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Nigerian startup KiaKia is helping to make direct and peer-to-peer consumer and SME loans accessible and obtainable for underbanked and unbanked Nigerians without credit histories through its online proprietary credit scoring and risk assessment algorithm.

Launched to the public in November of last year, KiaKia aggregates digital data and utilises machine learning, digital image forensics and psychometry to perform credit scoring and risk assessment services, to qualify and grant consumer and SME borrowers loans.

The process is conducted entirely online, with application, processing and disbursement taking under three hours to complete for first time users. For repeat or returning users, it takes less than 15 minutes.

With no marketing spend, KiaKia now has almost 5,000 registered borrowers on its platform, and has seen hundreds of loans disbursed and repaid.

“The level of interest in our peer-to-peer loans has been incredibly impressive, with new individual lenders signing up each day,” Olajide Abiola, KiaKia co-founder and chief executive officer (CEO), told Disrupt Africa.

“A number of the DMBs and SME associations have approached us for partnerships, which we are reviewing and having ongoing discussions about.”

Abiola and his team first began talking about a service like KiaKia back in 2014, but the idea was not developed due to the immaturity of certain digital infrastructure in Nigeria. It was revived the next year, with a private beta version of KiaKia eventually launched in July 2016. It became publicly available in November.

The whole basis of the service is the lack of access to loans faced by many Nigerians. This is due to a lack of credit information, with more than 60 million Nigerian adults unbanked.

“The addressable market in Nigeria alone is huge and inherent, with billions of dollars worth of opportunities,” Abiola said.

“We realised that if we could enable remote access to financial credit through technology, a good number of the population could be better served.”

Though there are a few other players in the online lending space in Nigeria, he said he sees them as competitors to the banks rather than KiaKia.

“This is because having a website doesn’t make a business an online business. So, what we have as competitors are players using gamification to define and control loan seekers’ behaviour in order to grant limited loans,” said Abiola.

“We also have those who collect partial or preliminary data of loan applicants online but complete the processing offline. This is why we are the only online lender with no geographic restrictions.”

Currently operating in Nigeria only, KiaKia has plans to expand into other Anglophone markets in West Africa, with Ghana being the first port of call.

“But before then, we have in Nigeria a huge market that’s bigger than all the West African markets combined, and we are just at the surface level,” he said.

“As much as we want to expand, building an efficient legacy system is more important to us. Something that is sustainable and not something that burns out rapidly. Something that eventually becomes the gold standard in our industry.”

KiaKia was initially self-funded, but subsequently raised angel and seed rounds in order to develop its product and grow its loan portfolio.

“The aim of going for small seed funding was to test our own capabilities and discipline in determining how viable we could drive good performance and growth organically with a lean team and resources,” Abiola said.

“Also, remember that we are a loan peering platform, so there is always loan capital to serve SMEs. Our next round of funding is to grow and expand rapidly on a number of key fronts.”

The startup makes money from interest rates charged on direct loans and commission charged on peer-to-peer loans, while also generating revenue from subscription to its Visa cards, which are issued to qualified underbanked and unbanked borrowers. Abiola said revenue is on the increase, and KiaKia is moving towards break-even.

Getting such a platform off the ground has its challenges. Abiola said the major difficulties have been with the poor reading culture of Nigerians and the high level of widespread cynicism over such a service.

“People do not have the patience to read through details of simple information related to the financial transactions they are going into. But we were able to navigate through this by simplifying transaction related information,” he said.

“Secondly, a good percentage of the population are cynical. They don’t believe they can access online loans. They don’t think it is real and wouldn’t come near it. This was caused by years of what we like to term “financial injustice” by both the traditional financial institutions and government over the years. People reason that, if their bank cannot give them as little as a US$50 overdraft or payday loan, how and why should a virtual outfit even consider them for a loan. Most don’t believe it is real until they are credited.”

KiaKia also faces legislative and regulatory difficulties, though Abiola is confident the startup has overcome these difficulties and ready for serious growth.

“Our governments aren’t proactive in reviewing, repealing and upgrading obsolete and outdated laws that somewhat impede or clog innovation,” he said. “For instance, we expect the Central Bank of Nigeria (CBN) to have proactively taken steps as the Ghanaian Central Bank has in catering to non-deposit and banking financial institutions,” he said.

“Lending activity is still within the purview of respective state governments in Nigeria. There should be harmonisation and coordination of policy, regulation and legislative enactments across all levels of governments. In all, if one has the requisite knowledge of the various legal, legislative and regulatory frameworks, things are much more easier, as is the case with us.”

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