Since getting into Nigeria in 2019, asset financing firm M-KOPA has deployed greater than ₦231 billion ($170.34 million) in credit score to over a million clients, positioning smartphone financing as one of many fastest-growing entry factors into formal credit score for low-income Nigerians.
In keeping with the corporate’s newest affect report, ladies account for 33% of debtors, and 52% of them are accessing credit score for the primary time by means of its platform. The corporate says the deployed credit score has unlocked ₦320 billion ($235.97 million) in digital credit score.
The lending spans financed smartphones and money loans, underscoring the corporate’s evolution from its unique photo voltaic dwelling programs enterprise.
Throughout Nigeria, embedded finance fashions are increasing entry to shopper credit score exterior conventional banks. By tying loans on to financed belongings and compensation behaviour, firms like M-KOPA are testing whether or not technology-driven lending can succeed the place standard retail credit score has struggled with defaults and excessive borrowing prices.
M-KOPA initially entered Nigeria, financing photo voltaic dwelling programs, a mannequin it pioneered in East Africa. However buyer behaviour shortly revealed a bigger alternative.
“As soon as you fiscal photo voltaic dwelling options, you begin to ask your self what you missed,” Babajide Duroshola, M-KOPA Nigeria’s normal supervisor, advised TechCabal. “That’s when you determine that everyone must be within the digital financial system, and entry to a smartphone solves this.”
Smartphones have grow to be the first gateway to the web for tens of millions of Nigerians, but affordability stays the largest barrier to adoption. Almost six in ten Nigerians stay offline largely because of system prices, in accordance with GSMA, the worldwide telecom business physique.
Machine financing firms are more and more focusing on this hole, providing installment fee plans designed for casual staff who lack conventional credit score histories.
M-KOPA’s mannequin removes a number of obstacles related to formal lending. Clients don’t require collateral, guarantors, or proof of revenue. As an alternative, they make an preliminary deposit alongside offering identification, after which repayments are structured as each day micropayments.
“What you begin with is what you’re ending with,” Duroshola stated. “Even when the mortgage was six months and also you pay in six and a half months, we don’t add further expenses. It isn’t an interest-based mannequin.”
Danger administration depends closely on embedded know-how inside financed gadgets. Telephones could be remotely restricted if repayments cease, limiting performance till funds resume whereas nonetheless permitting emergency calls.
Clients dealing with monetary hardship might also return gadgets and obtain refunds on their deposits, a mechanism the corporate says helps keep single-digit default charges in Nigeria.
The method shifts collections away from conventional debt restoration towards asset management and behavioural compensation monitoring.
Betting on casual Nigeria
The corporate’s hottest gadgets embrace Samsung’s A06 smartphone and its proprietary M-KOPA M10 system. Costs aren’t publicly listed on-line, as potential clients are directed to WhatsApp brokers.
The Samsung A06 retails for round ₦118,607 ($87.46) on Jumia.
The corporate says it has distributed multiple million smartphones in Nigeria up to now, together with 290,000 gadgets to first-time smartphone homeowners.
For M-KOPA, system possession is barely the start line. “The smartphone turns into a transformative monetary instrument,” Duroshola stated.
In keeping with its report, 77% of consumers use financed gadgets for income-generating actions, whereas 75% report elevated earnings after buy.
Partnerships with unique tools producers and telecom operators corresponding to MTN have additionally aligned smartphone financing with broader business targets emigrate customers onto quicker cellular knowledge networks.
“We’re Samsung’s largest retailer within the nation,” he stated.
Money loans develop quicker
Whereas smartphones stay its entry product, money lending is rising as the corporate’s fastest-growing section.
In contrast to smartphones, which clients usually substitute each two to 3 years, money loans could be accessed repeatedly as soon as compensation behaviour is established.
Our money lending enterprise has grown considerably at a quicker tempo,” Duroshola stated. “With a smartphone, folks require one system each few years. However with money, clients can borrow a number of occasions inside a cycle in the event that they repay on time.”
The corporate makes use of compensation historical past generated by means of system financing to construct proprietary credit score scores, decreasing lending threat.
Each day micropayment compensation buildings mirror the corporate’s system financing mannequin and replicate rising demand for working capital amongst small merchants navigating inflation and financial uncertainty.
Financial spillovers
The corporate’s distribution mannequin can be producing employment by means of a nationwide gross sales community. Greater than 11,000 brokers at the moment earn revenue by means of the corporate’s operations, with agent churn at simply 0.1%, in accordance with the corporate.
Native procurement spending reached ₦27.4 billion ($20.21 million) in 2024, whereas annual tax contributions exceeded ₦2.5 billion ($1.84 million), underscoring the broader financial footprint of the mannequin past lending itself.
The corporate at the moment operates in six states, together with Lagos, Ogun, and Oyo, however plans to increase its footprint to twenty states inside 5 years whereas unlocking greater than ₦1 trillion ($737.40 million) in credit score.
It additionally desires to supply extra merchandise, together with knowledge bundles.
“We need to launch extra merchandise which might be helpful to on a regular basis life. Issues folks do not need entry to at this time,” Duroshola stated.
Nigeria has grow to be a important development marketplace for the Nairobi-headquartered firm, which turned worthwhile in 2024, reporting $9.2 million in revenue after a $24.7 million loss the earlier 12 months as income grew 66%.
However as asset-backed lending expands deeper into casual markets, scrutiny is prone to shift towards compensation enforcement practices and buyer protections.
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