For years, Africa’s credit infrastructure has lagged behind the rest of the world due to low credit coverage from its bureaus. Per a World Bank report, only 11% of Africa’s population have their credit information recorded by private credit bureaus. And for those who are banked, only 17% have accessed loans.
Thus, there’s a real need to record credit transactions. And as financial services in Africa continue to get digitized, accessing credit in real time becomes increasingly important.
Africa’s credit bureau systems are due a revamp to tackle these issues, but since it’s a hard ask, infrastructural platforms that provide credit underwriting processes are positioning themselves as options in the market. Indicina, one such platform based in Lagos, Nigeria, is announcing its seed round of $3 million.
Berlin-headquartered and pan-European venture capital firm Target Global led the round, adding to its long list of investments in Nigerian startups, including Kuda, Kippa and Edukoya. The firm’s partner Ricardo Schäefer will join Indicina’s board. Greycroft also participated in this round, and so did RV Ventures.
As established, access to credit is an integral part of financial services’ adoption in any region. But while big corporates and high net worth individuals have no issues accessing loans from banks in Nigeria, retail and SME segments are somewhat neglected at scale.
This concern was too significant for Yvonne Johnson to ignore while working as an executive with First Bank, one of Nigeria’s largest banks by assets. And as digital banking — which includes the provision of loans — began to take off in the country, she told TechCrunch that she saw an opportunity to start Indicina in 2019 to provide credit rails and financial analytics tools for these businesses.
So lenders can use Indicina for credit scoring and bank sentiment analysis, getting access to ML-driven financial analytics and improved insights into consumers they currently don’t have and derisk unsecured loans. Another interesting angle to Indicina’s solution is that lenders who process loan applications manually can use the platform to double or triple their volume without blowing up their loan books.
“We’ve never had any balance sheet. It’s never been about offering credit for us. We want to focus on the infrastructure layer and provide good infrastructure for people to feel more comfortable,” said CEO Johnson, who has investment banking experience from Merrill Lynch.
“We want lenders to be better informed about the decisions around credit so they can go to market faster with their digital product. So we’ve never had a business model that included our balance sheet, which we’ve always worked with the lenders.”
Indicina’s unique approach to solving Africa’s credit problem is why Target Global and Greycroft invested in the company….