‘We are meeting the financial needs of millions of Nigerians through our unsecured loans’
Credit Direct Limited commenced test operation in 2016 and fully launched the first structured unsecured consumer lending business in Nigeria. In this interview, Akinwande Ademosu, its CEO, speaks on the journey so far and how the company is positively impacting the lives of ordinary Nigerians. Excerpt:
Tell us about Credit Direct Limited.
Over the past 10 years, Credit Direct Limited has emerged from a start-upbusiness to a formidable brand whose operation span two-thirds of the country and servicing more than a million households. As a non-bank financial institution, the company has pioneered many innovative products and services including its flagship – the first institutionalized unsecured consumer loans, integrated asset loans, micro-insurance and credit to the youth segment tagged “Empower the Corps (ETC)”. The company started its operation in 2007, from its operation head officein Ikeja, Lagos, Nigeria and has focused on providing hybrid Payroll-based consumer credit to validly-employed Nigerians who have hitherto been excluded from access to credit facilities traditional financial institutions– because of collateral, loan size and complex administrative requirements.
Post-banking sector reforms, it was clear that a gap existed at the bottom of the pyramid of consumers. Their inability to accesscredit of any kind either with little or no collateral securities drove us to the innovation lab that birth CREDIT DIRECT business model. CDL came as a response to Nigeria consumers’ need to be heard, engaged and served with the right products and services that meet their specific needs. We have harnessed this market knowledge over the past decade. Our presence in the 25 states of the federation and over 50 business offices (before the economic downturn) speaks volume of the immense value we are contributing to the average consumer all over the country.
What role has the company played in establishing the unsecured loans industry in Nigeria?
As at the time we launched, there existed no formidable financial institutionfor mass scale unsecured consumer micro-lending business. None was willing to risk their resources to provide ‘unsecured credit’. We however heard the voice millions of Nigerians in dire need of these financial services, but were deprived. It was on this premise that we decided to launch after carefully weighing the risk based on our unique “Employer Risk Assessment Criteria”. We started with our flagship offering which came with clear promise “24hours Unsecured Loans Sharp Sharp! We basically were telling Nigerians, ‘whatever your quick, urgent or emergent financial needs might be, we have your back with our quick turnaround yet unsecuredcredit’.
We can confidently say that Credit Direct has consistently over-delivered on her promise to customers and provided the template for unsecuredconsumer micro-lending. In addition to this, we prioritised the needs of our target market and this can be seen in the innovative and customized products that we have for different segments of the society.
Our unique product offerings are: Cash-To-Go (popularly referred to as ‘Sharp! Sharp!! Loan’) for salaried employees and civil servants; ‘Empower the Corps’(ETC)which was launched to provide credit facilities to fresh graduate and young entrepreneurs serving our nation. Interestingly, all our productsare designed to help solve personal problems and alleviate poverty which in turn reduces societal challenges. By making credit available to ‘youth corps’ for instance, we are able to provide them start-up capital that will bring their business ideas to lifeor at least pilot their ideas before it goes mainstreamand this will, in the long term, reduce the rate of unemployment in Nigeria.
How has it been blazing the trail for giving unsecured loans in Nigeria? What are the challenges you’ve had to overcome?
The current volatile state of the financial services sector in Nigeria has truly been uncertain to mildly put it. However, our organisation believesthere also exist some opportunities depending on how we choose to respond. Like any other systems built by man, it’s fair to say to we have areas of improvement. For instance, most of the locations where we were strong are now unviable orself-sustaining, which means they have over compensate with meagre federal allocations in the face of huge wage bill and developmental goals.The implication has been delayed salary, no salary and/or prorated payments in some cases which creates high portfolio value at risk. We have however kept close contact with client and remain confident that the situation will change for better. We have also kept our promise by not passing the additional cost to the employees unlike other financial institutions who charge default rates.
Our approach in tough market situation as described above has been to carefully position for portfolio quality, strengthen risk management capabilities, build on existing customer experience touch points, to deliver sustainable value to all stakeholders.
We have invested in customized information technology and data analytics capability that we ensure we have deeper understanding of our target market and created a more solution based flexibility to accommodate dynamic market trends and changes in consumers’ taste. Despite these challenges, our vision to help low income salaried people bridge financial needs and improve standard of living through our loans and various CSR projects remains a firm commitment. Our business outlook ratings also indicate a stable and improving business.
What are the criteria for accessing loans from Credit Direct Limited?
One major criterion that everyone must have is that they shouldn’t have any form of security. We basically have few but uniquely crafted solutions (some people say its products) aimed specifically to meet the urgent financial needs of our target customers. These products were designed after careful assessment of their life style and behavioural pattern. That is one of the reasons that aside from few financial institution, only Credit Direct cut across youth, female, male and MSME segments. Our offerings include Cash-To-Go, popularly called Sharp Sharp loan; ‘Asset-Carry Go (Our asset based loan)’, ‘Empower The Corps (ETC)’. Though their requirement slightly varies, they suit each customer’s segment profile. Our solutions drive our operation which is anchored around: Speed, Convenience, and Service. We request for the most basic information necessary to meet a new friend.
What impact has Credit Direct had so far in Nigeria?
Credit Direct is driven by a commitment to sustainable profitability and community or social impact. One of our core goals is to make tangible impression in the lives of our customers and the community where we operate. Life as we know it is full of opportunities, unpredictability and shocks. When these events occur, people will naturally seek the most appropriate and readily available solution by means of funds. This could come from sources ranging from friends and family to financial institution. We all are aware of the insurmountable mountain of documentations and collateral requirements that are demanded by the traditional financial institution. The most vulnerable are the low earners who are mostly left without support, they either suffer or borrow at exorbitant rates from loan sharks. The advent of Credit Direct has since changed the story. We have been able to build that bridge that connects this end of the market to financial services that they had been denied for so long. Our commitment right from inception is to be there for that person or family seeking to bridge finance, pay school fees to send their wards for education, pay rent, complete that small structure, pay for that medical condition that is threatening a loved one or putting smiles on the faces of millions of households through business ventures that have sustained their livelihood. Our hope is to be part of the daily life of millions across the country to the extent that we become a neighbourhood business – easy to access, and prompt to respond. It’s now a tag name: “Have you received your own sharp, sharp loan?” they ask themselves
We have been able to provide unsecured loans to hundreds of thousands of Nigerians and the implication of this is that we have met the financial needs of millions of Nigerians through our unsecured loans in over a decade of existence. Without platforms like ours, many homes and family would have been left stranded and hopeless. Our targeted offerings have helped many get out of tight spots, allow them make concrete plans, complete projects, invest amongst others and resolve life threatening situations.
In addition, we have remained a responsible corporate citizen through our education focused initiatives – support for public schools, donation of computer learning centres, sponsorships, continuous support for labour union activities on an annual basis, etc.
How has the company’s products evolved with changing society needs?
For a business like ours to remain a leading brand in terms of impact, reach and performance, it is expected that we continue to be dynamic, nimble and competitive both at the strategic and execution levels. Our approach towards sustainability and growth have been clear focus of asset quality, cash conversion cycle, cautiously target other growth segments, improve yield through carefully crafted cost management initiatives and Information technology enabled growth.
Since the expectation, taste, and requirement of the market frequently changes, as a consumer lending company, we continually seek to understand the best ways to add more value to our consumers. We conduct surveys, market sampling to know exactly the market trends and possible future trends. All these have helped to fine-tune our existing offering and launch new ones.
When we started we introduced Cash-To-Go (popularly referred to as ‘Sharp! Sharp!! Loan’) credit because we understood that a lot of people need quick turnaround unsecured credit with minimal documentation.When we launched our asset-based loans, it was because we saw the need to support the life-style of our target market to acquire assets at a discounted price and rate.
When we launched ‘EmpowerTheCorp (ETC)’ product it was because we were witnessing a continuous increase in the number of people who completed their compulsory one-year service of their nation “Youth Corp”, without gainful employment. So, we designed a product that provides a target-dedicated portal for serving corps members to access network, resources, training and credit to their own small ventures, acquire professional certification while serving and/or invest. So yes, we are always innovating to find solutions to every day problem for everyday people.
What advice would you give to people who are hesitant about taking unsecured loans for their businesses and projects?
To be honest, it is wisdom to toe the line of living within one’s means if you do not have a clear and genuine personal reason or venturing i.e starting a business. We have taken into consideration the scepticism of Nigerians regarding getting unsecured loans. A lot of people shy away from loans due to a mixture of different factors including high interest rate, repayment term amongst others. Our solution is such that you determine how much and for how long you pay depending of your financial status. You can decide to repay over a longer or shorter period as you please. One of our value offerings (especially, to public sector borrowers) is lack of penal charge in cases salary payment is delayed for no fault of theirs, this is in addition to “No hidden charges”. The message is, we will stand with you and won’t put more burden on you.
As good as easy loan is, it must not be abused – diverted or wrongfully applied. In other to prevent this, we have highly professional advisors in our customer advocacy team who continually follow up to ensure the credit is used for the specific purpose – personal, family, business or combination of two or all. We also follow up to see that the purpose for which you obtained the loan is achieved.
What is the company’s vision for the future?
Looking ahead, though there is a general slowdown in growth especially in the services sector due to the economic environment. The major impact for us came from shrinking disposable income of workers generally. But, due to our long standing understanding of the business environment, we have continuously build competencies in market knowledge, product development, keeping the team intact, and been able to gain and develop abilities to withstand headwinds while remaining profitable. We have gained significant momentum in consumer lending space, expanding our offering to private sector as we deploy bespoke retail and consumer products to youth, women and small-scale businesses.
Additionally, we have always felt that our maximum impact will be felt when we can be the go-to name during tight fixes in Nigeria and indeed, Africa. As daunting as it may seem, our experience has allowed us stay ahead of the competition while remaining profitable. We want to be a reference point for others in this space on how to impact lives meaningfully.
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