Is your loan business truly financially inclusive?

The financially excluded communities in Africa need loans and other forms of credit to grow out of poverty, build sustainable businesses, and create a viable future. Unfortunately, these communities have been marginalized from access to credit. 

Their slow growth in the technological curve has kept them away from the benefits they may have gotten; if that’s not enough, many lenders have decided to go digital. That’s why Lendsqr firmly believes in striving toward financial inclusion to create a flourishing economy that provides equal access to opportunities, yielding more benefits to the lending industry in the long run.

To quote the Central Bank of Nigeria verbatim,

“Financial inclusion describes a process where all members of the economy do not have difficulty opening bank accounts; can afford to access credit; and can conveniently, easily and consistently use financial system products and facilities without difficulty’.

Featured resource: Driving growth: How Government can boost economy via credit ecosystem

The CBN giving this definition would make you think that they were working towards financial inclusion, and they were; with the launch of the National Financial Inclusion Strategy on October 23, 2012, and the inauguration of the Financial Inclusion Steering Committee (FISC) and the Financial Inclusion Technical Committee (FITC) in 2015 to meet the goal of increasing financial inclusion by set targets in 2020.

Despite the efforts, these targets were not met, and The CBN governor says that the financial inclusion rate in Nigeria currently stands at 64%, which is far below the 70% target set for the year 2023. The blame alone cannot fall on the major financial institutions ‘Banks’ but on all financial institutions as a collective.

The big question remains for those with lending businesses: Is your lending business catering to a wide range of individuals with or without access to the Internet? Like our friends in the banking sector say, “Banking the unbanked.” Are you truly “Granting credit access to the underserved”? Is it just a spiel that you tell your customers and investors to give them more trust in your business? 

Why does financial inclusion matter? 

There is currently about $331billion worth of credit gap in Africa today. For context, that’s enormous money, far beyond many developing country’s economic capacity, and with such a vast credit shortfall, many businesses struggle to secure the necessary funds to grow or sustain their current operations.

A country like ours feels the resultant effect in various forms; stagnation, reduced job creation, and limited opportunities for economic advancement. Financial inclusion hopes to bridge that gap and be a pathway to equal opportunities for all. While we don’t have all the answers, let’s have a closer look at some of the ways financial inclusion could help bridge the credit gap:

• Reduces income disparity: In a country where well-paying jobs are as hard to find as raw gold. Income inequality is a huge problem, but here’s where equal access to credit comes in: it’s not just a financial service. It’s a turning point for economic growth and development. It is a key that opens doors for people from all walks of life to kickstart businesses or invest in brushing up their skills. And so the gap starts to even out, offering everyone a shot at boosting their income, no matter their initial financial standing. 

• Entrepreneurship and job creation: In Nigeria today, Jobs are as rare as a quiet day in Lagos traffic — practically non-existent. Currently, Micro, Small, and Medium Enterprises (MSMEs) contribute 48% of Nigeria’s National GDP and 84% of employment in the country. For that reason, giving credit access to underserved communities is a sure way to promote and create employment opportunities.

• Education opportunities: By extending credit to often marginalized persons, you are not just providing finance but also opening doors to education opportunities for the next generation. The mother, who is just N5,000, shy away from completing her child’s school fee. With your efforts, She can provide access to education for her child because you took the extra pain to reach her community.

• Economic growth: When individuals and small businesses can secure loans, they often use the funds to start or expand a business, leading to the creation of new jobs within the community, and improved financial resources allow people to invest in education, contributing to the reduction of illiteracy among the lower class.

Coverdey knows the power of financial inclusion and has used Lendsqr to drive its success

Coverdey, a digital lending company, saw a huge disparity in access to credit and sought to fix it by providing loans to traders in various markets in Nigeria. The company, however, needed the technology to serve these segments in the most cost and risk effective matter. So they turned to the Lendsqr, and they are currently growing at an astronomical rate.

With the Lendsqr lending-as-a-service platform, Coverdey can book loans for the financially excluded, get paid, and block bad borrowers. They use the Lendsqr offline loan feature, which also caters to borrowers without bank accounts or those who are even illiterate.

The COO, Damaris Onyendi, knows they couldn’t have had this success without Lendsqr. Here’s what she had to say: 

“We love how Lendsqr accommodates all kinds of customers and makes the lending process super seamless. Lendsqr is our bodyguard against possible bad loans, constantly looking out for us. Because our customers are artisans and not exactly tech savvy, the manual loan feature makes it easy for us to help out.”

Coverdey isn’t just doing this because they are an impact business; rather, their business model is profitable and effective. And it’s scaling rapidly because it’s powered by an effective technology that makes lending to the financially excluded a sustainable business model. Read about why manual loan booking is still relevant for lending today.

Coverdey is on a path to bridging the often-forgotten credit gap in underserved and vulnerable communities, and we’re thrilled to be on this journey with them.

Featured resource: Expand your horizon and reach more customers with the Lendsqr offline loan feature

How does the Lendsqr offline loan feature drive financial inclusion?

With Lendsqr’s offline loan feature, The focus is on inclusivity. And no, we are not just throwing around buzzwords. We recognize that not everyone has consistent access to the internet or possesses advanced digital skills, so we’ve built a tech that ensures that digital barriers don’t limit financial inclusion. By allowing manual loan bookings, Lendsqr enables all of her lenders to serve customers who may not be tech-savvy, ensuring they can access credit when needed.

By offering offline loan services, our lenders can differentiate themselves from other players in the industry and not only “talk the talk” of financial inclusion but actively “do the talk” – the ethos of true financial inclusion. To learn more about accessing this feature, Sign up for free at Lendsqr and watch a video explainer on implementing the offline loan feature.