Mobile FinTechs Aim to Crush 30% Fees for Nigeria’s SMEs

Finding financial solutions that work for every business — no matter the size or location — can be a challenge even with all the infrastructure it takes to make the process quick and convenient for everyone.

Doing it in rural Nigeria, where the financial and physical infrastructure can be underdeveloped, to say the least? Even more so. Couple it with annual interest rates that typically hover around 24% to 30%, and you have a recipe for keeping millions of smallholders and entrepreneurs excluded from the banking system, held back from expanding because they can’t find financing at any cost.

What Nigeria and other parts of Sub-Saharan Africa have working to their advantage are high rates of mobile penetration — and a history of using those devices as payment platforms that predates Venmo by decades.

That adds up to huge potential for companies that can reach a mobile-savvy customer base with tech solutions that give them access to the information and funding they need to grow their microbusinesses and small and medium enterprises (SMEs).

Tingo CEO Dozy Mmbousi believes those solutions could very well upend the financial status quo in his country — and the entire continent.

“What we want to always do is to provide solutions using technology, basically democratizing access to technology,” Mmobuosi told PYMNTS in a recent interview.

Over the 21 years Tingo has been in business, it has evolved from providing ringtones to mobile networks, to importing mobile devices, to building its own smartphone assembly lines in Nigeria, to becoming the parent company of Tingo Mobile, a leading FinTech focused on small farmers in Nigeria.

Throughout this journey, the company has focused on creating solutions to real-life problems in rural Nigeria.

Catering to the Needs of All SMEs

Now, Tingo has expanded its scope. In January, it announced that it was partnering with business solutions company ITScope Consulting to build a digital portal for SMEs.

The aim of the portal is to facilitate communication among businesses and help them build relationships with potential partners, clients and customers. The partners aim to provide access to information and collaboration across Nigeria — and then across Africa.

“We’ll use our expertise and support our partners to build this whole ecosystem for SMEs,” Mmobuosi said. “The SMEs will be using the Tingo wallet, so we’re looking at onboarding 2.5 million SMEs for that, and everything they will use is basically the Tingo ecosystem that we have used for the farmers.”

This will include access to micro pensions, health insurance, cheaper credit, advisory services and collaboration.

Providing Much-Needed Access to Cheaper Credit

At least 80% of the SMEs have smartphones, but not all those devices can perform proper business functions, Mmobuosi said. So, this partnership will give them access to devices that can compete with any other sort of smartphone, which in turn will allow these SMEs to compete in the marketplaces they serve.

One of the key solutions to be delivered by the new partnership is to give 2.5 million SMEs access to cheaper credit. Currently the interest rates charged to SMEs in Nigeria tend to range from 24% to 30%, Mmobuosi said.

“To ensure that SMEs have access to cheap credit will really restart their business,” Mmobuosi said. “You can’t sustain a business on 30% interest per annum — it’s impossible.”

Update: PYMNTS recently reported that the Nigerian agri-FinTech company Tingo will merge with Nasdaq-listed financial services provider MICT in a deal expected to generate $900 million in yearly revenue and help the companies expand across the African and Asian markets.

Read more: Nigerian FinTech Tingo Announces $900M Merger With MICT