Bolanle O. Oduyale is the Founder and Chief Executive Officer of CreditWise Financials Limited, a Nigerian financial lending company fast becoming a known brand in the Micro and Retail lending sector. She has operated in the Financial Services Industry successfully for over 25 years. Amongst other institutions, she worked with Standard Chartered Bank in Nigeria and South Africa for over 12 years where she rose to the position of Director of Financial Institutions before relocating to Canada.
While in Toronto, she joined International Financial Data Services, a world leading provider of outsourcing and technology solutions to the financial services, where she led the team in charge of regulatory compliance advising North American and European Financial Institutions (FI) on the implementation of Regulatory and Tax Reporting Standards.
Until recently, Bola Oduyale was CEO of Safetrust Mortgage Bank in Nigeria where she worked with regulators and investors to spearhead the recapitalisation and restructuring of the Bank. She holds a Bachelor’s degree in Chemistry from the University of Ibadan and an MBA from the University of Lagos. She is a member of the Institute of Directors (IoD) and a Fellow of the Chartered Institute of Bankers. She is also an Alumnus of Lagos Business and London Business School.
In this interview with TheNEWS, she speaks on her background, tax administration in Nigeria, how to secure loans for business, her company, the Nigerian real sector, the sliding exchange rate, the VAT controversy between the federal and state governments and other issues.
You operated in the Financial Services Industry successfully for over 25 years before setting up your own financial institution. In what ways have your past experiences helped you?
Thank you for the opportunity to speak with you and contribute my two cents to the economic discourse. Whether we are aware of it or not, our past experiences play an enormous role in determining where we are today. Every choice I made, every decision taken, every success achieved, and every failure that I have experienced has paved the way for me to continue to move forward on my unique journey in both my personal and professional life.
It has taken me a while to get here and the road has been filled with twists and turns, with bumps and detours. I have worked in Corporate and Institutional Banking, Investment Banking, Consumer Banking, Technology and Operations as well as Taxes and Compliance. I have been on Boards of crazy Organizations and on that of a great Organization. I have experienced both how to and how not to run a business.
My skills are a sum total of all these experiences and I’m extremely grateful for them. So yes! Over 25 years with 15 in leadership positions, which sometimes were extremely challenging, have helped and shaped me into what I have become today.
With your bachelor’s degree in Chemistry from the University of Ibadan and an MBA from the University of Lagos, you are in the Financial sector. What influenced your choice to be in the financial services field?
Believe it or not, I really loved Chemistry. It was a subject I aspired to study up to the PhD level and my plan was to have a career in academia. In fact, I already got admission for MSc (Chemistry). However, fate had a different destiny in store for me.
My studying MBA was purely accidental. I accompanied my friends to purchase their MBA application forms and I decided to buy one for myself as well. We all took the entrance exams, I passed, and they didn’t! But then, I found that I was actually great at finance and accounting courses because they were analytical and logical and not so different from the sciences.
I realized I could apply my scientific research and analysis thought process to solve credit analysis and financial modelling problems which was all manual at that time. I was recruited immediately after my MBA by the then Pacific Merchant Bank and the rest, as they say, is history.
You worked with International Financial Data Services which is a subsidiary of State Street Financials Group in Toronto where you led the team in charge of Regulatory compliance, advising North American and European Financial Institutions (FI) on the implementation of Regulatory and Tax reporting standards. Are you satisfied with the nature of Regulatory and Tax reporting standards in Nigeria?
Absolutely not! Tax administration in Nigeria has a long way to go. The regulators focus more on the implementation of monetary policies than fiscal policies. There are a lot of leakages in the system.
The Federal Inland Revenue Service (FIRS) has not been able to capture all taxable companies operating in Nigeria in its tax net and those captured are unduly harassed and arbitrarily charged. A large number of businesses and individuals are currently operating outside the tax net and there is a dearth of data capacity to capture this class of potential taxpayers.
The informal sector which is estimated to be 65% of the GDP, is actually heavily taxed, but unfortunately, not by the government. Taxes are usually forcefully extracted by non-state actors like illegal landlords, touts, NURTW, Traffic policemen etc. Sometimes taxes are paid multiple times a day to different groups.
The multiplicity of tax regulatory administrators (Federal/State/ Local govt levels) and endemic corruption amongst the tax employees and the taxpayers, and unorganized monitoring and enforcement approach are the banes of the Nigerian tax system.
The neglect of the non-oil revenue despite its potential to create great tax revenue inflow has also contributed to the inadequacy of tax revenue in Nigeria. The existence of tax avoidance and tax evasion increased cost of compliance and the ambiguity of tax laws are also some of the problems that I see plaguing the Nigerian tax system.
Most importantly, there is significant scepticism and a lack of public trust regarding the judicious utilization of tax revenues. There is a belief that tax naira constantly flows into the private pockets of politicians and civil servants, hence the people are not motivated to voluntarily pay their taxes to the government.
In the developed world, all these problems are literally nonexistent. There are clear and documented consequences for tax infractions and every resident and corporation is aware of its responsibilities as taxpayers and for annual tax filing. There are tools and resources the Tax Authorities utilize to track taxpayer income and potential tax evasion or avoidance.
However, the Government also takes seriously its responsibilities towards its citizens. In Canada for instance, there is free education up till secondary school, free health care is available for all, you can rest assured that all the roads are repaired and built as needed etc.
What is your position on the VAT controversy between States and FG?
The move by some state governments to collect Value Added Tax (VAT) in their states, seemingly looks easy and simple to execute, and with our tribalistic tendencies daggers have been drawn by the different states depending on their position on the issue.
However, except for Lagos state, I don’t believe any other state in the federation has the necessary mechanism in place to extract VAT from their residents. As previously noted, the state governments will continue to focus their attention on the formal sector which is only a fraction of the state economies and if the states end up collecting their revenues, then they should also be prepared to take on the fiscal responsibilities that come with revenue collection.
Many Nigerian states, especially those in the northern part of the country, are not viable and have never bothered to look inwards for revenue generation because of the largesse coming in from the other states that are working harder.
Zamfara state, for example, had the least generation of VAT revenue recording less than a billion in an 8-month period, However, it received the sum of N35. 716 billion (about N4.5 billion monthly), placing it at the fourth position on the allocation table. This situation has at the minimum created an awareness of the unfairness of the situation and should engender some changes in the revenue allocation policy and ensure the equitable distribution of VAT in future.
CreditWise is known in the Micro and Retail lending sector. Nigerians are crying about interest rates charged by banks to businessmen, advocating single digit for such. What is your position on this?
A survey carried out in 2020 by PricewaterhouseCoopers (PwC) on MSMEs in Nigeria found that obtaining finance is the most pressing problem MSMEs face, NOT the cost of financing. Access to finance, in particular credit, is a critical enabler for the growth and development of small and medium enterprises. The SME credit market, however, is notoriously characterized by market failures and imperfections. Hence, in emerging markets and developing economies, 55% to 68% of formal SMEs are either unserved or underserved by financial institutions, leading to a total credit gap estimated to be USD5.1 Trillion.
PwC estimates the financing gap for Nigerian MSMEs to be about N617.3 billion annually (pre-COVID-19 pandemic). Based on analysis of data from the CBN annual statistical bulletin, small businesses accounted for less than 1% of total commercial banking credit in 2018. According to the National Bureau of Statistics (NBS), less than 5% of SMEs have been able to access adequate finance for working capital and for funding business growth/expansion. Yet, SMEs still contribute a staggering c.50% to GDP.
The role of a microlender is to aid financial inclusion and ensure those without access to financial services gain the much-needed access. The primary goal is to have access to capital to enable him /her to work their way out of poverty.
To run a sustainable lending business, it must be profitable. We at Creditwise pride ourselves as responsible lenders by not practising price gorging like some lenders do despite the current high cost of funds. Targeting the bottom of the pyramid bestows on you a sense of responsibility.
Of course, if the cost of funds is at single-digit then I’m sure we will be happy to pass it on, however, such funds are not available except through the Bank of Industry (BoI) which could take between 6 and 12 months to disburse if you qualify. There have also been cases of funds allegedly disbursed but never reaching the actual borrower. Meanwhile, the process of application to final disbursement takes an average of 48 hours at Creditwise and sometimes less if you are a returning customer.
Now, your company focuses on Sustainable Lending specifically targeted towards Poverty Alleviation (Lending to junior and mid-level salaried workers), Women Empowerment and MSMEs. Kindly give us figures on how many have benefited.
At CreditWise, we have been able to use a combination of social media, automation, human relationships and the right product offerings to continue to locate and impact our target markets. We are also able to build a sustainable clientele that we believe will enable us to accomplish our purpose of contributing towards the achievement of the Sustainable Development Goals, especially No Poverty, Gender Equality and Decent Work and Economic Growth.
CreditWise started Business just after the second wave of Covid 19 and our first major loan was booked in March of 2021. Our loans range between N50,000 and N5m. We have so far approved and disbursed over 300 loans with an average ticket size of N750,000. Of the loans disbursed, about 60 are MSMEs out of which close to 65% are women-owned. We constantly have a pipeline of transactions in excess of N150 million that we analyze and work through.
We not only grant loans to our customers but also provide financial and business advisory. As you may well know, the risk of Business failure is high in the SME sector and this is mostly due to a lack of knowledge and understanding of how to run a business properly. For example, some of the Businesses are not registered and have no separate Bank accounts, the promoters typically comingle their personal cash with the Business finances. The owners hardly insure their risks and usually undertake minimal bookkeeping. We, therefore, provide support in capacity building.
How different is your company from the dreaded LAPO which could go to any length to recover debts? They allegedly lock women inside toilets!
At CreditWise Financials Limited, we have put together a process that seeks to improve and automate the delivery of financial services. The transition from application to disbursement to repayment is fully automated, especially for personal loans.
We have measures and tools to determine the eligibility for a loan application and won’t approve loans beyond the customer’s capacity. We are also cognizant of the need of the customer to manage their finances. The type of follow up we provide the customers is unprecedented and at first shocking to some customers that are used to the arm’s length way of their previous financial Institutions.
The follow-up and support are really to avoid any unpleasant surprises and confrontation when it comes to repayment. When we give out loans, we follow up with financial advisory which ensures the loan is properly utilized for the right purpose and not diverted.
At CreditWise, you claim to use a combination of Social media, automation, human relationships and the right product offerings to continue to locate and impact your target markets. Kindly explain more.
We adopt all available social media platforms to reach as many as possible in our target market and ensure that loan applications can be made online both for personal and SME loans and making the facilities accessible via mobile phone or PC. Our product offerings are customer-centric designed. We also embed good customer relations to ensure the recovery of our funds and assure them of our trust.
We have a product developed for everyone in our target market. We have the Employee and payday loan products for the employed groups and individuals, we have a working capital product for SMEs/MSMEs, we offer Asset finance loan products for those looking to make a purchase for personal or business reasons. We also perform LPO financing, invoice discounting, and our iconic lending product, SheBiz, targeted at Women that require funding to grow their businesses.
What makes CreditWise different from other lending organizations?
We have carved a niche for ourselves in getting involved in our customers’ businesses and provide quality advisory to them. We do not see customers as numbers but as partners that we need to nurture and grow with. We provide our customers with up-to-date information on the economy and new opportunities in their area of focus.
We provide helpful and accessible customer service and account officers to perform advisory services and to streamline and simplify the application process. Our after-hours response is second to none. We have had occasion to disburse loans over the weekend and even on a Sunday if the customer needs it, we always make it work.
We are now experiencing a large number of satisfied and returning customers as well as referrals from existing customers, which in turn reduces our customer acquisition cost significantly.
You offer different products. What are these?
Different products for different categories of customers. We have personal loans for individuals and MSME loans for Businesses.
Our Products are:
- Employee Group Loans; for employed salary earners on payroll deductible basis.
- Personal loans
- MSME cluster support Loans
- SheBiz loans: for female entrepreneurs only.
- LPO financing; for business contractors that lack cash flow required complete a customer’s order.
- Invoice Discounting: To help manage the cash flow of SMEs
- Creditwise Asset Finance
- Financial and Business Advisory
Your company claimed meeting clients’ financial needs with minimal hassles and flexible payback options. Kindly explain
We provide financial solutions to small and medium companies as well as junior to middle-level employees of large corporates. They can apply online, submit all required documents and the funds would be disbursed. For the salary earners, we do not need to meet you physically to grant you a loan. All the appraisals are technology-based. Verification of Identity, Bank account statement and income validation, BVN verification etc. are all done online using the latest technology available in the market and within the shortest possible time.
The repayment is convenient for being amortized over 1 to 12 months. There is no early payment penalty, and we are also able to easily reschedule and restructure loans for customers that we are aware are having challenges either due to loss of a job or some other unfortunate situation.
What are the provisions you have for low-medium income earners? How can they access finances from you?
The idea of Creditwise was conceived and birthed in the middle of the pandemic during which we saw the impact of poverty at its worst. The COVID-19 pandemic, like other pandemics in the past, did not only produce health shocks but also transmitted economic shocks.
The immediate consequence of the pandemic in Nigeria is worsening the poverty situation especially food shortage and malnutrition.
The lockdown caused hunger, frustration, and anger. The people had no access to the necessities of life, and I felt I could make a difference by providing the low income, women and MSMEs, access to credit and financial services.
It has been shown that part of the experience in poverty alleviation efforts in Nigeria is that such efforts ‘almost always flounder due to scarcity of and restrictive access to loanable funds.
At Creditwise, we target low-income earners like drivers, contract workers, cleaners etc. in paid employment. We sign an MOU with their employers which are the outsourcing companies that undertake to ensure monthly repayments are remitted directly to Creditwise.
Our loans start from N50,000 and are payable within 12 months. These loans are typically secured with social collateral like Guarantors that are well known to the customers. Again, we use technology to drive our lending process. The application can be completed on the cell phone and the whole process takes less than 10 minutes to complete. All verification is done online. Nigeria has a robust credit registry system now and we are usually able to filter out the perennial chronic debtors and those with bad spending habits like gambling etc.
The loans are typically approved and disbursed within 24 hours of application.
What about women?
Women are particularly vulnerable to the scorch of poverty especially in developing countries like Nigeria. To be honest, the males in Nigeria have comparatively higher social status and as a result, have more access to formal educational training and credit. Again, the men have a higher capacity for higher productivity and can usually combine several enterprises, which allows them to have multiple sources of income.
More than 1 billion women still do not use or have access to the financial system. The IFC estimates that a $300 billion gap exists for formal, women-owned small businesses, while more than 70 per cent of women-owned SMEs have inadequate or no access to financial services. Creditwise Financials is working to close this financing gap, one Nigerian woman at a time.
Our SheBiz loan product helps women gain access to the capital they need to grow their businesses, unlock their unrealized ability, strengthen their skills and encourage their participation in business.
We also work closely with these women entrepreneurs through capacity building and financial advisory. Some of the women have been in business for years without having any form of registration and no insurance. Cash flows from the Business are mingled with personal accounts and there are no proper sales and expenditure records. We assist the customer register with CAC, and any other relevant regulatory body required for the Business to operate effectively. We also provide advisory on the right insurance product that will adequately cover their risk exposure.
To access our loans, one of our Relationship Managerspays a visit to the business premises for an assessment within 24 hours of receipt of application. We typically require the business owner to provide a valid Government ID, Recent utility bill, Previous 6 months bank statement(which we access directly) and business certificate (optional), acceptable collateral and a guarantor. The most important criteria for the Shebiz product we ensure access to;
*Lower interest rates
*Financial Advisory and Skill-based training
*Facility Amount of between N150,000 and N5,000,000
And small business owners?
As earlier mentioned, the sole purpose of Creditwise is to support lower-income and small business owners. Our MSMEs programme is really for small business owners. The maximum loan we approve is for N5m. Anyone that has a need larger than N5m is already outside of our target market.
As our customers expand and their financial needs increase, we will be pleased to recommend other FIs that are more able to support at those levels.
What are the criteria?
*Online application
*Acceptable collateral
*6 months Bank Statement (obtained directly by Creditwise)
*Upload all relevant documents online
- CAC document
- Means of Identifications
- Passport photograph
*An acceptable Guarantor
On the Nigerian economy, how can the real (productive) sector bounce back?
The real sector produces goods and services through the utilisation of raw materials and other production factors such as labour, land and capital. The real sector has always played strategic roles in an economy, it is the driving force and engine of economic growth and development. It comprises agriculture, industry, building and construction, and services.
Unfortunately, the Nigerian economy is mono-product – oil, with output and prices depending on external economies. The revenue profile of the government is directly affected by the price of Bonny light in the international market. The scope of the challenges facing the Nigerian economy is enormous. Therefore, the fiscal performance of the government depends on how favourable prices of Oil turn.
Getting credit to fund productive activities has been the bane of the real sector because of the nature and depth of the financial sector in Nigeria. The dearth of longer tenured financial instruments has been a key constraint to real sector growth. Sustainable development can only be achieved if adequate financial resources are efficiently mobilized and transformed into productive activities that would engender growth and generate employment.
The present government has done a lot to improve the Agricultural output. The latest initiative of the CBN has been aimed at de-risking the agricultural sector for improved credit flow, unfortunately, banditry is now reversing a lot of the progress made in that area.
With the advent of AFCFTA, there will be a remarkable opportunity for growth and development for every country that signed this agreement, including Nigeria. The Government has no choice but to radically create an environment that will allow the real sector to thrive and enable them adequately compete with other regional players especially, the manufacturing sector.
The success of AFCFTA would depend much on the federal government coming up with the right policies that would attract investments into the country’s manufacturing sector as well as the willingness of the government to enforce the free trade area’s agreement favourably to avoid product dumping.
The government needs to build and refurbish infrastructure like electricity, roads, transportation etc., which are the factors that make the cost of production in the Nigerian manufacturing sector the highest in Africa.
Naira is sliding south! What is the solution?
Clearly, Nigeria has an import-dependent economy that is consumer-focused rather than production focused. As previously noted, Nigeria is a mono-product Country. Oil accounts for over 90% of the country’s foreign exchange earnings. At this point, there is a lot of demand for forex, 50% of which is probably speculative. There is hardly any other source of the forex except the Central Bank and the few exporters as well as Nigerians in the diaspora that are not willing to sell at the official exchange rate. There doesn’t seem to be a short-term solution to the problem. Whatever near term solution proffered will only be a band-aid and not sustainable.
To have a lasting solution to the perennial problem of exchange rate depreciation, the government needs to look inwards.
Correct the dysfunctional infrastructure in the country that has killed the manufacturing industry as earlier noted and made Nigeria so heavily dependent on imports. Electricity, transportation, repair and retool the moribund government-owned manufacturing plants across the country, etc.
Nigeria spent N1.5 trillion equivalent in USD to import fuel in the first half of 2021.The government needs to repair the refineries or privatize them to reduce the demand for dollars to pay for petrol import.
Our education system is terrible, to say the least. People send their children abroad now for post-secondary school education even when they cannot afford it, depleting the scarce foreign exchange available to the country…and then of course we have medical tourism. Nigerian elites going abroad for medicals at every opportunity.
Most importantly, we as Nigerians need to change our attitude and behaviour towards the economy. We must believe in the idea called Nigeria.