Through the activities of Carbon Finance, a fintech company which marked its 10th anniversary last month, the Dozie brothers, Chijioke and Ngozi, have confirmed the dictum that says necessity is the mother of invention.
The dictum, that necessity is the mother of all inventions has continued to play out in the Nigerian financial industry where the inadequacy of the traditional banking system is creating room for a technology-driven mode of operation.
Banking industry watchers said that is why financial service delivery is gradually merging with emerging technologies to form the now popular ‘financial technology in Nigeria.
When we talk about banking today, we also talk about FinTech companies, which provide financial services to the public using the software. Unlike the traditional banking system, these companies are not hindered by factors like legacy operating systems.
It was this gap in the financial industry that the duo of Ngozi Dozie and his brother Chijioke Dozie decided to exploit with the establishment of Carbon Finance, just like other promoters of the now famous fintech services in Nigeria.
As Banking Runs in the Family
Co-founders Chijioke and Ngozi Dozie are tested finance professionals with Ivy League MBAs. They are children of one of Nigeria’s foremost bankers, Paschal Dozie, who established the defunct Diamond Bank which was later acquired by Access Bank Plc. Diamond Bank, until its acquisition was an undisputable digital-minded bank.
Although the company had been quietly pushing its services deeper into Nigeria’s financial market over the years, it was time to make a noise on September 16, 2022, when the management decided to roll out drums to mark its 10th anniversary with a promise to transform the banking experience, making the process more accessible and flexible for consumers.
The Beginning
The firm was originally set up as a lending company, with over a million users across the federation and operations in two African countries.
Having begun operations in 2012 as One Credit, a brick-and-mortar consumer lender focused on the Nigerian market, the company then pivoted in 2016 to become a digital lender via its Pay later App and was focused on providing access to consumer credit services.
With a refreshed intention to develop into a fully-functioning digital financial service platform that offers cost-effective bill payments, free fund transfers, and high-yield savings and investments options in addition to loans, the company 2019 rebranded itself as Carbon Finance and was granted a microfinance banking licence by the Central Bank of Nigeria.
According to Ngozi Dozie, the licence means that Carbon’s customers are afforded additional protection through depositors’ insurance via the NDIC. The Nigerian Deposit Insurance Corporation, a federal insurance agency, protects depositors and guarantees the settlement of insured funds when a financial institution can no longer repay its deposits. With that in place, Dozie says the typical Carbon wallet is now a full-fledged bank account, and customers can perform transactions on the platform as they would with any bank.
Focusing on Customers’ Needs
Speaking further, Chijioke Dozie, noted, “At Carbon, we are very proud of what we have built, thanks to our customers and the humans. When we look at the last 10 years and the future ahead, we want to focus more on our customer’s needs and ensure we are adapting to the market demands and changing the way Nigerians make payments.”
His brother, Ngozi Dozie, who is also co-founder further explained that the company’s newly launched buy now pay later product “Carbon Zero” gives customers the flexibility to shop what they want, when they want, without breaking the bank at a zero per cent interest rate.
Financials
Its last financial figure released was that of the fiscal year 2020, in which the company, which has about 659,000 customers, said it processed N96.54 billion (~$241.35 million), up 89% compared to the same period of the preceding year. For its lending arm, disbursement volume was N25.21 billion (~$63 million), up 9.1% from FY2019. Also, N13.02 billion (~$32.55 million) worth of investments were made on the platform, representing a 365% increase from the previous year.
As of 2019, this top Nigerian Fintech company had already generated a revenue of up to $10.4 million and has disbursed not less than $35 million in loans.
Providing Access to Nigerians
Speaking at a press briefing in commemoration of the 10th anniversary of Carbon, the founders disclosed that a major achievement for the team over the years is being able to provide access to credit and finance to many Nigerians.
They described Nigeria as one of the most fertile markets for Fintech companies in Africa and a rightly regulated destination for tech innovations to thrive, irrespective of the ratings by Nigerians themselves.
For them, Nigeria offers the right market in terms of regulation due to the forward-thinking abilities of the regulators. This provides a soft spot for market entry.
On his part, Chijioke Dozie believes the imperfections of the market also provide innovators with real-life market challenges they can leverage to build sustainable business models.
“Nigeria is one of the most rightly regulated tech spaces in Africa, and that’s why it continues to attract more funding investments for startups…”
Chijioke said that Carbon has been a beneficiary of some of the developmental policies of the Central Bank of Nigeria, like the Bank Verification Number (BVN), for instance, which allowed their team access to their customers’ information without necessarily conducting physical verification.
The co-founders said Carbon provides customer-centric services, including making loans accessible for everyone at the lowest cost possible, enabling seamless finance decisions, and helping other businesses scale.
Ngozi recalled that the company was the first digital lender to give customers credit reports. Then, customers could go on to verify their credit status from any of the credit bureaus.
“We were the first fintech in Nigeria, if not Africa, to get a credit rating from GCR, and that was because we realized that finance is not just about credibility but also about trust.”
Since its rebranding to become Carbon in 2019, the fintech company has evolved into a fully-functional service platform that offers cost-effective bill payments, free fund transfers and high-yield savings and investment options to users, in addition to its original loan option.
In addition, it started to offer Nigerians what many conventional financial institutions in the country are unable to guarantee: no charges when they use the platform to carry out financial transactions or shop with Carbon Zero.
Carbon later started to pay interest to customers monthly based on their savings balance. Another interesting offering is a 1% interest payment on the total spending of a customer at the end of the month who use the platform for their transactions.
Another major value proposition that has kept Carbon apart from its competitors is its “buy now, pay later model. This allows customers to spread payment over time based on their convenience when they shop for items using Carbon.
Credit Culture
The founders emphasised the need for Nigerians to eliminate the stigma associated with people taking loans. Ngozi explained that credit facilities are a normal phenomenon around the world, and people should be encouraged to take loans when they see the need, to kickstart a business or even sustain a need at any point in time.
On the emergence of loan sharks and a lasting solution for distinguishing them from genuine credit-giving facilities, Ngozi said that the Central Bank of Nigeria (CBN) and the Federal Competition and Consumers Protection Commission (FCCPC) are doing so much already to curb these loan sharks.
He, however, admits that more is still required in the areas of implementation and enforcement of these policies.
He noted that the problem was one of supply and demand. Individuals continually want loans from businesses that offer rates that are wild off the mark and then go on to fall prey to being harassed and molested by these supposed credit businesses.
In curbing high loan defaults, he noted that a model that has worked for them involves a collaboration with banks and other financial institutions like the Credit Bureau to have access to the credit information of individuals and issue credit on that basis.
This way, a serial defaulter can be identified before he or she gets more loans or if a defaulter attempts to leave the country.
Chijioke noted that Carbon has had to be careful with fund management, with $15 million as its major raise since 2015. He said that when they started in 2015, Nigeria was not a big destination for foreign investment inflow as it is now.
“We had to think about releasing products that the customers wanted. Given the funds raised, we knew people wanted loans and so we stuck with that with the least cost as much as possible and did not digress into other services immediately. We have also had some disciplined investors too.”
Analysts believe one of the lessons learnt while running Diamond Bank was the culture of transparency and adherence to corporate governance.
Other top fintech companies in Nigeria include Flutterwave, Paystack, Accelerex, PiggyVest, Paga, Interswitch and E-transact.
