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10 Compelling SME Financing Startups in Nigeria

On July 9, the Nigerian central bank issued a directive to all banks regarding their loan to deposit ratio. This directive obliges banks to have a minimum loan-to-deposit ratio of 60% by the end of September. It is intended to force banks to lend more to the real economy and buy fewer government securities. It is expected that this move will encourage lending to small and medium-sized businesses (SMEs) by overweighting these loans.

This is not the first time the government has aimed to encourage lending to SMEs. Research notes that the country has been formally assisting SMEs in financing and skill training activities which have enabled their growth. They also collaborated with global development partners to conceive the Development Bank of Nigeria, which has been lending to 20,000 SMEs in the country. In aggregate, SMEs have contributed about 48% of the national GDP in the last five years. Moreover, they account for 50% of industrial jobs and close to 90% of the manufacturing sector in terms of the number of enterprises.

This move, although beneficial to SMEs, would lead to increased competition towards FinTech lending startups. In light of this, it would be interesting to see how the startup ecosystem in Nigeria performs over the next few years. MEDICI presents to you some exciting SME financing startups in Nigeria:

  1. AellaCredit, founded in 2015, provides loans to businesses and individuals based on their cash flows. It helps the underbanked gain access to credit via an Android Application, which can be downloaded on their mobile phones. The startup also operates in the US. The company has raised more than 1 million seed fund from a group of investors, including Y Combinator, 500 Startups, Zeno Ventures, Vy Capital, and angel investors.
  2. Creditville Limited, founded in 2013, is a private lending institution registered in Nigeria. It provides businesses and SMEs working capital between ₦200,000 and ₦2,000,000. This startup provides loans within 48 hours.
  3. Grofin, founded in 2004, is a private financial institution that provides medium-term loan capital and value-added business support. The startup has invested in over 650 businesses so far. The startup operates across Africa and the Middle East.
  4. Kiakia, founded in 2015, is a digital financial marketplace. It provides personal and business loans in real-time. The startup also provides customers with assistance in building a credit score and provides reminders for repayment.
  5. C24, founded in 2016, provides online loans without collateral. It offers both business and personal loans to customers. So far, C24 has provided loans of ₦5 billion+ to borrowers.
  6. Lydia, founded in 2011, uses technology and algorithms to finance SMEs to unsecured loans between $500 and $15000. It provides these financial products at a low cost as it can effectively assess the risk before granting the loan. The company has raised close to $8.2 million to till date.
  7. One-Fi, founded in 2012, provides loans via their Carbon Mobile App. The startup aims to increase access to finance and leverages data & technology to do the same.  The platform can also be used for making bill payments, investments, and to access credit reports. The company has raised a total funding amount of $10.8 million to date. Recently, One-Fi acquired a payments startup Amplify.
  8. QuickCheck, founded in 2016, is an app-based lending platform. It uses technology to deliver financial services to individuals and small businesses. It provides short-term loans up to ₦30,000 at low interest rates of 1% per day.
  9. RenMoney, founded in 2012, allows businesses and individuals to borrow up to ₦4 million. The provision of loans is quick, and users receive money in less than 24 hours. So far, RenMoney has had 140,000 customers.
  10. Branch, founded in 2015, is a mobile application providing loans to those with limited financial access. It uses alternative data such as smartphone data and machine learning algorithms to offer customized loan options. The company has raised a total funding amount of $250 million to date.

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