Nigerian fintech startup Pivo has secured $2 million in a seed fund backed by investors such as Precursor Ventures, Vested World, Y Combinator, FoundersX and existing investor, Mercy Corp Ventures.

The investment was attracted by the company’s innovative solution to SME’s payment bottleneck that slows down the industry’s supply chain. It takes small and medium businesses several days to receive invoice after executing orders. Pivo speeds up payment for freight carriers by providing a bank account, a debit card and digital invoicing tools that track payments.

Launched in 2021 by Nkiru Amadi-Emina and Ijeoma Akwiwu, Pivo provides financial services that include credit, payments and expense management, to SME vendors within large manufacturing supply chains. These services make it easy for supply chain SMEs to make, receive and track payments.

“We launched Pivo in 2021 with our credit product, Pivo Capital. Since then we have launched Pivo Business which offers business accounts with features like invoicing and bulk payments to help SMEs manage their cash flow better. We’re focused on building an all-in-one financial services platform for supply chain SMEs and are glad to have the backing of our investors,” the company said.

Pivo said in a statement it intends to use the financing to upgrade existing products, build new ones, hire talent and expand outside of Lagos, its first market and other African countries, particularly in East Africa.

The startup, which has raised $2.55 million since launch, told TechCrunch in an interview that the prevalence of friction in companies’ management of cashflow inspired its founders to seek solution.

“In most cases, we found out that managing cash flow was the primary issue for these businesses — it was either nonexistent or just paper-based,” Amadi-Emina said. “A lot of the payments made were made with cash and we thought to build a digital bank that provides financial services geared towards solving these various problems for SME vendors that operate within large manufacturing supply chains, starting first and foremost with the logistics providers, and then gradually moving to the supplier pockets and at the tail end of things.”

Pivo said it relies on manufacturing supply chain relationships and deploys financial services to the SMEs within them.

Truckers usually need advance or full payment before they leave a depot for their destination – a situation that usually creates a vacuum in the supply chain. To solve this problem, Pivo has deployed the credit play of its platform, Pivo Capital, as an early payment alternative for truckers and allows logistics companies to deal with any upfront costs such as diesel and driver’s allowance.

Pivo Business, its payments reconciliation arm, helps these small businesses to facilitate payments via peer-to-peer transfers and track payments with debit cards with spend controls, per TechCrunch.

With less competition, Amadi-Emina explained that all these features will drive Pivo to capture a sizable portion of a $4 billion addressable market opportunity.

The startup currently serves about 500 SMEs as direct customers and makes revenue by charging interest on capital and fees on payments processed. Pivo Capital which is one of its products has disbursed over $3 million to SMEs and currently records a 98% repayment rate while transaction volume on Pivo Business grew over 400% between April and September this year. The startup has registered a total volume of $4.7 million from July to date, according to Amadi Emina.

The Banks and Other Financial Institutions Act (BOFIA) was signed into law by President Muhammadu Buhari on the 12th of November,2020.

This new law effectively repealed the old BOFIA 1991 and became the primary piece of legislation regulating the Nigerian Banking and Financial Services Sector through the Central Bank of Nigeria (CBN).

This Act was specifically enacted to overhaul and improve the Banking and Finance sector for a more positive impact on Nigerian economic development.

This article will be looking at the most important provisions of the act and their resultant effects on Banking and Financial services today. 

These provisions are as follows :-

Loans/Credit Facilities :- Under the BOFIA 2020, there is to be no more advancing of unsecured Loans or loans above 1 Million Naira by a bank or Other Financial Institution (OFI) except in compliance with CBN Regulations on Collateralization or with the prior approval of the CBN.

Transfers of shareholdings in Banks and Other Financial Institutions :- Under the BOFIA 2020, the consent of the CBN is now required where there is a planned transfer of significant shareholdings (which are interpreted as 5% and above) or percentages of the paid-up share capital of a Bank or OFI.

The Prohibition of Unlicensed Banks and Other Financial Institutions:- The BOFIA expressly prohibits the operation of Banks and Financial Institutions without CBN licensing.

The establishment of a Banking Sector Resolution Fund :- Otherwise known as “The Fund”, this is a fund to be domiciled with the Central Bank of Nigeria for the purpose of paying the Operational costs of bridge banks as well as the cost of transferring all or part of the business of a bank or financial institution as a result of a resolution and credit facilities where requested to banks and OFIs under Resolution.

Banks and Other Financial Institutions are as a result, subject to an annual levy towards this fund to be paid not later than the 30th of April every year.

The Introduction of a Special Tribunal For the Enforcement and Recovery of Eligible Loans :- Otherwise known as “The Credit Tribunal”, this is a measure of the BOFIA aimed at the creation of a more efficient sector-wide eligible loan recovery system, having jurisdiction over the enforcement of securities, guarantees or attachments or assets under eligible loan commitments made by any bank or OFI in Nigeria with its customers.

The Introduction of Stiffer Penalties for Defaults of BOFIA and Associated Provisions :- Some of these stiffer penalties include personal liability burdens for officials of defaulting banks in the event of compliance negligence on their parts as well as monetary fines of up to 50 Million Naira for violations of the BOFIA.

The introduction of CBN observation rights at Bank and OFI Board/Management Meetings:- The Act now allows for the CBN Governor to appoint agents (examiners) having the right to attend in observer capacities, board and management meetings of banks and OFIs.

Immunity of the CBN & Other Related Entities From Liability Claims :- This applies under the Act to claims of liability arising from the exercise by the CBN of its powers granted by the same Act.

Also,the Act now limits remedies open to parties suing the CBN to monetary compensation in cases of CBN license revocation, effectively banning the issuing by any court of restorative (Status Quo) orders against the CBN.

Liability limitations in cases of Force Majeure :- Under the Act, banks and OFIs are exempt from liability in cases of inability to render services to customers due to Force Majeure situations like natural disasters (classified under “Acts of God”), national incidents like coups, Medical/Public Health outbreaks/epidemics, etc.

CBN Powers Against Failing Banks :- Under the Act, the CBN Governor is empowered to when it deems it fit, halt payments in pursuance of contractual obligations entered into by failing banks as a party.

The CBN can also exercise its power under the Act to transfer a part or whole of a failing bank to 3rd party purchasers from among a set of intervention options at its disposal regarding failing banks, including but not limited to the power of the CBN itself to acquire controlling shares of failing banks and as a final solution, revocation of the failing bank’s license.