Around 57 percent of the population of Africa, 95 million people, do not have a traditional bank account, making access to credit difficult across the continent. Nigerian startup, PayHippo is solving this problem with it's instant financing model.
Nigeria has over 40 million Small and medium-sized enterprises, most of which are creditworthy, however, it is difficult to find out who exactly is creditworthy, due to the lack of accurate data and credit information on small businesses. For this reason, traditional banks and lenders often don’t lend to small businesses and collateral requirements are too high. Of those businesses that get through the process, it can take banks up to 3 months to respond.
Technology businesses in Africa, such as PayHippo are solving this problem by using tech to build a large pool of creditworthy businesses through assessment, scoring and the provision of finance. With Payhippo’s instant financing, small businesses have the liquidity to buy inventory and retain customers in their stores.
PayHippo provides loans to small businesses in Africa in under 3 hours. With an average monthly loan size of US$1600 and US$96 revenue from each loan, they have a total market opportunity of US$46B. As of June 2021, the company made US$42k in revenue from US$700k disbursed in Nigeria, growing 25 percent month-on-month . They also have a 97 percent repayment rate.
The company also recently got accepted into startup accelerator Y Combinator, closed a US$1m pre-seed, and then a US$3m in seed funding all in 2021.
Impact at the heart of innovation
Payhippo was co-founded by Chioma Okotcha, who also doubles as the company’s chief operating officer. She has a background in microfinance policy and public sector consultancy with the Agence Française de Développement, Organisation for Economic Co-operation and Development, and Tony Blair Institute. She was a part of the team that launched a non-profit start-up, Teach For Nigeria, in Lagos.
Okotcha comes from a line of successful business owners, as her mother and grandmother are also business owners who inspired her to build the successful business she leads today. One thing she noticed particularly with her mother was the challenges with accessing credit for expansion. When she did get credit, the collateral requirements were heavily asset driven. She believes that her mother’s business would have been able to scale much faster if access to capital was easier. She quickly realized that this was not a problem that was unique to her family and began to work towards solving the problem.
Thanks to Okotcha’s background in policy, impact remained at the heart of everything that she did. She saw innovation through the same lens, hence the decision to create a business that would impact small businesses and in turn impact families in Nigeria. Payhippo has created a technology that can be used by other financial institutions to support SMEs across Africa. They are therefore defining credit for SMEs and educating businesses on the credit scoring model and why it's important.
Connect with Chioma Okotcha on LinkedIn and Twitter.