There is a fundamental portion of this story that may not survive for long. OPay lending is usurious - 10 to 13% monthly. There is no part where a person or business that is not desperate will take those terms but with the multidimensional poverty in Nigeria, there are a lot of desperate businesses and people. CBN has forced them all to become MFBs and MFBs interest rates are capped. What happens when CBN and FCCPC cracks down?
Fair point. My view is that those rates partly reflect the risks and costs of serving these borrowers. As transaction histories deepen and customers become more bankable, pricing could compress.
There’s also room for different products — consumer loans, merchant working capital, trade finance, insurance, etc. — with different risk profiles, pricing and sources of capital suited to each.
That evolution is part of the opportunity I’m describing.
There is a fundamental portion of this story that may not survive for long. OPay lending is usurious - 10 to 13% monthly. There is no part where a person or business that is not desperate will take those terms but with the multidimensional poverty in Nigeria, there are a lot of desperate businesses and people. CBN has forced them all to become MFBs and MFBs interest rates are capped. What happens when CBN and FCCPC cracks down?
Fair point. My view is that those rates partly reflect the risks and costs of serving these borrowers. As transaction histories deepen and customers become more bankable, pricing could compress.
There’s also room for different products — consumer loans, merchant working capital, trade finance, insurance, etc. — with different risk profiles, pricing and sources of capital suited to each.
That evolution is part of the opportunity I’m describing.
The opportunity is there. Maintaining the profitability without usurious interest rates may not continue to be there.