In the African fintech space, digital lending has been one of the fast-growing sectors, which comes with a lot of challenges, from finding lenders to recovery issues and others. To change the narrative, Sycamore, a p2p platform, was established to connect lenders to borrowers by letting people access good investments and loans.
Speaking in an interview with Techpression, Babatunde Akin-Moses, the Sycamore founder/CEO, revealed that this is one of the problems they are currently solving with a product called Loan Friends. Basically, it enables people to lend and borrow money from their friends with a very high assurance of getting their money back. He explained that “a lot of people, you know, lend money to their friends, and it’s trouble to get it back, so Loan Friends is making that easy.”
Read also: Lulalend secures $35 million to serve SA business with loans
How does Sycamore come about?
The idea started in Lagos business school, where him and his friends were initially talking about the problems over lunch, the fact that it was so hard for the small business to get access to finance quickly. “And at the time, we didn’t think of it as a business. We were just talking about the problem, and then we inquired and did a case study and read about some companies and how a problem was being solved in China using technology.”
This research gave them the idea that they could also replicate the same in Nigeria. The next thing they could think of was how they were going to get the funding to give out credit. However, in their research, they stumbled upon a peer-to-peer lending model. “Essentially, we could provide a platform for lenders and borrowers where we can serve as an intermediary platform and that’s what we became with a very huge focus on technology from the start.”
Speaking further, Babatunde explained that the name “Sycamore” was inspired by the Bible, from the story of Zacchaeus, a short guy who had to climb a Sycamore tree to see Jesus in a crowded place. “So that became like a metaphor of a running cry of an upliftment. So we want to uplift people financially, just the way the Sycamore uplifted Zacchaeus in the bible.” he added.
Sycamore plans and progress so far
According to the founder, in March, the startup will be four years old, and they hope to increase their presence in more states in Nigeria as they are looking to go to other African or possibly even European countries by 2024. “At the moment, we are only in like 10 states in Nigeria, and in 2024 we want to go beyond Nigeria like some African countries, Canada and the UK because we are targeting countries where a lot of Nigerians are based.”
Transactions over their platform last year were over 10 million dollars, and they are looking to triple that amount this year.
The fintech space in Nigeria is really growing. However, there is a need to develop global stability and solutions.
Challenges faced as a digital lender
Like every other entrepreneur, they have several challenges, from getting capital to starting and even building the platform. Another challenge initially was having access to good people to join and believe in their future because it’s really hard for talented people with low budgets, as most people would want to work for a big company.
Moreover, the general issue of any credit space is dealing with borrowers, “thou it has improved, but a better credit culture is still needed, which involves recovering money using a lot of technology.” In terms of recovering funds back from people, he affirmed that one of the strategies that have helped them is doing things the right way and being patient. Their experienced team also make use of best industrial practices by not being in a hurry to get their funds back.
There is a system that is being worked on in the finance sector called “Open Banking”, basically it’s about the banks writing their APIs with common standards. “It’s going to be very easy for the banking system to communicate. It’s going to be very easy for people to build products that can do amazing stuff. So, for example, when the banks have common API standards, life will be a lot easier for lenders because if you don’t have money in Bank A, It will be easy to debit bank B as long as your BVN is the same.” It’s going to make lending and saving a lot easier. Making this work requires government support.
Other issues from the Fintech space
Furthermore, on the government’s part, easy security would mean that startups can do business in more states freely when everywhere is safe, and then fintech can cover more states. Another is infrastructure, the sector spends a lot of money on power, transport and the like.
Also, on Cross-border collaboration with respect to the new African Free Trade Zone. Free trade legislation and agreement are good development in African countries, but there is a question of implementation. The system that is being worked on is called PAPSS Pan-African Payments Settlement Scheme. It will be easy to transact within African countries.
Political will and willingness to cooperate among the African countries to a common standard are the challenges that are needed to address.
Regarding regulation, he added that it is good as CBN tries to regulate the financial industries. However, he believes that the CBN shouldn’t be doing much business but should support the industry players’ products, and there should be more collaboration. If he was the CBN governor, his approach to things should be “more experimentation, less business, less banning, more studies, more empowerment, more embracing of ideas.”
What to know about Babatunde Akin-Moses, Sycamore CEO
As an economics graduate, he started his career in consulting at Shell as a Contracts NYSC staff, and later he went to KPMG and PwC, before he later went for his MBA at Lagos business school.
Aside from being a writer, he is a Nigerian that is very passionate about Nigerian and Africa. He also likes to promote those ideas and encourage young people to do their best.