One finance (One Fi) Limited, owners of loan providing platform Paylater, announced on Tuesday that it has been assigned a “BB” rating with a Stable outlook by Global Credit Rating Co. The new development is expected to increase transparency and the credibility of the Paylater platform. Paylater is one of the leading digital financial services in Nigeria with its unique credit and lending services making it one of the best FinTech startups in the country.
With its rating, One Finance becomes the first African FinTech company with a Credit rating. Credit ratings usually improve investor confidence in businesses, while also giving these businesses the confidence to market their debt securities to potential investors.
Credit ratings have been known to be potentially risky as they put pressure on businesses to continuously deliver. For large corporations and banks, this isn’t really a problem. However, for smaller companies like One Finance limited, a bad credit rating, especially after a bad patch can affect business.
In an interview with Ventures Africa on the possibility of his company being put under pressure to succeed, (which is a good thing) One Fi CEO and co-founder Chijioke Dozie assured that Paylater wants to continue on this trajectory, while also applying the recommendations made by the credit rating agency.
“We want to continue delivering consistently by being laser-focused on transparency; demystifying financial services, loans, and products to our current and future customers. We are also looking very closely at the recommendations made by Global Credit Rating Co. and ensuring we are in the best possible position to implement them across the business, as we continue to build our financial products and services, and strive for an even higher credit rating” he said.
Global Credit Rating Co. is Africa’s leading rating agency, accounting for the majority of all ratings accorded on the African continent. Its report on One Fi analyzed key financial and operational factors including risk management, liquidity positioning, borrowings and capital under management. In arriving at this rating of “BB” with a Stable outlook, Global Credit Rating Co’s analysis found that OneFi is well capitalized vis-a-vis its current risk level, and also highlighted the fact that the company currently has a low liquidity risk.
While One Finance’s credit rating looks good and stable, it is also a reflection of the FinTech ecosystem in Nigeria. Nigeria currently has more than 40 FinTech startups, with these startups receiving more than 75 percent of investments in startups in the country.
A good credit rating is attractive to investors and will stand One Fi, and Paylater, in good stead for more investments. With the recent CBN policy on FinTech licenses, Chijioke believes there will be more banked Nigerians. “The new Fintech licenses are very positive because it will bring more unbanked clients into the formal sector,” he said. However, he hopes that the FinTech market in Nigeria could be helped with more tech-friendly policies from the government.
“If the CBN could encourage open banking where financial institutions have access to customer data (with the customer’s permission) such as their bank statements, then this will help Fintech lenders in assessing clients” he explained.
Paylater, which was launched in 2016 by Nigerian finance entrepreneurs Chijioke and Ngozi Dozie provides hassle-free loans to costumers. The platform’s app has been downloaded more than a million times with over 1,575 loans approved daily. As part of its ongoing commitment to transparency, the lending platform has, since September, provided each Paylater loan applicant with a free credit bureau report, irrespective of a decision, with 100% reporting of positive and negative data. To date, the company has shared over 60,000 reports with customers.
And Paylater is planning to roll out more services :
“Our goal is to be a one-stop-shop where all the financial needs of the Nigerian consumer can be met through our platform. We are building a trusted name through the Paylater brand, so it makes sense to grow our product offering, and grow with our customers. We currently offer Consumer Loans, Investments, Bill Payments, Personal Finance Management, and are currently in beta with our Wallet service, Paylater Wallet” Chijioke concluded.