They've been talking up JumiaPay for a while, although, if you ask me, I can't tell you exactly how JP is a game changer. We'll see if you're right and send that merch if you are.
Hello there. A new reader of your newsletters from Twitter. Just clocking this can also be a social space for interaction on insightful topics like this, and it's nice, it's on a lighter note.
Ok, now to my comment proper. Take it from a guy who works in an Equipment finance startup. Typical Nigerians would go to any lengths to default/evade repayments.
Also considering the FX impact on the prices of phones and devices (and inflation). The markup to cater for that would be a high interest rate for the end user.
Lastly deploying asset recovery officers to customers locations would be too tedious to manage, seeing that Jumia have also outsource logistics, but if they outsource the recovery operations entirely, they could keep a lean model (hmm)
In a nutshell, with a good model to mitigate these aforementioned risks, in a sane country, it should be a success, but Nigerians still part of Nigeria's problem. So....
You're right on the potential for this to be a social space. One thing I'm thinking of experimenting with is discussion threads like this. Now to your comment proper, I understand this repose of Nigerians going lengths to evade payments, but I suspect that this is mostly because, for years, we haven't had a framework that incentivises people to pay back and punished people who don't.
While I understand his markups, it defeats the point of asset acquisition loans. My sense is that companies will have better decision processes for these loans and as long as that happens, prices will be sensible and these things may catch on.
I think the most challenging aspect to decision making in a micro credits firm is trying to service the formal and informal sector together with technology. You can either take the LAPO approach or the Carbon approach, for recovery. I totally agree with the rewards and punishment approach, but trying to achieve this whilst keeping OPEX low no be beans. My final take is it would be rough for these early years as an emerging industry (hmm, wonder why) but in years to come, with better data collection across board, it will be a safer space to play in.
The major problem with lending in Nigeria has always been the recovery of those loans and that is why you find the rates to be abnormally high especially with these fintechs that are littered all around Lagos.
I receive at least 3 SMS and WhatsApp messages per week on "ä contact of mine defaulting". Now if Jumia wants to do this, it needs to find a way to recover the loans without resorting to those crude tactics of messaging all your contacts to inform them you are a debtor who is fleeing from paying back.
I also suspect Nigerians may have a cultural problem of collecting money and not wanting to pay it back.
I find it odd that a few digital lenders often brag about how their lending decisions are guided by proprietary technology, yet they still need to shame people into paying back their debts. I think that the more structures around credit that are developed, the less we'll talk about loan recovery.
First of all, make me the random pick for the merch *blows powder*
I hate that members of my generation are having to do adulting in a Nigeria where having a side hustle is somewhat of a norm. I do agree with the point Choco raised as to the stringency of the process of opening corporate accounts with legacy banks. Still, I'm glad to see the techbros getting their disrupting hats on in that regard.
If everyone was me, the BNPL model will fail woefully as I just can't deal with debt in any form and I've perfected the art of delayed gratification until my coins are complete.
Finally, I'm glad to note that we both read the T. B. Joshua piece over the week.
Just wondering. Realistically, wouldn’t this mean Jumia would, like Digital lenders, eventually resort to public shaming when Nigerians start being Nigerians?
If startups are going to offer businesses cooperate accounts with no too much documentation required, don’t you think this will make it less reliable since (for e.g scammers that has filled up the SMEs space) could easily get this done?? Because just maybe the reason why traditional banks are making it quite difficult to open cooperate accounts (except the Nigerian factor we all know) is to maximize full length in accreditation.
Or do you think there’s a simpler way we can get around this and also make it authentic at the same time??
I think that documentation is super important especially for current accounts, given that some of these compliance issues are protections against money laundering. Yet, my real gripe is that the banks don't seem interested in guiding you through the process. Account officers are indifferent about opening corporate accounts because they know that compliance will make their lives hell.
There has to be a simpler way to work around this problem, which is where, for me, the fin techs can make progress and use competition to force the banks to sit up.
And it was wrong ! Techcabal compared a grey market vendor with iStore - an official Apple reseller. Carbon Zero has many merchants that sell Apple products so a customer is free to choose the merchant they want to use. All the Author had to do was call the store up and ask for the price to see if there was any markup from the price advertised on Zero and they would haven’t found any markup. It is a requirement to our merchant partners that they do not add a surcharge for Zero customers.
Chief, big fan and promoter here.
I'd bet Jumia's next play is an online payments one across all 11 countries they are in.
Where make I put address for the merch? 😜
They've been talking up JumiaPay for a while, although, if you ask me, I can't tell you exactly how JP is a game changer. We'll see if you're right and send that merch if you are.
Hello there. A new reader of your newsletters from Twitter. Just clocking this can also be a social space for interaction on insightful topics like this, and it's nice, it's on a lighter note.
Ok, now to my comment proper. Take it from a guy who works in an Equipment finance startup. Typical Nigerians would go to any lengths to default/evade repayments.
Also considering the FX impact on the prices of phones and devices (and inflation). The markup to cater for that would be a high interest rate for the end user.
Lastly deploying asset recovery officers to customers locations would be too tedious to manage, seeing that Jumia have also outsource logistics, but if they outsource the recovery operations entirely, they could keep a lean model (hmm)
In a nutshell, with a good model to mitigate these aforementioned risks, in a sane country, it should be a success, but Nigerians still part of Nigeria's problem. So....
You're right on the potential for this to be a social space. One thing I'm thinking of experimenting with is discussion threads like this. Now to your comment proper, I understand this repose of Nigerians going lengths to evade payments, but I suspect that this is mostly because, for years, we haven't had a framework that incentivises people to pay back and punished people who don't.
While I understand his markups, it defeats the point of asset acquisition loans. My sense is that companies will have better decision processes for these loans and as long as that happens, prices will be sensible and these things may catch on.
You should totally explore that potential.
I think the most challenging aspect to decision making in a micro credits firm is trying to service the formal and informal sector together with technology. You can either take the LAPO approach or the Carbon approach, for recovery. I totally agree with the rewards and punishment approach, but trying to achieve this whilst keeping OPEX low no be beans. My final take is it would be rough for these early years as an emerging industry (hmm, wonder why) but in years to come, with better data collection across board, it will be a safer space to play in.
The major problem with lending in Nigeria has always been the recovery of those loans and that is why you find the rates to be abnormally high especially with these fintechs that are littered all around Lagos.
I receive at least 3 SMS and WhatsApp messages per week on "ä contact of mine defaulting". Now if Jumia wants to do this, it needs to find a way to recover the loans without resorting to those crude tactics of messaging all your contacts to inform them you are a debtor who is fleeing from paying back.
I also suspect Nigerians may have a cultural problem of collecting money and not wanting to pay it back.
I find it odd that a few digital lenders often brag about how their lending decisions are guided by proprietary technology, yet they still need to shame people into paying back their debts. I think that the more structures around credit that are developed, the less we'll talk about loan recovery.
First of all, make me the random pick for the merch *blows powder*
I hate that members of my generation are having to do adulting in a Nigeria where having a side hustle is somewhat of a norm. I do agree with the point Choco raised as to the stringency of the process of opening corporate accounts with legacy banks. Still, I'm glad to see the techbros getting their disrupting hats on in that regard.
If everyone was me, the BNPL model will fail woefully as I just can't deal with debt in any form and I've perfected the art of delayed gratification until my coins are complete.
Finally, I'm glad to note that we both read the T. B. Joshua piece over the week.
Hahaha, send me an email (olumuyiwa@notadeeepdive.com with your address and contact details and I'll send you merch this week.
Just wondering. Realistically, wouldn’t this mean Jumia would, like Digital lenders, eventually resort to public shaming when Nigerians start being Nigerians?
I doubt that will happen given that they have large customer data. If they tighten their decision making process, they will have very few defaults.
If startups are going to offer businesses cooperate accounts with no too much documentation required, don’t you think this will make it less reliable since (for e.g scammers that has filled up the SMEs space) could easily get this done?? Because just maybe the reason why traditional banks are making it quite difficult to open cooperate accounts (except the Nigerian factor we all know) is to maximize full length in accreditation.
Or do you think there’s a simpler way we can get around this and also make it authentic at the same time??
I think that documentation is super important especially for current accounts, given that some of these compliance issues are protections against money laundering. Yet, my real gripe is that the banks don't seem interested in guiding you through the process. Account officers are indifferent about opening corporate accounts because they know that compliance will make their lives hell.
There has to be a simpler way to work around this problem, which is where, for me, the fin techs can make progress and use competition to force the banks to sit up.
Carbon Zero doesn't charge a mark-up on the merchant's price.
This article does a pricing analysis: https://techcabal.com/2021/01/28/the-backend-buy-now-pay-later-carbon-zero/
And it was wrong ! Techcabal compared a grey market vendor with iStore - an official Apple reseller. Carbon Zero has many merchants that sell Apple products so a customer is free to choose the merchant they want to use. All the Author had to do was call the store up and ask for the price to see if there was any markup from the price advertised on Zero and they would haven’t found any markup. It is a requirement to our merchant partners that they do not add a surcharge for Zero customers.