Samuel Taylor Coleridge wrote the ageless words to describe the predicament of the ill-fated hero stuck on a ship in the middle of a becalmed ocean: “Water, water, every where,. Nor any drop to drink.” In Shakespeare’s Twelfth Night, Duke Orsino delivered one of the most memorable lines when he said “If music be the food of love, play on”. Shakespeare did not stop there: in a scene in Hamlet, when Lord Polonius asked Hamlet “What do you read, my lord?”; Hamlet responded “Words, words, words”.

Those “words” could go for “opportunities”. How do you discover them? Indeed, how can one be in the middle of the oceanic sea and still be thirty? How can the beats of opportunities by playing and yet we cannot hear? What do you see in Nigeria, Africa and the world? I hope you respond: opportunities.

Tomorrow at Tekedia Mini-MBA Live, I will explain how we can discover opportunities in markets. Yes, like Russell Conwell’s Acres of Diamond, we can find new vistas.

And as I conclude on that, I will then explain the best ways to structure modern startups in Africa. Remember, I was a banker and I understand deals well well. And as an investor, there are things we like to see in startups. Tomorrow at the best school, come and let us co-learn. This is Tekedia Institute, the uncommon business school.

Please register for the next edition which begins Feb 6 2023 here 

If you offer credit and depend on credit provision to grow your business, and you come to a village where most people who have borrowed money in the past have failed the decent credit history test, what would you do next?

1. Abandon the idea to operate in that village because most of the villagers are not good credit managers; they cannot repay as agreed.
2. Investigate the root cause which is preventing most of the villagers from keeping their credit histories clean. The outcome will help you determine the next plan for the business.
3. Change your business model where instead of offering credits which enable people to buy more (in volume), you reduce product packaging to fit into pay and carry which can fit customer budgets without any requirement for credit.

Read this from me: the African credit system can send really bad signals. Yes, that guy has a really poor credit. That is not the whole story. The whole story is that in most state governments in Nigeria, less than 30% of workers  and pensioners receive their emoluments/wages on time.

What that means is this: digital credit scoring systems will certainly catch up with them, but that does not mean most are natural defaulters. In other words, the credit score may not be what you think. Of course, you can argue that whenever that happens, it means the credit process is working; you are able to weed out those who are unable to repay irrespective of the circumstances.

I doubt if that is sustainable in Nigeria. In America, you cannot owe people salaries and with that, the credit system offers a clear view of  a person’s capacity to take credits and service them. In Nigeria, that is different; you can have means but that may not be accessible due to irregular salary payments. And if that village has everyone working in such a system, if you do not find a creative way to serve that village, your business will struggle.

As you operate in Nigeria, think beyond what the credit score says. More than 90% of Nigerian university lecturers might have defaulted on loans in the last 12 months since they were not paid during the recent strike. As you look at bureau data, do not allow that to cloud your judgment, thinking that professors and lecturers in Nigeria cannot manage credit. Indeed, think beyond the credit score in Nigeria.

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.