Nigerian fintech startup Lidya is making moves to expand its lending business to Eastern Europe precisely Poland and the Czech Republic as it recognizes the challenges small and medium enterprises face in accessing funds in the European economies.
Lidya which was established in 2016 by Tunde Kehinde and Ercin Eksin was targeted at helping small and medium business enterprises open accounts, save money, build credit profiles, and access credit to grow their businesses and address private necessities.
The company aims to digitize and streamline the credit assessment process to make it easy for any SMEs across Africa to access the funding they need to grow their business.
Tunde Kehinde, co-founder of the firm said “During slowdowns, banks restrict themselves from taking risks while businesses still need to function and finance their operational expenses, Together with the long-term investors on our side, we are basically agnostic to business cycles,” said.
A recent report released by the Organisation for Economic Cooperation and Development (OECD) shows that Poland is among the countries with the highest loan rejection rates for small and medium enterprises.
Following its expansion strategies, Lidya plans on reaching 4 countries annually, including eastern European markets. It will initially make $10 million of new capital available for financing companies’ operating expenditure and said it can provide an additional $200 million in pursuit of the expansion.
Ercin Eksin, co-founder of Lidya said the company plans to disburse $1.1 billion within the next five years to small businesses unable to get bank loans and is targeting customers in the agriculture, pharmaceutical, and retail sectors.
Lidya also uses credit-scoring smart algorithms and technology which provides a unique credit score to predict a customer’s creditworthiness thereby enabling access to funding.
the company’s strategic movement to new markets will examine its online scoring system which captures data aimed at making fast decisions relating to granting short-term loans. Lending agreements for Polish and Czech customers may average $15,000, compared with $3,000 in Nigeria, where the firm has issued 10,000 loans.
Lidya has hired the former head of Polish factoring company Idea Money SA to run its operations in the country and doesn’t expect an economic slowdown caused by headwinds buffeting western European economies to impede its growth.
Earlier in 2018, the start-up secured a $6.9 million seed funding from Omidyar Network and Alitheia Capital, co-manager of Umunthu which was used to improve its services as also expand to other African countries.
Lidya, since inception in 2016 has granted more than 1,500 loans to help companies involved in agriculture, hospitality, logistics, real estate or health in Africa. The start-up also raised $1.25 million in seed funding in 2017 led by Accion Venture Lab.
Gbemi Faminu
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