Timothy Nuy talks about Finclusion’s mission to end debt traps by bringing sustainable installment loans to more Africans

Enjoy the interview with Timothy Nuy.

BI Africa: Nice to speak with you, Mr. Nuy. For those who may not know you, please introduce yourself and what you do at Finclusion.

Timothy Nuy: I started working in Africa at a German company called Africa Development Corporation. It is an investment banking group with offices across Africa. We invested in BancABC in southern Africa and Unity Bank in Nigeria. And in 2014 we sold ADC to Atlas Mara. From there, I joined a microlender called GetBucks (later MyBucks) in 2015 along with the shareholders who had invested in ADC. Between 2015 and 2018 we expanded this business from South Africa and Kenya to 12 more countries. In 2018, I differed from the founders in how the company should be run and where the business should go, so I made the decision to start Finclusion.

At Finclusion, we believe in closing the credit gap in Africa and creating sustainable financial services on the African continent. A strong focus is that our loans are productive for small business, education, home improvement, etc. And in doing so, we find ourselves caught between nano-lenders, who offer small loans, and banks, who offer larger loans.

One of the ways we differentiate ourselves is by making sure we are very fast in processing loans, by providing people with essential financial services that they can use through infrastructures that are appropriate for the stages our consumers are in.

We operate in South Africa, Kenya and Tanzania.

BI Africa: As you know, access to finance is one of the biggest challenges for small businesses in Africa. Tell us more about how your company is helping to solve this specific problem.

Timothy Nuy: We focus on affordability first. That’s why we make sure we make loans to people who can afford to pay them back. We also offer the ability to spread refunds to make things more convenient for our customers. That is why installment lending is important.

Our credit scoring system uses all the data we can get – It’s in data analysis that we differ the most. By successfully gaining access to a bank account or mobile money information, we use that information to calibrate income and expenses and then make the best possible lending decisions.

BI Africa: How does your interest rate compare to commercial banks?

Timothy Nuy: Our interest rate is approximately 56%, including all fees and charges. We sit at a lower level without the associated costs, fees and expenses.

BI Africa: FinTechs have greatly contributed to bridging Africa’s financial gap. And their work has been made possible by funding they’ve received from investors. Unfortunately, VC funding in the African startup ecosystem has slowed significantly recently. And this has raised concerns about whether FinTechs can continue to do their jobs effectively.

So, I want to get your insight on this. Do you think the slowdown in VC funding poses a significant threat to African FinTechs?

Timothy Nuy: The people “who are going to fight” have been trying to “fake it ’til they make it,” as they say. Those who run excellent businesses will be fine.

Investors will continue to fund the right FinTechs in Africa. They’ll also become a lot more conscientious about which startups to invest in, so don’t worry.

When your FinTech solves actual problems, you have capital available to scale your business.

BI Africa: Finclusion recently raised some capital which I believe will help you facilitate your business activities. Do you have plans to raise more capital soon?

Timothy Nuy: We have taken on a fair chunk of debt. We are constantly building additional capacities because the more we muster at the end of the day, the stronger our market development. No capital increase has been confirmed at this time. However, I think that we will announce further capital increases this year.

BI Africa: What do you think will be the “next big thing” in African FinTech space in terms of innovation?

Timothy Nuy: For me, lending is still an important part because that is where the great opportunity lies; I’m pretty excited about this. Another area where I think there will be a significant increase is the further adaptability of mobile money on the African continent.

BI Africa: Recently, African “TelCos” have also positioned themselves as important players in the mobile money industry. Do you think this will lead to business saturation and possibly increase competition? And is your company ready for the competition?

Timothy Nuy: We have excellent credit knowledge. I think we are better than most players when it comes to credit rating/rating. This will continue to help us drive growth.

That being said, I believe that competition in the African fintech space is positive. There is such low credit penetration today that the more people spread credit and educate the public about credit, the better for Finclusion.

Ultimately, we need more credit available to all Africans.

BI Africa: How is your company Finclusion positioning itself for the next phase of growth in the African FinTech sector?

Timothy Nuy: We see ourselves as an appropriate solution provider for essential financial services. We want to continue to provide reliable, world-class financial services to customers in the lower to middle income and middle class segments.

We are concentrating on lending for now. But over time we plan to diversify into savings and other services. Sustainability is fundamental to us.

BI Africa: Earlier when you mentioned some of the countries you currently operate in, I didn’t hear you say Nigeria. So, which other African countries are you currently planning to expand into next?

Timothy Nuy: At the moment our focus is on East Africa. Aside from the countries I mentioned, the next country we’re likely to expand into will be Uganda.

We want to first consolidate our efforts in East Africa before we start looking at West Africa and other markets. I think there is tremendous opportunity in Nigeria. On the other hand, many people are trying to solve the challenges that the Nigerian market brings.

When it comes to financial services, scaling is key. So we had to decide which market to commit to first. And that’s why we’re pretty optimistic about Uganda.

Ultimately, we look forward to transforming Africa country by country while providing people with sustainable installment plans in the process. The transition from nanocredit to installment lending is important because it helps us overcome debt traps and create a more sustainable lending model.

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