Egypt’s President Abdel Fattah al-Sisi recently issued a decree to allocate new swathes of land to the Armed Forces, doing little to fend off ... intensifying criticism against the military’s deeply entrenched economic involvement as the North African nation’s financial woes mount.
The equity raise starts this month and is planned to run until June. The amount of $20m to $25m which is being sought could come from either a single investor or a consortium, Dayal says.
Yabx, which has its headquarters in the Netherlands, seeks to enable access to financial services for customers who have either a “thin” credit file or no file at all. The company uses machine learning to analyse information from mobile money wallets and other sources to construct a risk profile.
The company announced its entry into Nigeria in November, and also plans to enter Ghana. Private credit bureau coverage in Nigeria stood at just 13.9% in 2019, according to the World Bank. Dayal has been in discussions with “five or six” leading banks in the country, and “three or four” of them are already on board to partner with Yabx, he says.
For the moment, partnerships are likely to focus on analysing existing databases at the banks to maximise their potential. The aim is to help the banks launch products for the new-to-credit segment such as buy-now-pay-later and payday loans. Further ahead, Dayal wants Yabx to serve as a “conduit” to help the banks win new business.
Nigeria, says Dayat, is a “risky market. Your credit underwriting needs to be spot on.”
Yabx operates in Tanzania, Uganda, Malawi, Somalia and the Côte d’Ivoire, as well Asia and Latin America, and has 100 million customers. The company provides small consumer and business loans, unsecured working capital loans for mobile money agents and smartphone purchase financing, and also has a savings product.
Dayal says that now is an “opportune” time to enter Nigeria as the “ecosystem and the regulation are becoming a little friendlier.”
Some have found recent regulatory changes hard to predict or understand. Nigerian central bank governor Godwin Emefiele in October announced plans to redesign the largest denominations of the naira, with the old notes ceasing to be legal tender on January 31. Emefiele followed that up by ordering that cash withdrawals be drastically slashed to N20,000 ($44.78) per day, before backing down.
The growth of wallet provision gives us a big opportunity.
Widespread criticism of the withdrawal limits included the argument that Nigeria lacks the necessary wallet-to-wallet transaction capability for such a radical limitation of cash use. Victor Olojo, president of Nigeria’s Association of Mobile Money and Bank Agents, estimates that developing that capability could take another two or three years.
According to McKinsey, Nigeria will see Africa’s fastest annual growth rate in electronic payments revenue at 35% per year from 2020 to 2025. Dayal says while Nigeria lags behind east Africa in wallets, its banking ecosystem is much stronger. He is confident that Nigeria in the long term can follow east Africa in terms of wallet penetration. “The growth of wallet provision gives us a big opportunity.”
Yabx and the rest of Nigeria’s fintech industry need a predictable regulatory framework to succeed.
Understand Africa's tomorrow... today
We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.View subscription options