Friday 08 November 2019
BUSINESS DAY
MONEYINSIGHT How credit bureaus are expanding access to credit in Nigeria FRANK ELEANYA
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redit providers may be in the business of helping people achieve their dreams by making available finance when needed. But they are certainly not not-for-profit organisations. The credit they give are not often personal but funds they received from investors whom they are obligated to make a return at a specific time. Credit providers make money from the interest rate they charge on loans. In Nigeria, the rates vary widely from the threshold of 13.5 percent set by the Central Bank. While most banks charge between 21 to 26 percent for individuals and businesses, nonbank lenders can go as high as 35 to 50 percent. Notwithstanding, access to credit is not as ubiquitous as many would expect. For instance, it took an imposition of a 60 percent loan-to-deposit threshold to get Nigerian banks to increase lending to small businesses. Currently, the CBN has increased the landing target for banks to
65 percent. But banks’ willingness to give collateral-free loans to businesses and people often depends on the amount of information they possess the recipients. Small businesses and individuals are leaving a vast amounts of digital footprints and data trails on mobile and online payment platforms, social networks, and other
African tech hubs get least funding from Venture Capital, University FRANK ELEANYA
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enture Capital and Universities are the least sources of funding for the majority of technology hubs across Africa, according to a report by Afrilabs and Briter Bridges. The report which derived its results from data collected from over 90 Africa tech ecosystem builders and hubs, found that while 60 percent of all respondents said they had received external funding, corporate sponsors, philanthropic organisations, and non-governmental organisations (NGOs) are the most active funders. Venture Capital and Universities contribute 5 percent and 3 percent respectively compared to corporate sponsors which account for 21 percent of total funding. Philanthropic organisations and foundation/grants bring in 16 and 15 percent respectively while private investors account for 12 percent of funding. The 5 percent for universities is hardly surprising considering that the tech ecosystem is only recently beginning to build a bridge between it and the academia in Africa. Africa academia has long been accused of being disconnected from the latest developments in the world of technology and has done little to build a relationship with tech entrepreneurs setting up shop across the continent. A hub which is defined as a centre, structure or network
credit in Nigeria. A credit bureau refers to an entity that collects and shares information about the creditworthiness of individuals and businesses. Essentially, they are set up to gather information about people’s loan performance and the information gathered includes previous loans that have already been paid, new loans that
have just been collected, how the loans have or are being serviced and if there are any outstanding balance. It also includes the contact addresses of the borrower. Credit bureau operations in Nigeria go back to 2003. Today, there are only three national credit bureaus licensed by the Central Bank of Nigeria. This include CreditRegistry Plc; FirstCentral Credit Bureau; and CRC Credit Bureau. Recently, the three bureaus formed an association called the Credit Bureau Association of Nigeria (CBAN). The association has a mandate to promote the development and use of credit reporting in Nigeria. Apart from banks and credit firms, companies outside the financial services sector also use the services of credit bureaus. This is because the credit bureaus also serve as an accountability mechanism that influences behaviour and stimulates honouring business agreements and obligations. In other words, they champion a high level of financial responsibility of the public. They also make possible the processing of millions of loan decisions everyday and in an automated fashion.
Four ‘Made in Nigeria’ footwear makers in Lagos entrepreneurs can learn from STEPHEN ONYEKWELU
comprising of actors supporting or facilitating the development of an environment conducive to entrepreneurship or innovation, has often been projected as critical to driving the digital economy. Their ability to harness talents and ideas is particularly beneficial for universities which are also a breeding ground for unskilled talents. “Insights from the hub managers also suggest that greater financial support and collaboration within the ecosystem are vital success factors for hubs to efficiently and sustainably deliver their services,” said Dario Giuliani, founder and director of Briter Bridges. While most of the hubs said they have received less than $100,000 from various sources, a significant portion is dedicated to paying salaries and upgrade facilities. Energy and rent-related costs often depend on where the hubs are located. For those in Nigeria, faced with unreliable access to electricity or increasing rent, a lot more pressure is brought to bear on the business. The study found over 110 hubs have shut operations in the last few years due to bankruptcy, pivoting, or the expiration of their mandate. Africa currently has 643 hubs including coworking spaces, incubators, accelerators, and hybrid innovation hubs affiliated with government, universities, or corporations. Nigeria has the largest number of hubs with 90 located in the country. www.businessday.ng
non-banking platforms such as online record keeping and trade transactions. These vast amounts of digitized alternative data when mined can aid financial institutions in the decision-making process and promote financial inclusion. This is where credit bureaus are playing a significant role in helping expand access to
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ome studies have shown that human beings learn by imitation. For entrepreneurs wanting to earn a living through shoemaking, these four models serve as examples. Hesey Designs Hesey Designs is an Africaninspired fashion label that makes beautifully handcrafted shoes, apparel and fashion accessories (bags, purses etc.). The brain behind this fashion label is Odiete Eseoghene, the 25-year-old Nigerian-born fashion entrepreneur, who only graduated from university less than two years ago. Since hitting the market with her creative designs, just after she graduated from university, Odiete has won several awards and hit the spotlight when she designed the sneakers are worn by Richard Branson, CEO of Virgin Atlantic, during the launch of Virgin Atlantic’s new uniforms and 30th Anniversary celebration in London. The young designer started her business with less than $100 in capital, from her savings. Through sheer determination and passion, she has raised about $60,000 in extra capital to further grow her business. Odiete’s fashion pieces are primarily sold through its website, commerce stores and a few retail and distribution outlets
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and she’s looking to partner with more retail outlets. Mona Matthews Mona Matthews is a Nigerian company founded by Monalisa Abimbola Azeh in 2002. The company produces hand-made shoes with matching bags for women, as well as high-quality leather footwear for men. They create whatever shoe size a customer demands. Their styles are very fashion-forward and trendy. The company offers bespoke services as well as ready-towear shoes and made out of the best quality materials available. Taking advantage of many exotic materials they have a wide variety of colours and styles, such as raw silk, satin, Swarovski crystals and various types of leather. T. T. Dalk T. T. Dalk is a Nigerian-based fashion brand that is redefining the African footwear industry. It makes simple, trendy and elegant footwear for both men and women that appeal to a @Businessdayng
wide range of consumer tastes. Temilade Osinfade is the founder and Creative Director at T.T Dalk. During his days at the university, he would draw out footwear designs on paper for local shoe craftsmen to make for him. His shoes and slippers caught the attention of other students and that’s how the T.T Dalk footwear business was born. T.T Dalk is revolutionising the local footwear business in Nigeria and has been featured on several international fashion shows and runways. He primarily sells his shoes on online stores and a few boutique retail outlets in Nigeria’s major cities. Haus of Hercules Haus of Hercules is a footwear and accessories brand based in Lagos, Nigeria. It specialises in simple yet stylish and exquisite handmade shoes. The HOH collection includes loafers, oxfords, brogues, toms and moccasins made from luxurious fabrics such as velvet and a soft suede and traditional fabrics like denim, tweed and batik-patterned fabrics. The brain behind Haus of Hercules is Christopher Jeje, a young Nigerian designer and entrepreneur. He started this impressive footwear business in 2010 with just over $30 in startup capital. Since then, HOH has showcased on fashion runways in Lagos, Accra and London.