The Brilliance Of Nigeria’s Paylater. ng

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September 19, 2017

Nigerian entrepreneurs are innovating in the financial sector. Despite all the challenges we face on building companies, our young people are finding ways to demonstrate that we can think and redesign our economy, through hardwork and commitment to excellence. We have seen the amazing works from AppZone, Paystack and other startups across the nation. I am introducing one here today which is going to the heart of average Nigerian core financial problem: lending.

Our banks do not have memories. No matter how many years you bank with them, if you need credit, they will ask for collateral. Yes, they may know that in the last 10 years, you have received at least N200,000 monthly, but that was the “last ten years”. They will remind you that anything can happen, from tomorrow. So, if you do not have collateral, that loan cannot be extended. Before we talk of credit bureaus, most banks already have enough customer data to give credits, but most do not without extra securities.

That is why Paylater is exciting. Owned by One Finance & Investments Ltd, Paylater is going after that market where the highest pain points are found in the Nigerian banking sector. We can surely live without shopping through the modern digital payments. But we know that it is challenging when there is an urgent need for funds and no friend or family can help. That is what happens across Nigerian families today. Challenges go beyond how to move money fast across digital channels. Simply, we want credits. Paylater focuses on short-term loans, mainly for emergencies.

Paylater is a simple, entirely online lending platform that provides short-term loans to help cover unexpected expenses or urgent cash needs. You can apply for a loan 24 hours a day, 7 days a week with our quick application process that lets you know your status within minutes.

Yes, we like the payments and remittance fintechs, but lending is going to be a key part of what will help many families move up. The capacity to take loans and pay school fees, or during those tough moments like taking a child to a hospital, when all borrowing options have been exhausted, will be another layer in the fintech evolution in Nigeria.

Paylater is focusing on those moments of craziness and it is finding success. It now disburses 1,000 loans daily. The firm is a CBN-licensed and regulated lender, meaning that CBN understands the need to bring new ideas into the lending sector in Nigeria.

At the start of the year when we were disbursing about 200 loans a day, we set ourselves what we felt was an aggressive target of 1,000 paylaterng loans issued on a daily basis. We felt it was ambitious not because of a lack of demand (who hasn’t got a friend that needs a loan?) but rather the challenge to risk-assess 1,000 people that we had never met, living in all states of Nigeria and then disburse within a short time frame to their customers accounts.

Today we are happy to say that over 60% of these 1,000 loans are disbursed within 1 minute with the rest all under 5minutes and they span a range of N7,500 to N200k for first time borrowers. The inevitable question is “yes, great but are you profitable? Any monkey can give out loans – but are you collecting?. Our mothers told us not to boast so let’s say that our default is between 10% and 20% but trust us that its a manageable number. If you don’t believe us then look out for us early next year – if you are right, then we won’t be around!!!

Whilst we are pleased with the team effort that has got us so far, we are not content. Our mantra is “credit for all” and there are too many within Nigeria who don’t have access to credit. We only give @paylaterng loans via smartphones so the 60% of Nigerians that have feature phones unfortunately are excluded. Moreover, for most local banks, “financial inclusion” is just another way of saying “let me provide another channel to take your savings”. Less than 10% of customers have accessed loans from any formal financial institution but you don’t see banks showing the same energy to grow their retail assets as they do their retail deposits.

The Products

The product is a simple digital product with clear focus on the digital and mobilized citizens of Nigeria.

The produce is a simple, entirely online lending platform that provides short-term loans to help cover unexpected expenses or urgent cash needs. With just an Android device and basic requirements, you can apply for a Paylater loan 24 hours a day, 7 days a week with a quick application process that lets you know your status within minutes.No collateral, guarantors or application fees required. Just a few clicks of a button.

We currently offer two loan packages: PAYLATER (loans available to all) & PAYLATER PLUS (loans for salary earners). We’ll discuss both in a bit more detail below, so you can decide which best fits your needs.

Borrowing and paying help clients borrow more

The Opportunity

Paylater has a huge opportunity ahead of it. It is in a very growth industry. However, it is evident that it is going after the formal workers who can demonstrate they are employed. It is an app with no desktop version. So, the focus is the mobilized Nigerians with smartphones. They are also the people largely employed in the formal sector. Paylater needs that to mitigate exposure to risks. Of course it has the lower segment where it can lend N10,000 but that is not necessarily significant for me. The opportunity lies in the N500,000 bracket.

Paylater® is a simple platform that provides short-term loans to help cover unexpected expenses or urgent cash needs. You can apply for a Paylater loan 24 hours a day, 7 days a week with a quick loan application that lets you know your status within minutes, and credits your account immediately.

It’s fast, secure and reliable. Currently available across Nigeria.

YOU’RE JUST A FEW STEPS AWAY FROM GETTING A LOAN

– Download the Paylater app
– Complete registration and submit the short loan application
– Receive your loan straight to your bank account within minutes
– Earn increased amounts and better loans by repaying loans on time

The Challenge Ahead

Running a lending business without a credit system will be a challenging business to scale. But what constitutes a credit system can vary. Some may use cellphone SMS data. Others have used Facebook feeds. They just make the loans and for most, it is working. There are risks in all these models. The entrepreneurs are managing them since most times, they do not ask for huge collateral like banks do. Of course, they do not give as much money as banks do, preferring to lend below N500,000.

That limit is the challenge. If the entrepreneurs cannot find a novel model to overcome that limit, they will not easily scale to serve more profitable customers who may need at least N1 million. The market today is mainly for students, and lower scale of the middle class with jobs. The middle and upper middle class may not necessarily be in positions to complete forms online for N500,000. Most will have access to the banks as they already have reliable income (the reason why they are middle/upper middle class) and today Paylater is not competing for their opportunities.

What Paylater is doing is tough. Despite the Bank Verification Number (BVN) and access to customer earning capacities, banks do not have so much confidence to give decent credit without collateral. They have their data and they cannot be wrong, on why they never lend liberally. The lending startups will learn over time on how their loans are performing to explore how they can tighten the lending requirements. Once they can get to N1 million, a new market will open for them that will now begin the trajectory to challenge the banks. At that high amount, we can see small businesses going to companies like Paylater for loans. But those businesses cannot expect to hold the loan for long owing to the interest rates. I expect Paylater to also evolve by serving those small businesses when the time comes.

A Paylater loan attracts interest rates starting from as low as 2% monthly on the first loan. It is intended to meet urgent, short-term cash needs. Because of this, we have limited the lowest loan amount to NGN7,500 (for first-time applicants) and loan duration ranging between 60 days and 6 months, so you are not paying excessive interest rates. We also do NOT charge any additional fees – for late repayments or processing costs. Please do not take a Paylater loan if you intend to service long-term debts.

Paylater loan is certainly high, but that is expected for the risks it is taking

The company is aware of the risks and it is working to make it harder for defaulters to access the credit market. Government needs to get in and help build a centralized database so that responsible borrowing can emerge in Nigeria. Paylater with the CBN certification has access to BVN of customers. It is possible that it evaluates credit worthiness through data pooled from NIBSS (Nigeria Inter-Bank Settlement System Plc) which handles transaction details of Nigerian bank customers. I am not sure about this but since it asks for BVN, I do not understand any other value BNV offers than checking account history. NIBSS or Paylater can explain what it does with BVN.

Failure to pay off any loans taken trigger a notice to the consumer credit reporting agency which would negatively impact an individual’s credit score. Late payments can also affect your ability to borrow in the future, so please ensure timely repayments of obligations.

There are other players like Wema Bank’s ALAT and Piggybank.ng. These are competitors and also coopetitors and together these entities can pioneer a new sector that will make banking a sports for many Nigerians: something to cheer.

All Together

Paylater is pioneering a new area in fintech along with other lending startups in Nigeria. Though their annual interest rates can vary from “31% to 213%”, for most people, it is better than nothing. Simply, they are meeting the needs of customers, left behind by banks. For the very fact that they are CBN regulated, it means that they have to disclose every element of their loan terms in ways that customers will understand.

For Paylater, the firm is totally online, away from the bulk of the people that need its loans. That is the main weakness but also the strength since the Internet gives its unbounded distribution channel to scale, even while excluding the millions of Nigerians who are not yet online. Most of the excluded people are the people that desperately need the product. But Paylater has to start from somewhere and succeed first. It cannot serve everyone. The Internet helps it to operate lean with positioning to serve its desired customer segment efficiently. I see brilliance in this company and its mission.

Photos of Zenvus Smartfarm Design for U.S. and European Markets

By

Ndubuisi Ekekwe

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September 19, 2017

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When we unveiled Zenvus for the African markets, we did not know that we were out for something big. From the north to the south, east to west, African markets have responded. But while that was happening, American, French and Brazilian farmers were calling. Our products are affordable and have changed the basis of competition since you need to spend about 5% compared to the cost of some competing big brands.

Zenvus is a pioneering precision farming technology company that uses computational algorithm and electronics to transform farms. Zenvus collects soil fertility and crop vegetative health data to deliver precision agriculture at scale. It then uses the aggregated and anonymized data to deliver financial services to farmers

I saw the global opportunity and knew that we needed to modify some specific things to serve those markets. In this post, I am sharing some photos of some circuits under tests. We will begin serving those markets next year. This is for big farms with at least 50 hectares of land.

This version of Zenvus Smartfarm is engineered for private cloud. So a farmer can pay to have its data stored in a sequestered datacenter while relying on Zenvus award-winning algorithm to process the data. Zenvus sensors will still anchor the data collection.

We continue to serve African markets through governments and co-operatives providing the best precision agriculture technology for smallholders farmers in the world.

The Inversibility Construct

By

Ndubuisi Ekekwe

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September 19, 2017

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In this video, I explain the Inversibility Construct which is a construct that deals on what digital entrepreneurs must achieve for them to have scalable advantage. Scalable advantage means that you can scale without much burdens, financially. Scalability comes when what is typically a bad customer experience in the physical domain becomes the enduring strength of a digital product.

Your digital startup cannot grow if you do not have a scalable advantage. You must have a means to add new users at a marginal cost model that tends towards zero. In essence, if the market has been perfect (it is not, and nothing is), you must serve customers at zero prices, on the web. But you do not do that since you need to make profit to exist as a business. That is why you have a cost on your apps or you extract tax via advertising.

For the Inversibility Construct, you need to turn a typical frustration in the meatspace into strength in the digital space. That means, you need to INVERSE the experiences of people, so that what annoys them in the physical becomes strength in the digital space. I provide some examples:

People hate crowded shopping malls; make people to like crowded shopping malls via your products (Amazon, Konga)
People hate crowded classrooms; make a classroom where everyone is happy when it is crowded (Udacity, Facyber)
People hate crowded bank halls; make products where everyone enjoys the service when the bank hall is crowded (Paypal, Paystack)
People hate crowded motor parks with passenger hailers; make a hailer which people like because it is crowding many people together (Uber. Little Cab)

If you fail to inverse the physical domain experience, you have no digital product. There are core anchors that will help you which I have explained in this portal in many areas.

Aggregation Construct
Internet Diminishing Abundance
Unbounded Distribution Channel
Marginal Cost

The Inversibility Construct posits what a digital entrepreneur must work to turn the enablers of meatspace poor customer experiences into strengths in digital domain products or services.

Deciding Where To Locate Your Agro-Allied Factory in Nigeria

By

Ndubuisi Ekekwe

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September 19, 2017

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You can join the conversation on LinkedIn here; the community is discussing this topic.

If you can, please assist and provide some insights and perspectives. A member of the community has this question and needs help. This is the question::

If you were to own an agro allied factory, where will you locate your factory. Close to the market, close to the raw materials or close to labour? Thank you sir as you help enlighten a budding entrepreneur.

This is my response but I have never built such a factory to have looked at many of the variables:

Market vs. Raw Material
- I will locate close to market because the market is where the final customers are located. No matter where I locate the factory, I will always come to the market to make sales
- I do not know the nature of the product but no matter what it is, the pull mechanism will make the producers of the raw materials to tend towards going to the market. That means, even if I am not close to the original source of the raw materials, I can always get raw materials from other suppliers
- The transportation cost of the raw materials may be high depending on the nature. However, the flexibility of having many distributors coming to the factory being closer to the market opens more doors to improve sales. If the factory is located near the source of the raw materials, I may not have many distributors coming to lift the products.
Market Vs. Labour
- I am not worried on labour because labour is always pulled to the markets. So, people will always go to where the money is. In this case, the labour issue will be dealt with provided we are closer to the market. If we locate just for the labour, it is not likely it will be a stronger pull compared to either the raw material or the market. Besides, agro-allied labour is not that extremely specialized to have that level of pull-effect. Again, we are not talking of labour for the raw materials. Here we are talking of labour for the factory. I do think being closer to the market, usually a big city, will help me on that
Raw Materials Vs. Labour
- Between locating close to raw materials and labour, I will bias towards raw materials. At least that will save me cost of transportation to the factory. The labour for agro-allied factory is not ultra-specialized that I have to move my factory to it. Raw material wins between these two variables.

All Together

Labour has mobility and can move better than raw materials. But since this is a factory, it is better I stay closer to the market to have more access to distribution and dynamics of the customer taste.That will always win over being sequestered from the market because of the need of proximity to raw materials. So, locate close to the market for non-perishable raw material. If perishable raw material, owing to poor road networks and logistics in Nigeria, put closer to source of raw materials if alternative sourcing will not be readily possible.But generally, if there are multiple raw material suppliers, I do think the raw material suppliers will deal with their products and associated logistical challenges. Personally, as the agro-allied entrepreneur, I will focus on the market. So at the end, close to market wins irrespective of the nature of the raw material.

[This construct can be examined from the elementary concept of location and localizaion of industries which they taught us in 4th year in secondary school, in most Nigerian schools. There land, labour, and capital, being factors of production were always part of the considerations. Agro-allied is not the farm from where we will get the raw materials, so land is not a huge issue. Capital is not a factor even though buying land near the source of the raw materials may be lower (assuming the farm to be in rural area). Nevertheless, the cost is not going to be so huge to overcome the benefits, over time, of having the factory closer to the market. In the Economics book (by O. A. Lawal) which I read decades ago in 4th year in secondary school, he noted markets as being a factor. This setting mirrors his explanation; I think close to market wins for this Nigerian entrepreneur. But where the raw material is perishable, we can consider closer to the raw material]. What do you think?]

Google Tez Begins Africa’s New Era of Voice Banking

By

Ndubuisi Ekekwe

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September 18, 2017

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This is the beginning of the new era of modern agency banking in Africa. For decades, banks have struggled on how to serve poorly educated potential customers, through text-based technology. The banks have struggled because the cost of serving these customers is high. This explains why you may not find a single bank branch in some local government areas in Nigeria, while if you visit NNPC or the National Assembly, you will see many banks in their facilities. Simply, the banks are following the money. You will not make a lot of money serving rural communities in Nigeria with today’s banking solutions.

However, the Central Bank of Nigeria (CBN) does not want the banks to forget the Nigerian citizens living in rural areas. Also, the banks do understand that these citizens are potential customers, if not currently but in the near future. Some banks like Diamond Bank have deepened their agency banking products. However, most of the solutions are still text-based. Nigeria needs to deliver solutions in ways the customers, who can neither read nor write, can understand. We like to talk in Nigeria. That means voice is the path to deliver the solution. I have already noted that the shift in computing to voice provides that paradigm.

There are many opportunities in the voice assistance space in Africa. In short, if you make it, you will get customers even in the enterprise market. The following are simple examples:

Banks working on agency banking will adopt the technology to reach customers who are largely not literate enough

Insurance firms will also use it to build new solutions, based on voice

Many government services will move from text to voice, solving the illiteracy barrier

Africa’s leading ecommerce companies like Jumia and Konga will come on board. Of course, you must make sure such a technology works with our accents

There is a shift in computing at the consumer level, where people can talk to their phones and the phones get things done. The opportunity will be huge. Now is the time to think of Africa’s voice operating system.

Google Debuts Solution

According to TechCrunch, Google has a product named Tez that can allow customers to make payments via audio. Period, you talk and the transaction goes through. Where are they testing it? India. It has the same demographics in terms of literacy rate as most parts of Africa.

After several weeks of speculation and leaked details, today Google officially unveiled its first big foray into mobile payments in Asia. The Android and search giant has launched Tez, a free mobile wallet in India that will let users link up their phones to their bank accounts to pay for goods securely in physical stores and online, and for person-to-person money transfers with a new twist: Audio QR, which uses ultrasonic sounds to let you exchange money, bypassing any need for NFC.

“Send money home to your family, split a dinner bill with friends, or pay the neighbourhood chaiwala. Make all payments big or small, directly from your bank account with Tez, Google’s new digital payment app for India,” Google notes in its information portal about the new app.

Tez is Google’s play to replace cash transactions and become a more central part of how people pay for things, using their mobile to do so. But it’s also a chance for the company to push out some new technologies — like audio QR (AQR), which lets users transfer money by letting their phones speak to each other with sounds — to see how it can make that process more frictionless, and therefore more attractive to use than cash itself. More on AQR below.

Tez is launching today on iOS and Android in the country and will see Google linking up with several major banks in the country by way of UPI (Unified Payments Interface) — a payment standard and system backed by the government in its push to bring more integrated banking services into a very fragmented market. There will also be phones coming to the market from Lava, Micromax, Nokia and Panasonic with Tez preloaded, the company said.

https://youtu.be/N2A_RkIHNgU

What Happens Next

I expect Google to make available API and SDK that will help people integrate Tez in their solutions in coming months. They will also scale beyond India to Africa and Latin America. Also, over time, Google will make this product part of Home Assistant, its voice assistance technology. The fact remains that developing regions like India and Africa will find the emerging voice operating system very exciting because you do not have to worry if the person can read or write. The promise of moving computing to voice will unlock more value in Africa.

Voice computing will be a total liberalization of computing where anyone that can talk can compute. Indeed, “Audio QR is poor man’s NFC and it’s better and awesome”, says Aniruddh Dodiya , Founder of Grocya.

All Together

I expect African developers and entrepreneurs to position themselves for this emerging opportunity. They have to find ways to build on top of Tez which will be easier since Google has provided the core elements. Yet, we also have to find ways to manage the accents and our spoken English flavor. There are many opportunities in this area and people have to get excited and begin to explore. I expect banks to begin to explore solutions in this space. Agency banking in Africa and indeed Nigeria will be anchored by voice computing. Google Tez can make that moment happen.

Imagine the possibilities. This comment from referred TechCrunch link above sums it up.

Audio is great because in populations with high illiteracy, voice based transactions can allow people to be more productive. The records of transactions should be easily recoverable by the same users. If people can use pictures in addition to their voice, they can navigate the digital transaction landscape and become active participants. For example, a farmer and a consumer can enter into a verbal agreement to sell a specific kind of produce as part of ecommerce. Google appears to be on to something big.