• Wednesday, November 29, 2023
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Fintechs offer juicy rates in race for BBN winner’s N120m

Fintechs, financial inclusion and regulatory challenges

Conversations on what an ideal savings rate or return on investment should be were brought to the fore on social media after Ilebaye Odimiya emerged as the winner of the Big Brother Naija All Stars edition with a N120 million prize money.

Some fintech companies including Fairmoney and Piggyvest have taken to X (formerly Twitter) to offer her bumper interest rates in a bid to have her save half of her prize money with them.

The savings and investment platforms offered her interest rates ranging from 12 to 24 percent.

It was Piggyvest who first started the pitch with the message “Ilebaye call me.” The platform followed up with a post showing its high-yield savings account called ‘PiggyFlex’, offering a 12.517 percent interest for a 366 days maturity period. This amounts to N7.51 million on N60 million.

Before long, other platforms like FairMoney MFB joined the conversation, offering a higher interest rate.

FairMoney, a digital microfinance bank, said: “Ilebaye, don’t pick up the wrong call! Just saying.”

The bank offered 23 percent interest on N60 million for a 365-day duration; at maturity, this will be N72.420 million after a 10 percent withholding tax withdrawal.

BusinessDay findings show that FairMoney loan amounts range between N1,500 to N3 million with repayment periods from 61 days to 18 months at monthly interest rates that range from 2.5 percent to 30 percent.

Another fintech platform Credpal said: “We trust you to choose wisely”.

CreditPal showed that after investing the N60 million with them for 360 days, Ilebaye will get N72.960 million. That’s a 24 percent interest rate.

Read also: Ilebaye wins BBNaija All-Star season’s ₦120m star prize

Adesina Olumide, an analyst at Quantum Economics, said the Federal Government of Nigeria bond market yields based on different tenors are between 13 and 15 percent. “Any guaranteed return in Nigeria higher than that deserves a regulatory microscope,” he said on X.

Some Nigerians felt Piggivest’s interest rate was too small and unattractive. “Your interest is too low for 1 year,” an X user with the handle @DcClint1 wrote.

Others mentioned how they would earn more on various betting platforms. This sparked a conversation within the tech and investment ecosystem on what is a fair interest rate.

“No institution can guarantee you interest rates higher than your country’s prevailing bond rates,” Ezra Olubi, co-founder of PayStack, said.

Olubi said anyone offering rates above Nigeria’s bond rate to a mass market audience has the responsibility to educate investors on the attendant risks involved.

He said the reaction to Piggyvest’s tweet “showcasing their safe lock interest rates at ~12 percent underscored how deeply Ponzi schemes, wonder banks, and pervasive financial illiteracy have scarred the Nigerian financial mindset”.

Ponzi schemes are ‘investment’ schemes that promise unrealistic returns, which ordinarily should be treated with caution.