Nigeria’ Paylater.ng, a startup that offers small loans has disclosed that it now disburses 1,000 loans daily to Nigerians. This is a far cry from the 200 loans a day it issues earlier this year.
The startup made this revelation on its Medium page. They wrote: “We set ourselves what we felt was an aggressive target of 1,000 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 bank accounts.
“Today, over 60% of these 1,000 loans are disbursed within 1 minute with the rest all under 5 minutes and they span a range of N7,500 to N200k for first-time borrowers.”
The startup explained that between 10% and 20% of their customers’ default in payment. “The inevitable question is “yes, great but are you profitable? Anyone can give out loans — but are you collecting?” Our mothers taught us not to boast, so let’s say that our default is between 10% and 20%, but trust us that it’s 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.
“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. We are also unhappy with the cost of borrowing but with a cost of funds at around 30% and inflation running at around 15%, we have no choice.”
On what they want to achieve next, the startup wrote that it would like to increase its number of customers.
“Our next goal is to keep amassing large numbers of customers so that we can break the stigma that the so-called lowly worker is not trustworthy. Our next goal is to keep amassing large numbers of customers so that we can break the stigma that the so-called lowly worker is not trustworthy, or that if you give that first-time entrepreneur a loan (s)he will not pay back.”