The availability of domestic credit is a key requirement for consistent economic growth in developing countries. To solve the challenge of domestic credit to the underserved markets, Canadian fintech startup and credit assessment company, Periculum, has launched in Nigeria.
The company plans to focus on improving financial inclusion in emerging markets through automated credit assessment tools that close the consumer credit gap and help financial institutions provide credit facilities to the financially excluded while making smarter decisions.
“Africa needs domestic credit to stimulate real economic growth. And this is not the only bank-to-business credit; it can also be digital lending for short-term credit as well as ‘buy now, pay later’ schemes,” Michael Temitope Collins, Periculum’s founder and Chief Executive Officer, said.
The vitality of financial services such as banking, savings, debt and equity financing, investment management, and point-of-sale lending is largely dependent on the maturity of its domestic credit industry.
Nigeria’s domestic credit market pales in comparison to similar countries of the same size. For context, credit to the private sector in Nigeria is about 12 percent of gross domestic product (GDP), lower than South Africa’s 129 percent and Malaysia’s 134 percent.
High ratios of credit to the private sector in these countries have helped to ramp up real sector growth, create innovative innovation possibilities for technology-enabled businesses, accelerate financial development, ensure the efficient functioning of the economy and guarantee the prosperity of the private sector.
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Founded in 2019, Periculum helps its banking and lending customers identify fraud risk, assess creditworthiness and analyze existing data. Periculum offers real-time decision-making, analysis, and credit underwriting solutions to financial institutions including banks, non-banking financial companies, and fintech companies.
By providing information on the financial worthiness of customers and automating the loan decision process, Periculum’s customers can gather and analyze borrower information and assign a credit score faster, with real outcomes on financial inclusion in Nigeria and other markets.
“The absence of tech-enabled credit assessment infrastructure has limited the quality and quantity of lending and may be behind the risk premiums borrowers have to pay, and the harassment practiced by predatory lenders in countries like Nigeria. With our analytics and credit assessment services targeted explicitly to underserved markets,” Collins said.
According to the company, the Central Bank of Nigeria (CBN) and other development partners including the Bank of Industry (BoI), the Bank of Agriculture (BoA), among others have embarked on significant credit injections to support the critical sectors of the economy, but the littleness of credit assessment infrastructure ensures many potential borrowers are denied access to loans, and when they do, they can be charged as much as triple the base interest rate.
This financial exclusion has significant outcomes for the real sector as lack of access to credit can be a disincentive to entrepreneurship, investment, and economic growth.
“We help our customers to reduce their lengthy loan application processing times and loan default rates and offer loans to the underbanked and unbanked consumers as well as micro, small and medium-scale enterprises. With reliable, tech-enabled, credit assessment services, financial institutions can increase lending to those that need credit,” Collins said.
The company also announced the appointment of a Managing Director, Damilola Aluede, to accelerate its business in Nigeria.
Periculum offers data aggregation application programming interfaces (APIs) and platform solutions that collates data from partners including open banking APIs and the credit bureaus, to provide complete financial and data profiles of prospective borrowers and third-party entities. Some of its clients include Fundii, Lendaba, Sycamore, Golden Ox partners, Vola Africa and Venero.
The startup was accepted into Techstars in 2021 and is among the 2021 Techstars Montréal AI cohort, as well as the Founder Institutes’ Select Portfolio. In October 2021, Periculum raised a $620,000 pre-seed funding round to help it expand its team, improve product development and scale its operations in Nigeria and other markets. The company currently delivers services to customers in Canada and Nigeria and plans to expand to Ghana, Kenya, and Egypt before the end of 2022.
