.
Aella credit is an app-only easy and quick loan platform. It is designed to help employees access funds between N1,500 and N700,000 at interest rates between 4% and 29% monthly.
Aella credit is available in Ghana, Nigeria and the Philippines.
- Requirements: BVN
- Platform: Mobile App
- Interest rate: 4 – 29%
- Loan tenure: 1 to 2 months
- Repayment channels: Direct debit
Fidelity Bank Plc must cover the chink in its curtains to keep rising
Fidelity Bank Plc follows the narrative of top tier-2 banks, which have had better or easier years.
The Nigerian banking sector has consistently been one of the most profitable sectors in the Nigeria Stock Exchange market. However, in 2020, Deposit Money Banks (DMBs) have faced a flurry of impediments, which may have affected their solidity.
With reduced income from fee and commission implemented at the start of the year by the Central Bank of Nigeria, the paucity of foreign currency for international transactions, the resulting economic contraction from dire effects of the coronavirus pandemic, and the consequent operational constraints of keeping employees safe, 2020 is obviously fraught with numerous disorders for banking institutions.
For most, it hasn’t exactly been a year for growth at all, more like a walk in the woods, where improvements to bottom-line is almost unexpected. This period, many banks seem content with simply surviving and fundamentally matching their previous feats.
Fidelity Bank Plc follows the narrative of top tier-2 banks, which have had better or easier years. The bank generated a 2020 9M PAT of N20.4billion, rising 7.08% from the corresponding figures last year, but drilling solely into its results in Q3’2020 and its exact comparative period in 2019, the bank suffered reduced interest revenue, reduced fees and commission, reduced profit before tax, and reduced after-tax profit.
Fidelity Bank Plc concluded Q3 with a profit position of N9.1billion, 13.7% decline compared to its position in 2019 y/y. PBT reduced by 12.9% from N10.8billion in 2019 to N9.4billion this year. Gross earning in Q3 was only N49billion as against N57billion in 2019 – plummeting 14%.
The Group Chief Executive Officer of the bank, Mr. Nnamdi Okonkwo, commenting on the result said: “Our 9 months results reflect our resilient business model, particularly in a very challenging operating environment. We worked closely with our customers to gradually recover from the economic impact of the pandemic and the attendant effect of the lockdown. The drop in gross earnings was due to the decline in interest and similar income, caused by lower yields and drop in fee income.”
True cause of the reduction in earnings
DMBs generate gross earnings under three primary subheads: Interests earned, Fees and commission, and Other operating income. Fidelity Bank Plc generated a combined total of N150.8billion for the period ended September 2020 from these three categories, compared to the N158.5billion in the corresponding period last year.
Deeper analysis reveals that this rising tier-2 bank has seen more deficit in revenue from fee and commission compared to the other aforementioned gross-earnings’ generating-sources within this period. Interest earned dropped by a difference of N4.3billion, while revenue from fee and commission saw a decline of N4.8billion from N14.5billion in 2019 to N19.3billion YoY.
Fee and commission as a component of gross earnings
Card maintenance fees, account maintenance fees, commission on remittances, collect fees, telex fees, electronic transfer fees, amongst others, represent the plethora of channels that makes up income from fee and commission.
The real insight this particular component of gross earnings provides is that a spike in revenue generated indicates increasing/increased customer account activity. The more a customer maximizes the usage of an account’s product and facilities, the more the revenue earned from this segment. Thus, earnings from fees and commissions are so overriding due to their apparent controllability.
For example, a bank could make the decision to purely pursue and aggressively drive the usage of its ATM debit card and promptly see the revenue from commission rise. Furthermore, an increased rate of card production and collection necessitates usage and consequently means more money is earned as card maintenance fees.
The fact that gross earnings reduced mostly from fees and commissions should be a telling concern for the Management of Fidelity Bank Plc. Post covid-19 would birth the dawn of a new era for business processes. The management must guarantee the usability of its electronic banking channels, promotion of its cards, and with urgency, implement improved service delivery mechanisms to ensure that it is the first port of call to customers for general payments and remittances.
These measures are of grave significance in the bid to bridge its widened fee and commission income gap.
Holistically, in the 9 months ended September, it is worthy of note that the bank made certain advancements. Customer Deposits, Net Loans and Total Assets all grew in double digits. Customer Deposits grew by 22.3% from N1.2billion to N1.5billion, Total Assets also rose by 21% from N2.1billion in 2019 to N2.5billion, and Net Loans rose by 12.9% to N1.3billion from N1.1billion.
Airtel is paying up its debts
Airtel’s annual report revealed that the company has a repayment of $890 million due in May, as well as, an installment of $505 million due in March 2023.
Airtel’s presence in 14 countries from East Africa to Central and West Africa would have been impossible without relevant financial investments. But, while the funds have been key to its growth in the past few years, many of its financial obligations are starting to mature quickly.
The Covid-19 pandemic has had negative economic effects on different sectors of the economy; however, the resilience of the telecom sector is evident in an increase in Airtel’s income. The overall performance of Airtel increased with a revenue growth in constant currency of 19.6% in Q2 compared to 16.4% recorded in Q1, while revenue on reported basis increased by 10.7% to $1.82 billion, with Q2 revenue growth of 14.3%.
Unilever Nigeria Plc: Change in management has had mixed impact
9 months into the change of management, Unilever Nigeria Plc’s performance in Nigeria has been largely underwhelming.
Change in the management of a company is never a walk in the park. Transitions usually take time to yield the desired results. Organizations can look to past successful managerial transitions for inspiration, but not for instruction because there is no defined playbook. The decision to replace Mr Yaw Nsarkoh, who served as the Managing Director of Unilever Nigeria Plc until the end of 2019 was plausible, but adjustments were never going to be an easy task.
Mr Nsarkoh had served as Managing Director of the company for 5 years and steered the course of its proceedings with remarkable skill up until the financial performance disaster which culminated in his resignation on November 28th, 2019.