Tolaram Group, the Singapore-based manufacturer of Indomie, Nigeria’s most popular noodle brand, is planning to tap opportunities in the lending space in Nigeria and the rest of Africa with the launch of Tala on the continent, according to a source very close to the matter.
Tala is a US-based fintech company that offers uncollaterised loans of between $10 (N3,600) and $500 (N181,500) for customers without traditional bank accounts or credit histories via an app.
Tala, which was founded in 2012 and launched for the first time in 2014 in Kenya, has reportedly loaned more than $1 billion via its mobile application to 4 million customers in most emerging countries including Kenya, Mexico, the Philippines, India, and Tanzania. It is currently the largest non-bank lender and plans to expand into five additional countries within the next two years.
Tolaram plans to invest in Tala to come into Nigeria, BusinessDay gathered. African countries like Ghana, South Africa, and Egypt are also in the plan.
With about 66 percent of the adult population in Africa unbanked, Africa fintech represents a huge opportunity to drive financial inclusion outside of traditional banking systems.
Tolaram’s entrance into the lending space in Nigeria, in particular, brings more competition to the digital lending market which already has deep-pocket players from China such as Opera, owners of the OPay super-app platform in Nigeria and Okash in Kenya, and Transsion, owners of PalmPay.
Tolaram will also be locking horns with more entrenched local companies such as Carbon, Lydia, Page Financials, Renmoney, among others.
While Tolaram can count on Tala which raised $110 million in Series D funding in 2019, it would have to do more in terms of driving local penetration.
But it appears the company is thinking in that direction already as the deal is said to be led by one of the Tolaram sons, Nitin Vaswani, who is a medical doctor but also part of a private equity firm, Social Investment & Alternative Finance.
“Nitin is an Indian but was born and bred in Nigeria even though he was schooled abroad,” a source who will not be named told BusinessDay. “He knows Lagos and Lagosians like the back of his hands. I think they would either invest in Tala directly or invest in Nigerian operations.”
A report by Bloomberg which also confirmed the Tolaram’s interest in digital lending noted that Kunal Adnani, who leads Tolaram’s mergers and acquisitions team, has been enlisted to help coordinate the push into lending. Adnani is also betting on the company’s wide network of distributors to drive its digital banking entry in Africa.
“What we’re looking to do is take the same technology, the same systems, and the same learning into African markets where we have a presence, albeit in a very different area,” Adnani said in an interview with Bloomberg. “We have access to thousands of distributors in these markets and they can also have a knock-on effect on our business. The more credit we can give them, the more they can increase volumes.”
Adnani further said Tolaram’s offering could take the shape of a traditional bank, complete with interest rates similar to regular credit cards and savings accounts.
The Singapore-headquartered company with an estimated value of $1.8 billion has food production and distribution operations across Africa and sells to more than 75 countries. It is behind several household brands in Nigeria like Indomie, Minimie, Power Oil, Power Pasta and Hypo Bleach. It also runs a bank in Indonesia, PT Bank Amar.
In 2019, Mohan Vaswani, chairman of Tolaram Group, said the company was not afraid to try new businesses.
“We are not afraid,” Vaswani said. “When we see opportunities, we are ready to take the risk.”
FRANK ELEANYA
