Just to rewind a little bit, this whole BNPL craze was exploding. I hadn't seen anything like it: interest free credit didn't really make sense to me and was very excited about the prospects of this business model. But at the same time, a lot of the people I spoke to in banking and lending were just like, the last thing South African needs is just more unsecured credit being piled on top. This isn't Australia, isn't Sweden where Klarna is from.

So I did take that to heart and looking into the BNPL space realised that in countries like Brazil, Mexico being two significant examples, point of sale interest free instalments have been there for ages offered by most retailers. Yes, it's now become tech enabled. But in those markets, it's done very much off the back of a credit card. And the bank is the key issuer of their credit, they understand the consumer and what they're earning. And the thesis was that the South African use case was far more similar to those markets, developing markets, high interest rates, very disparate levels of income. In some places, you'd argue over indebtedness of the middle class, as opposed to a massive need for financial inclusion, which is the narrative.

Yeah, and I just thought that that product would fit so well here, we just have to find a way to technically adapted and created here.

Whereby from the report we see that 7.5 million people in Tanzania do have bank accounts. And with the presence of mobile money operators, we have 24.4 million mobile money wallets currently opened by these telcos talking into the lending space.

In particular, the banks still dominate the biggest share in terms of value, but the market has seen a new narrative of digital loans, which is mostly dominated by MMOs and fintech players through their micro lending services, which still requires banks collaborations by funding for regulatory approval, as well as managing the provision side with the help of the FinTech players will bring onto the table, the scoring and big data capabilities.

So if you were to think of some of these African countries and then go into Rwanda, you will understand that the credit growth and maturity is fairly new outside of South Africa, most of these African countries had predominantly been cash-driven markets, it's not to say there wouldn't have been a form of lending or products that would have been there. But if you think of the South African credit market or maturity curve, you know, retail, for instance, people go and buy clothes on credit, you have never seen that in any of the African markets, they get a shock to hear that you buy clothes on credit. So there's still a lot of whitespace, there's still a lot of opportunities for better products to come into play. So personal loans have predominantly been the default lending product that we've seen in the market across all the financial institutions in Rwanda.

But now mortgage, your typical mortgage, right? It's starting to emerge as a product, that historically people would probably just get a personal loan and go buy a plot of land and try to, you know, use their own income to build a house for themselves. What you have started to see off the lead is vehicle financing starting to come up in Rwanda. I'm not sure how close you are to the VW project that kicked off, I think, a couple of years back where they had a factory and wonder and assembling factory and wonder, because outside of South Africa, maybe with the exception of Botswana and Namibia, most of these countries do a lot of great imports. Right? So you find a lot of Japanese cars out here, right? So with that said, vehicle finance, the process of it has been much of a challenge because the bank doesn't know the vehicle, they're financing, they don't have confidence on the quality of the vehicle, right?

So that's why we work with Airtel to say, let's bridge this gap. Let's try to be the boundary between the lenders and the borrowers. And the only way you can do that is having standardised credit score.

So Airtel provides all the transactions when you buy airtime on your phone, when you buy data, pay a bill, you know, that information tells us probably you have some responsibility in your house, you're moving around, probably you have some kind of mobility, are you having so many people different one sending to you, tells you you're making sales.

But if you're just receiving from one person, we can can infer probably your law student getting some update from the parents.

Okay, so I knew that if Nigeria was going to grow and the middle class was going to emerge, there has to be a credit culture, right?

And I knew that one person wouldn't be able to do it. One lender wouldn't be able to do it.

Because when you look at Nigeria and look at why credit doesn't work, you need to understand that is a lack of consequences that killed credit. In Nigeria today, if you took money, and you don't pay it back afterwards, nothing happens to you. Now, one of the things that Lendsqr is doing is that, by having a technology driven consequences, then that problem is going to go away.

The paradigm of 'let's collect as much information on a customer ahead of time, try and score them, and then provide them with an unsecured product'. We just don't think that works as well as putting an asset in someone's hands, asking them to pay a small deposit. And knowing that once they have access to that smartphone device, it's actually going to improve their ability to make a living. It helps them power the hairdressing salon and helps them advertise their business on WhatsApp, you're actually improving their ability to earn a living and also then to pay back the instalments just a much more compelling and sustainable model for working in the markets where we want to have an impact.

I mean, behind this there is a very sophisticated predictive credit model and we make adjustments all the time to pricing and instalment plans, and we have a lot of investment on the connected estate IoT side. And our loan book actually has been remarkably consistent. And particularly when it looked over the last three years, despite massive disruptions, and it's also been resilient in the face of high inflation.

And of course, as you mentioned, digital has played a massive role.

You know, back in the day, people were just happy to get credit. Now, people are much smarter, they want things like loyalty, they want things like rewards, it's not just about the access to credit, they've got more choice. So certainly the space have become more competitive. The banks are still not there, but certainly a lot more non bank lenders have come onto the scene, people that are able to service customers quicker, faster, more efficiently than the banks.

And of course, if you look, now you've got products like buy now pay later that attracts specific segments of customers.

So, in as much as I was a salesman who was always supposed to be pushy at all times, what I needed to also understand what was the problem that I was solving for them, right and try to solve that for them.

Now, wearing this new hat for me as a salesperson, I'd already prepared me for what it was going to look like when I moved to a company like Fair Money. And if you look at all three co founders, we actually were all at Fair Money at the time. And we moved out just to go to this. When I got into Fair Money, and then the COVID era just hits, we basically began to see one new thing, which was that the guys who were doing collections for us at the time, were still doing collections, like it was 2018 - where the customer just needed a call for them to remember to go to make the payments.

They did not need you to help them structure payments, you know, create a payment plan; they did not need you to help them with any educational of any sorts. They were not in any mess whatsoever.

It really started in analytics when I first joined. And I think for me, as you know, if you want to learn, strong analytics really helps you to make better credit decisions. So we really worked with Experian on scorecards, but we built out a very strong analytics capability in the business. I guess that goes from the data warehouse through to the frontend with dashboarding and all the analytical tools that you use, as well as, like the actual people capability that we bought in.

And it's helped us to understand our loan portfolio performance at a very granular detail and be able to tweak our scorecards very, very, very quickly to respond to to any credit risk portfolios to be seen. And it's helped us from a margin perspective has certainly helped us a lot to grow the business sustainably.

It's one of the areas that we do differentiate ourselves, and it's something that we have built up over the last 10 years. So we are in over 45 countries at the moment, representing 45 countries, and what's significant about that is we've worked on obtaining various bank connections. So we've got over 13,000 bank connections over these 45 countries. And that's significant, in other words for some of the global clients that we've signed up, so when you move to a global client, and they want to use open banking, that richness of data over to three countries that don't necessarily have to start from scratch, and especially if they've partnered with a global decisioning provider decision system provider, we can then facilitate the same relationship and agreement across various countries. So that's something we worked very hard on doing.

So it's not just UK-based.

So I think in the beginning of this business, we realised that we have to put in some real time in order to prove that with potential customers. So we've been at it for just slightly over two years. And we're able to not only back tests from source data, but actually test or run our models on real data.

And the results have been quite impressive, if I say so myself, we're happy with that confidence of 86%. We do provide then a boolean results where you know, it's a Yay or Nay, We realise we don't want to reinvent the wheel with another score that one has to contend with.

Well, yes, we've got very many stories. We've got a woman who is physically challenged and is unable to move around and she started a small food business. And for one reason or another was never never able to get credit from a bank or any other financial institution - because they deem her as a high risk. And we stepped in to support her with a micro loan. And now she's grown her business 300% Very, very powerful testimony, which is on video, and a very excited woman.

Indeed, we have several people just to mention, one lady also had a cow, and was giving her 1 litre of milk, and we convinced her to sell it. And she topped up that money for us to finance and get her cow. And now she enjoys 17 litres of milk every day. Now, the beauty of this is immediately after the cow calved down, it was again pregnant within two months. And so I think in the next three months, she would again be enjoying a second calf from the original cow that we helped her to get.

And remember, the consumer is not our customer, the merchant partner is our customer. And if you love a brand, and you buy from them two or three times a year with PayJustNow we may be empowering you to buy more of that product, or more often. I think back to our very first merchant partner -they had no reason to, but they gave us a chance. They're called Freedom of Movement known by the acronym FOM. And they at the time probably had about 20 products, they were above average value, they were durable, they were aspirational, was high quality, and at that time in 2019, the last relaxed memory that we have was the World Cup in 2019. You know, they traded off the popularity of what was their most iconic product and that was the FOM x Kolisi. It was veldskoen shoes, which they made in collaboration with the Springbok captain Siya Kolisi, in the same year that he took our nation's dreams and team to Japan and inspired us all with that scintillating campaign that gave South Africa yet another Rugby World Cup title.

So I think along the way, partnering with merchants, storied merchants that have a following was quite an important thing to get right from the beginning. And then we needed to overlay that with consistent, predictable, transparent service to the consumer that could build trust.

Just to quickly add onto the innovation. So I spoke about data and it's big for us, but the system and the technology side is equally as big, if not bigger. We've insourced our loans management system, which was a big challenge, but a very good decision for us. We centralise the cost between the different operating entities, which certainly takes away some of the pain and we've made a lot of effort to integrate directly into the large mobile network operators that are across Africa (MTN, Airtel, and SafariCom) to be able to do realtime integrated mobile money, collections and payments. That gives our clients massive convenience.

So even though we have a new client requirements to present yourself to a branch and to enrol your fingerprints and take your photo, once new clients are enrolled, the majority of people actually transact subsequently through a USSD interaction that's fully integrated with mobile money. Cashless, paperless contactless. So you could sort of see the theme here of traditional start, and then very quickly move people into an online and tech interface and a channel with limits growing and prices coming down.

So we've created a first-world infrastructure, but it's been an uphill battle to get lenders to embrace the use of bureau data and credit scores and bureau scores to make mass decisions. In Nigeria, it's a legal requirement that you perform two credit inquiries, but that's not to say that you must make good use of the data you're given, as long as you know, you've met your legal obligations. So there hasn't really been an appreciation of how that data can help you improve your decision making. So that's the journey that I've been trying to help my clients to realise - it's been as an educational upskilling, a sort of training project as much as much as a hands-on rebuild the bureau score project.

I think one of the cultural changes that's required is the willingness to invest money in order to save money, that thinking hasn't really been that prevalent in Nigeria, in the past at least. Curiously, that's the first time I've ever encountered a situation where lenders have questioned, well, why are we paying for a credit inquiry if we ended up rejecting that customer? Why would we want to pay for that? Which kind of misses the point of the protection that screening for risk gives you.

Well, let me paint a picture of the banking landscape at that time, the banking landscape in the 90s in Ghana, West Africa, we were just beginning to wake up to the advantages that digitization could bring in terms of transforming from manual processes to technology-based processes. And more of automating the manual process, rather than looking at the processes end-to-end and transforming them. Very, very basic accounting, very basic bookkeeping, and all of that.

And nothing really digital as we know it today, because still if you wanted a banking service, you had to go to the bank physically, all that really had to change was that we're able to do a lot of transactions in a shorter period of time. And our books were more accurate.

But by the mid-1990s, I had started getting a little adventurous with what we could do with the technology stack that we had.