Making of the Award winning KiaKia Peer-to-Peer lending Investment.
When KiaKia launched digital lending along other pioneering Nigerian fintechs in 2016, the aim was to enable credible individuals and businesses access consumer and business loans as quickly as possible. Nothing more. We just wanted a way to quickly underwrite credit to individuals and MSMEs that couldn’t access this service from our banks for so many nagging and unresolved factors and reasons within the financial polity. We did just that, and we did it well. Like Glo did with per second billing, we led the provision of same day application, approval and disbursement. This was in recognition of the time value of money to borrowers without compromising on our ideal on promoting responsible borrowing, which empowers and liberates, rather than sink under the burden of debt. While gamification as basis of issuing loans was the prevalent practice by our contemporaries, which limited access to credit by those who really had capacity as a result of Nano loan offerings, KiaKia tailor fitted accessible loan amounts to determined financial capacity of applicants.
It also remains on record that, while the prevailing rates for unsecured micro loans and payday online lending of our contemporaries stood at 30%, which still does for some, ours was10% lower and remains so. Even much lower for medium and longer tenured consumer loans. Testaments to these abound in digital archives and alive in the memories of users. While a novice may want to prematurely scream with objection “but these rates are too high”, it is necessary to embark on basic reading around the dynamics of lending and cost of funds. Interest rates for unsecured consumer lending anywhere in the world is intricately high, and the reason is obvious. This should perpetually lay to rest the common refrain of ignorant payday loan and consumer loan seekers who assume and expect interest rates on unsecured loans to be single digit. Let’s not bore you with the academics and economics of that.
Our emphasis remains responsible lending and not growth by all means, which is the philosophy of cancer. Our mission is to grant access to capital that empowers economically and liberates socially, and not sink millions of people, especially young people who are yet to even establish clearly defined incomes nor economic footing into a debt trap, which micro-credit binging has sadly created. This is why our approach to lending, while simple, is not indulgent. We do not want people to access loans they do not need because it is convenient to get rather than because it is really useful and helpful in sustainably improving their financial situations. We also are committed to delivering value, comfort, security and good investment yield to our trusted lenders and investors. This is why we refrain from the growth vanities that do not translate to improved bottom line. We apply security where it is necessary, social collateral when it is what will deliver result and effective common sense technology to enhance the efficiency of value delivery across all business models.
Last year, we clinched the InFINCA Award for Best Peer-To-Peer Platform in Nigeria. A testament to our pioneering effort and sustained creation and delivery of value to the supply and demand end of the service. MSMEs have timely access to capital and fund owners get value and security for their funds committed to us. In over 3 years that this service has been operational, no single Individual or corporate that has committed funds to us in trust as a tool to steward to our teeming customers has lost a single Naira. This is a record we are proud of. This has been possible through the shrewdness of our judgement and decision making, and the efficacy of the proprietary systems and simple but innovative processes we have instituted. The modest but effective impacts we have made and still making. One that has earned us respectable reference and recognition along with other fantastic, impact making startups as Kuda, Farm Crowdy, Thrive Agric, Lifebank, 54Gene, Nairaland et al by the Vice President of the Federal Republic of Nigeria.
We aim to be the reimagined and locally adapted Lending club of America, Ratesetter and Zopa of the UK and Europe for the Nigerian and African MSMEs, which has a financing gap of $331bn according to the International Finance Corporation. And also good investment yields for investors as there aforementioned deliver. This is why we have been able to mobilize private lending investments from Nigerians in Russia, United States, UK, Qatar, Canada and a vast number of Nigerians to fund the small fractions of the immense funding gaps to the real sector in Nigeria. Our work is not even yet started though clearly defined and cut out.
When we introduced the Peer-to-Peer, the minimum threshold investment was One million Naira. The thinking was that, this shouldn’t be an all comer’s affair. Asides, the emphasis was on affordability. In addition, no single investor/lender was solicited. If there is such phrase as “cold call investing”, this will best describe our experience. Individuals with savings began to approach KiaKia with offers. “What will I get if I gave you this amount?”. We had a rapidly growing loan book that was difficult to fund. The harvest field of MSMEs credit needs is huge but the funds are in short supply like every other financial institution that doesn’t have infinite resources. Thus began the KiaKia Peer to Peer lending investment. Through one satisfied lender/investor came the next and the next and the next and the next. No single advertisement nor solicitation. We had established that we could profitably put people’s finances to work without any risk of loss. We rejected offers below N1m even in the face of huge funding gaps. This is because we prioritized quality over quantity. The quality and character of lenders/investors is as important, if not more important than the quality of borrowers. As lenders/investors increased, so also did cost of funds also decrease, benefits which were passed on to borrowers in terms of lower interest rates and longer tenure. Simple economics of scale at work.
With growing accusation from interested lenders/investors that the lending/investment packages were economically discriminatory, effectively marginalizing those who did not have up to One million Naira, it became incumbent to provide an all inclusive service that accommodated everyone above 18 years with legitimate source of income who was interested in lending/investing to earn decent returns. A decision that led to the creation of the KiaKia Peer2Peer lending/investment App. Anyone with as little as N50,000 can be part of those who contribute to the funds we aggregate to lend to and fund our qualified borrowers/businesses to earn decent interests and share profits. Packages are between N50,000 and N5,000,000 and can be done in multiples.
We have laid a good foundation. We have placed our hands on the plough. We are committed to improving and continuing the important work of providing timely and responsible financial lifelines to millions of credible individuals and MSMEs in honest industry across Nigeria, while delivering decent returns to the lenders and investors who keep faith with us.
The Android App can be downloaded here: https://play.google.com/store/apps/details?id=com.kiakia.p2p
