How to start a lending business in Nigeria from Canada, UK, and the US 

Let’s imagine you’re one of the many Nigerians who successfully “japa’d” to the United States or Canada, where you’re now thriving in your career and building a solid life. But even as you make strides abroad, there’s that persistent pull to contribute back home. To give back to the country that shaped you, but most importantly, to set up a profitable business for yourself. You’re not alone in this; in the last few years, Nigerian diasporans have injected $168.33 billion into the Nigerian economy over the last seven years, with remittances reaching $20.9 billion in 2022 alone.

Now, if you’ve been thinking about starting a business in Nigeria that doesn’t require you to be physically present, and you’ve zeroed in on lending — congratulations, you’re onto something brilliant. Lending in Nigeria is a lucrative venture, especially with the increasing demand for accessible credit.

That savings you’ve built up abroad? It could translate into something powerful. For instance, with $50,000, you’re looking at over ₦80 million, which is more than enough to get your lending business off the ground. Don’t let us get started with £50,000; that would net you ₦100 million as of today.

You could put the $50,000 into an index fund that returns 7 – 10% per year, or what about returning 100% in a year in Nigeria?

So, if you’re serious about starting a lending business in Nigeria from the comfort of your Japa base, you’re in the right place. We’ve laid out the steps you need to turn that vision into reality. Let’s get started.

5 essentials for starting a lending business in Nigeria from the US

To successfully launch a lending business in Nigeria while based in the US, you’ll need to cover these five key areas: 

Define your lending model

Choosing the right lending model is like laying the foundation for your business. It’s not just about deciding who you’ll lend to. It’s about understanding the unique needs and risks of your target market. With years of experience guiding over 4,500 lenders globally, we’ve seen that the working-class segment in Nigeria offers a sweet spot for new lenders. They are often salaried employees with predictable income streams, making them less risky and easier to validate. You can verify their employment through work IDs, professional emails, LinkedIn profiles, and bank statements. By aligning your loan offerings with the needs of this group and providing fair interest rates, you’re setting yourself up for steady, reliable returns. See what other types of lending models are available.

Secure the right lending license

Navigating the legal scene from thousands of miles away might seem daunting, but securing the right lending license is vital. The type of license you choose will determine how you operate. We advise obtaining a state lending license, which many lawyers and firms in Nigeria can help you acquire. If you’re looking to couple this with another lending license, consider a cooperative lending license. See what other type of license you need to lend.

Tech stack

As a forward-thinking entrepreneur, you must always think of ways to run your business operations smoothly. Moreover, as a lender looking to serve a target market from outside the shores of Nigeria, you cannot afford to compromise on the right technology. You need an end-to-end loan management software (LMS), a customer relationship management (CRM), and a chat system. For loan management software, your best bet is Lendsqr. It would be foolhardy to opt for foreign software because you would need a naira-funded software provider to cater to Nigerians. There’s also the issue of getting a deep pocket after paying for a foreign software provider. Most importantly, you need a software provider with years of experience catering to the country you wish to serve. Even amongst local competitors, Lendsqr still trumps them all. 

Develop targeted loan products

Your loan products need to align with your business goals and your customers’ needs. Whether you’re offering short-term loans, salary advances, or larger installment loans, it’s important to define clear terms, interest rates, and repayment conditions. These products should be designed to meet the financial realities of your target market, providing value to your customers while ensuring profitability for your business. 

Risk model

Let’s talk about risk. You’ve got to be sure you’re lending to people who can pay you back. This means verifying their employment and financial stability by checking their bank statements, LinkedIn profiles, and professional credentials. A sound loan management system can do much of this work for you, making the process quicker and more reliable. With a robust risk model, you’re not just handing out loans. You’re making informed decisions that protect your investment.

Featured read: How we built Oraculi to help lenders make informed decisions

Distance is not a barrier when you have Lendsqr

Starting a lending business in Nigeria from afar might seem like a giant leap, but it’s more achievable than you might think. With the right approach and smarts, your savings can do more than just accumulate interest abroad. They can start a thriving business that guarantees you profit while supporting countless individuals back home.

With a solid strategy, the right technology, and a keen understanding of the local market, you can turn your vision into a reality. And what better partner to have on this journey than a loan software provider that knows all the nooks and crannies of the market? Send us a message at [email protected], and let’s make a reality out of your vision.