• Thursday, May 23, 2024
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SympliFi: How tech platform uses diaspora remittances to offer loans

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In more ways than one, downturns in the local and global economy have impacted individual and household incomes, and access to credit by individuals and businesses. Some relief, can however, be found in a number of creative and innovative products that are enabling and also easing access to both credit and remittances from Diaspora Nigerians, writes CHUKA UROKO.

Official records indicate that there are 1.24 million migrants from Nigeria in the Diaspora, according to a United Nations estimate noted in a 2019 PwC report. This figure was projected to increase with the recent trend in migration from the country, and while the 2020 COVID-19 outbreak may have slowed immigration, the desire to migrate remains.

Almost half of Nigerian adults indicated their willingness to leave the country in the next five years, according to a 2018 survey conducted by the Pew Research Centre. These Nigerians continuously seek greener pastures, and form the country’s Diaspora population, responsible for $16.8 billion inflow in 2020. This was, however, a 27.7 per cent decline from $23.24 billion in Diaspora remittances the previous year (2019), according to a world bank report.

Nigeria’s dwindling economy has created a plethora of financial bottlenecks for individuals, households, entrepreneurs and businesses in the country. This finds an explanation in the fact that, over the years, banks in Nigeria have incurred loads of bad debts resulting from unpaid loans by individuals and small and medium scale enterprises (SMEs). For that reason, the history of defaulters haunts new loan applicants.

Read Also: Nigerian Diaspora, remittances and contributions to national development

diaspora remittances

A Credit Conditions Survey Report released by the Central Bank of Nigeria shows that the size of approved loan applications has decreased as lenders try to manage their risk exposures due to increase in default rates.

“Secured loan performance, measured by default rates, worsened in Q4 2020, while lenders expect default rates in Q1 2021 to remain unchanged,” the report quotes CBN as saying.

The aim of setting up the system is to move Diaspora remittances for Africans from the prism of being a mere means to living to a tool for empowerment and prosperity on the continent.

In 2019, the federal government directed deposit money banks to give loans to customers in an attempt to address the prevailing issue of non-access to credit. Though banks have acceded to the directive, most loans are still considered and approved based on the credit and transaction history of applicants.

Read Also: On CBN’s incentives to increase Diaspora remittances

The implication of this is that those with little or no credit history are boxed out of the scheme of things. A perfect illustration is a university graduate, fresh from the one-year mandatory National Youth Service (NYSC), who may be in need of capital to grow a small trade. This fellow has no credit history.

So, like it is said in local parlance, this is “wahala for who no get money” for the ex-corps member. Even for those privileged to have relatives in the Diaspora, the prevailing global economic situation is also not helping.

In an apparent reflection of the severe impact of the COVID-19 pandemic on the incomes of Nigerians living abroad, Diaspora remittances into the country fell 27 percent, year-on-year, to $17.2 billion in 2020 from $23.55 billion in the previous year.

This adds to the fact that these immigrants endure financial strain from constantly sending money back home. This is a problem now made worse by prevailing economic realities.

Many Nigerians in the Diaspora send money to dependants back home, but accessing credit individually remains a challenge for many of the recipients. By using Diaspora remittances as a way of creating credit history and worthiness, SympliFi, a technology driven platform, is however changing the narrative in access to credit.

After 15 years of rewarding experience in the financial sector, including buying and building microfinance banks across Africa and China, Maurice Iwunze, a Diaspora Nigerian, co-founded SympliFi with Gregoire Lecomte in 2019.

SympliFi was built from the ground up with the latest in secure hosting and transactions. The promoters have partnered with Rapyd for its technology infrastructure, ensuring that all transactions are fully certified to meet credible standards as well as global fraud protection. Symplifi only works with licensed and regulated bank partners that are fully vetted in Nigeria.

The aim of setting up the system is to move Diaspora remittances for Africans from the prism of being a mere means to living to a tool for empowerment and prosperity on the continent.

“We believe empowerment is better than sending money. So we started SympliFi to help millions in the Diaspora to support their loved ones back home,” Iwunze explained.

“But the unique part is that they are able to do so without sending money. Instead of sending money, they empower their loved ones to access money on their own by building their credit history,” he added.

Money transfers help people to just get by and, according to Iwunze, they want to help people to prosper.

The argument is that if people in the Diaspora keep more of their money, so they can build financial wealth, then they can help their loved ones back home to do the same on their own in which case it becomes a win-win-situation.

As a fintech brand, SymliFi is one among many. However, its offering is the first of its kind globally. Those who use it have described it as “a world changer,” noting that the experience to set up and send funds is seamless and hassle free.

According to them, the platform is easy to use and fast too, adding that the speed and ease of the sympliFi platform makes it the best way to support credit transaction from the Diaspora to individuals back home in Nigeria and elsewhere in Africa.

The operations are simple and, according to the founders, “your guarantor is only required to cover 50 percent of the loan amount; he or she must legally reside in the UK and you are allowed to have multiple guarantors to split the guarantee amount.

Powered by a mobile app, a SympliFi wallet is a combination of comfort, ease, and dynamism, which makes it a perfect fit for the current digital world of speed and immediacy. Iwunze explained how the fully digitized process works, saying that instead of asking for money, a person in Nigeria can request for a low-interest loan on the SympliFi website from one of its banking partners in Nigeria.

This loan is secured by refundable cash collateral, which the person in the Diaspora provides simply by topping up and holding the funds in the SympliFi digital wallet. No money is sent, and the loan is disbursed by the bank within 24 hour, according to the founders.

“The cash collateral is usually equivalent to the money the person in the Diaspora would normally send. The collateral is securely held in the SympliFi wallet of the Diaspora for the duration of the loan. When the loan is repaid, the Diaspora earns cash back, like interest, and is free to move the money back to this bank account,” Iwunze assured.

“We don’t charge any fees and there are no foreign exchange costs. In the event of default, any amount owed to the bank is deducted from the collateral,” he explained further, adding that one collateral can be used over and over to give the person in Nigeria continuous access to credit.

Besides access to funds, especially for entrepreneurs, SympliFi also helps increase financial inclusion, financial independence, and credit-worthiness on the local front. This helps to empower people in Nigeria to stand on their own so they don’t have to always ask for money.

SympliFi provides responsible access to credit and a foot in the door to credit. This explains why beneficiaries can access more financial opportunities on their own.

Established as a United Kingdom-based company, SympliFi currently operates in Nigeria on the borrower side and the UK on the guarantor side. It has been running on a pilot for the past year and now launched as a mobile App in the UK in July 2021.

Presently, it has two lending partners in Nigeria. These are Grooming Microfinance Bank and Alert Microfinance Bank. Access to credit of up to N200,000 given within 24 hours could be done with either of these two partners.

The company intends to add more lending partners in Nigeria in the coming months and to expand its Diaspora countries to include the EU and eventually the US. It is also preparing to launch in Senegal in partnership with the United Nations Capital Development Fund (UNCDF).