Financial Services Sector in Nigeria: Nkiru Amadi-Emina Presents SME-Focused Financial Platform Pivo Africa

Interview with Nkiru Amadi-Emina, Founder and CEO of Pivo Africa

What does Pivo Africa do in the financial services sector in Nigeria?

We are a financial platform that offers digital banking services for small to medium sized businesses (SMEs) in the supply chain sector. Our credit and loans product is centered around supply chain finance. In terms of the trends that we are seeing, there is a push to get commercial banks, or micro finance banks, to solve the credit gap for SMEs using a supply chain finance model. That model ties the issuing of loans against an SME’s receivables outstanding, or against an SME’s receivables upcoming. Relying on the supply chain to implement that model is becoming easier because more technology is now being used in the supply chain space. Whether it is technology to place and manage orders, provide visibility, or technology that allows e-invoicing or managing accounts and payments, it makes it easier for SMEs to integrate with larger corporations via supply chain finance programs.

What is your approach?

Traditional banks focus their supply chain finance on larger businesses and corporations, whereas Pivo’s approach is centered on SMEs. Bigger banks won’t deal with SMEs because to them, SMEs do not have a credit profile, or a transaction history that allows banks to either credit profile or risk assess their loan portfolio. Pivo can zoom out to attach credit profiling and risk assessing to the larger corporates that SMEs are working with, so decisions we make on an SME that we are financing are tied to the larger corporate with which they are doing business.

How do you stand out from other banks?

Our main mission is to see how we can make financial services accessible and affordable for SMEs in this sector. Our long-term vision is to build a digital trade bank for SMEs in emerging markets, starting with Africa.

There are several ways in which we differentiate ourselves. First, with the loan product itself, we have the ability to make quick decisions on every loan application that we get. Secondly, we are able to negotiate competitive interest rates with finance partners and then pass on that rate to the SMEs. Thirdly, we tie a loan to an SME’s transaction with a large corporate, rather than to an individual SME. The good thing about that is we are allowed to insure 98% recovery of every loan we approve. Another competitive advantage that we have is our value-added, multi-product strategy. When an SME comes to Pivo for financing, we can keep the entirety of its banking relationship within Pivo. We can offer SMEs tools that enable them to run their accounting and we can also offer them insurance on their transactions.

What is your typical client’s turnover?

We define SMEs in two ways. First, customer groups and second is the customer profile. SMEs we work with fall into different customer groups. There are logistics service providers such as transporters, truckers and boarding agents. There are cargo importers and exporters, and distributors and retailers. We profile our customers in three tiers. A Tier 1 customer typically has a deposit value of about $10,000. A Tier 2 customer is usually able to generate revenue of between $1,000 and $10,000 per transaction and usually their deposit value is between $10,000 and $50,000. A Tier 3 customer does transactions that are over $10,000 and their deposit value is generally higher than $50,000.

Does Pivo Africa have an international focus?

Right now, we are only working in Nigeria, but the goal is to expand to five other African countries next year. We are going to expand to Ghana, Kenya, Zambia and Rwanda and the last country we are still trying to figure out is between Cote d’Ivoire and Togo.

What is Pivo’s best success story to date?

There are two success stories that are definitely highlights. The first is how fast we were able to secure a $1,000,000 credit line that provides us with the necessary capital that we need to lend to our SMEs. The second is the number of SMEs we have been able to onboard in a short period of time. In one month of coming out of stealth mode, we have onboarded 300 SMEs and we also work with larger corporates and the network of SMEs within them. Typically, larger corporates have from a hundred to a thousand SMEs that they work with, and we have been able to onboard five of such larger corporates and their SME networks. We have also processed about $400,000 in loan applications out of which we have been able to disburse $200,000. And the number just keeps growing as we are growing. The goal is that by December, we want to receive at least $1,000,000 in loan applications and disburse about 70% of that amount.

What is your message to potential investors?

Every developed nation is built off credit, but for emerging markets, affordable credit is very difficult to access. The credit gap globally averages $1.5 trillion and in Africa it is around $220 billion. Pivo is working on ways to close the credit gap that exists in Africa for African SMEs using our supply chain finance model.

What opportunities is Pivo looking for with other companies?

We are looking for financing partners that we can open debt financing and credit lines with to support our lending products. We are also looking for large corporates to partner with across Africa that work with SME vendor networks. We find that a lot of corporates are looking to stretch out payment terms for as long as they can to support their working capital needs. In the same vein, SMEs want working capital so they can do business with larger corporates. Pivo wants to be the go-between to plug that gap.

What are your immediate projects?

We are working on scaling up our capital products so that by the end of the first quarter in 2022 we will have processed $3,000,000 in loan applications. We want to increase that amount every quarter and by the third quarter of 2022, we want to start to cross-sell other products in our product portfolio. Products such as Pivo Finance, which is a core banking and payments product, as well as Pivo Plus, which is a core insurance and value-added services product.

What does Pivo hope to achieve within the next three years?

Our main mission is to see how we can make financial services accessible and affordable for SMEs in this sector. Our long-term vision is to build a digital trade bank for SMEs in emerging markets, starting with Africa. Our strategic plan is to build a trade web and trade-eco system on the back of our financial services. What that means is if there is a Pivo SME in Nigeria and a customer in Ghana, we want them to be able to do business easily while also making sure the financing involved in the transaction is available through Pivo.

What drives you and what is your inspiration?

Advancement of my country, advancement of developing nations and focusing on achieving that one step at a time is what drives me. Making sure that we have the economic and financial bandwidth to be successful, and creating a way that enables, supports and grows SMEs that drive the economies in developing markets is my focus.

ABOUT PIVO AFRICA: Pivo is building a financial hub that allows SMEs across Africa access all the financial services they need in one place. Businesses use Pivo to setup a corporate account, apply for business loans, transact in over 42 different currencies, and manage their finances all in one simple application.

For more information, please visit: https://pivo.africa.

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