Providing Africans: Timothy Nuy discusses Finclusion’s Mission To End Debt Traps
Timothy Nuy, the Co-Founder and Co-Chief Executive Officer of
Finclusion Group. We asked him specific questions about the current
state of fintech in Africa and what the next innovation phase will be.
We also spoke about the critical role fintech plays in bridging the
financial gap in Africa and how Finclusion is doing this better than
others.
Timothy Nuy worked at Lehman Brothers, KPMG, Africa Development
Corporation and MyBucks before establishing Finclusion in 2018. The
company has grown considerably and raised up to $40 million worth of
funding under his steer.
BI Africa: It’s nice to talk to you, Mr Nuy. For the benefit of those
who may not know you, kindly introduce yourself and what you do at
Finclusion.
Timothy Nuy: I started working in Africa with a German company called
Africa Development Corporation. It’s an investment banking group with
operations across Africa. We invested in BancABC in Southern Africa
and Unity Bank in Nigeria. And in 2014, we sold ADC to Atlas Mara.
From there, together with the shareholders that had invested in ADC, I
joined a micro-lender called GetBucks (later MyBucks) in 2015. Between
2015 and 2018, we built that company out from South Africa and Kenya
to 12 other countries. In 2018, I differed from the founders on how
the company should be run and where the business should be going, so I
made the decision to start Finclusion.
At Finclusion, we believe in addressing the credit gap in Africa,
tangibly creating sustainable financial services on the African
continent. A strong focus is that our loans are productive for small
businesses, education, home improvement, etc. And in doing that, we
see ourselves positioned in-between nano-lenders, who offer small
loans, and banks who provide larger loans.
One of the ways that we differentiate ourselves is by ensuring that we
are very quick on loan turnaround, as we provide people with essential
financial services they can use through infrastructures suitable for
the phases our consumers are in.
We operate in South Africa, Kenya and Tanzania.
BI Africa: As you know, access to finance is one of the biggest
challenges facing small businesses in Africa. Tell us more about how
your company is helping to solve this specific problem.
Timothy Nuy: What we focus on is affordability first. So, we ensure we
give out loans to people who can afford to repay them. We also provide
the facility to spread repayments to make the terms more comfortable
for our customers. That’s why installment lending is significant.
Our credit scoring system consumes all the data we can get – Data
analysis is where we distinguish ourselves the most. By successfully
gaining access to a bank account or mobile money information, we
utilize such information to calibrate income expenses and then make
the best possible credit decisions.
BI Africa: How does your interest rate compare to commercial banks?
Timothy Nuy: Our interest rate is about 56%, including all fees and
associated costs. We sit on a lower level without the related costs,
fees, and expenses.
BI Africa: To a great extent, FinTechs have been instrumental in
bridging Africa’s financial gap. And their work has been made possible
by the funding they’ve received from investors. Unfortunately, there
has recently been a significant slowdown in VC funding in the African
startup ecosystem. And this has raised concerns about whether FinTechs
can continue doing their work effectively.
So, I want to get your insight on this. Do you think the slowdown in
VC funding is a significant threat to African FinTech?
Timothy Nuy: The people “who will struggle” have been trying to “fake
it until they make it”, as they say. Those that run outstanding
businesses will be just fine.
Investors will continue to fund the right FinTechs in Africa. They
will also become significantly more diligent in deciding which
startups to invest in, so that’s nothing to worry about.
If your FinTech is solving actual problems, capital will be available
to help you scale your business.
BI Africa: Finclusion recently raised some capital which I believe is
helping you to facilitate your business activities. Do you have plans
to raise more capital soon?
Timothy Nuy: We’ve raised a good chunk of debt. We are continuously
building additional capacity because at the end of the day, the more
we raise, the stronger our market trajectory No capital raise is
confirmed at the moment. That said, I think we will be announcing
additional capital raises later this year.
BI Africa: What do you think will be the ‘next big thing’ in the
African FinTech space regarding innovation?
Timothy Nuy: To me, lending is still a major component because that’s
where the big opportunity is; I am pretty excited about that. Another
area where I think will see significant pickup is in the further
adaptability of mobile money across the African continent.
BI Africa: Recently, African ‘TelCos’ have also positioned themselves
as major mobile money industry players. Do you think this will create
saturation in the business and possibly increase competition? And is
your company ready for the competition?
Timothy Nuy: We have an excellent knowledge of credit. I think we are
better than most players in scoring/assessing credit. That will
continue to help us drive growth.
But that aside, I believe that competition in the African fintech
space is positive. There is such a small penetration of credit today,
that the more people push credit out there and educate the public
about credit, the better it is for Finclusion.
Ultimately, we need more credit available for all Africans.
BI Africa: How is your company Finclusion positioning itself for the
next growth phase in the African FinTech space?
Timothy Nuy: We see ourselves as the solution provider of essential
financial services, fit for purpose. We want to continue to give
customers in the lower- to middle-income brackets and middle-class
reliable, world-class financial services.
For now, we will focus on lending. But over time, we plan to diversify
into savings and other services. Sustainability is fundamental to us.
BI Africa: Earlier, when you mentioned some countries where you
currently operate, I didn’t hear you say Nigeria. So, presently which
other African countries are you planning to expand to next?
Timothy Nuy: Right now, our focus is on East Africa. Aside from the
countries I mentioned, the following country which we may probably be
expanding to will be Uganda.
We want to first consolidate our effort in East Africa before we begin
to look at West Africa and other markets. I think there are tremendous
opportunities in Nigeria. But then again, many people are trying to
solve the challenges which the Nigerian marketplace presents.
In financial services, scale matters a lot. So, we had to decide which
market to commit to first. And that’s why we are pretty bullish on
Uganda.
We are ultimately excited to transform Africa one country at a time
and provide people with sustainable instalment plans in doing so.
Moving from nano-loans to installment lending is important, because it
helps us move away from debt traps, toward a more sustainable lending
model.
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