These founders want to reduce bad debts in Africa

LR Lionel Orishane, Kingsley Ibe Source: CreditChek

Kingsley Ibe and Lionel Orishane are brothers-in-law trying to develop a credit scoring system for “underserved” Africans. They both have extensive experience in the African tech ecosystem and want to leverage this experience to reduce the occurrence of bad debts for lending companies.

How did the idea for CreditChek come about?

Kingley: I started my tech career as the first employee of Jumia Group and left in 2016. In 2017, I founded a company called Price Slash, an e-commerce company. However, we closed the business due to a lack of investment. Investors referred to the situation of Jumia and Konga as a reason not to invest. In 2018, Abdelhamid Hassan and started OyaPay which we ran for over a year before most of the team moved to Paystack. It was around this time that I started testing the idea of ​​providing micro-loans to small businesses.

The idea was stimulated by the demand for these loans by merchants on OyaPay, and this demand led me to create MicroMoni, a loan company. In 2019, we granted loans to more than 300 companies; and at the end of 2019, we were acquired and merged with AjoCard, [a fintech company for the unbanked]. It made sense at the time, as it was a mobile money company looking to grow. They were already backed by venture capital and had a microfinance banking license. They had everything we needed. I worked with AjoCard for almost two years, and it was during my time there that the idea for CreditChek was born.

Lionel: Compared to Kingsley, this is my first venture into the startup space. I’ve been in the big tech environment for the past 15 years. I am a system engineer who studied computer science before turning to system administration. Since 2011, I have been a cybersecurity consultant and have had the privilege of working in many countries in sub-Saharan Africa. With my background in basic engineering and my understanding of project management and software development, it was easy to partner with Kingsley to create CreditChek.

How did you two meet?

Kingley: Lionel and I are in-laws. We are both married to sisters from the same family.

Lionel: Perhaps we are the first case of co-founding brothers-in-law in the industry. I don’t think I’ve heard of any other brothers-in-law having a startup together.

Kingley: That’s what led us to launch this idea. We were at my house to celebrate my wife’s birthday. Lionel was there, and I was telling him about my experience with MicroMoni. With MicroMoni, 40-60% of our loans came back as bad debts. We also had the same problems during my stay with AjoCard. Lionel also recounted his problems trying to access a mortgage. Based on this, we realized there was a huge gap, and we thought we could solve this problem with CreditChek.

It says on your website that your business serves the underserved. How do you do this?

Kingley: I wouldn’t say we serve the underserved, even if the after-effect of our solution is to help the underserved. We are a business-focused platform. Our goal is simply to provide data access to loan companies. Based on this data, they can make more informed decisions when providing loans to underserved Africans.

How do you collect this data?

Kingley: We collect data from several sources such as credit bureaus and banks. We also explore other data sources such as telecommunications companies and mobile money operators.

How to integrate all this data to provide a reliable source of information to lending companies?

Kingley: We decided to start from scratch by looking for the simplest source of historical data, and found that the credit bureaus had this kind of data. Loan companies have often struggled to access this data. We are connected to the credit bureaus and have harmonized this data so that lending companies can easily access this data and break down any barriers that currently limit them. We have made this access very simple and easy for these companies. They can access this data without having to log in to the credit bureaus.

For bank data, most microfinance banks access the data either by requesting a PDF statement and then manually accessing that statement, or by logging into Mono [a banking platform for businesses] and access transaction data. With the latter option, they only have access to data, so they still have to assess the creditworthiness of customers.

What we’ve done isn’t reinvent what Mono did, but create a top layer by changing the way lending companies use this data. We automate this process and make it as simple as possible. With a single click, they can easily see a person’s average income, expenses, and debt-to-income ratio.

What problems have you encountered with CreditChek?

Kingley: The first problem we faced was having to change the business model. We first started as a consumer service, and quickly realized that was not a sustainable business model. We didn’t have the capital to scale, and we didn’t think all of our money should be spent on advertising and customer acquisition. It took us about 3 months to go from a B2C model to a B2B model.

Another problem we faced was that initially the credit bureaus didn’t want to partner with us. They felt like we were in competition with them and we had to assure them that we were helping them. It was not easy to build a lasting relationship with all our partners.

Since your launch, how have you measured your impact?

Kingley: To date, we have processed nearly 5,000 API calls and onboarded over 30 companies to the platform. These companies continued to perform assessments for thousands of customers. For us, that’s where the impact is. We build trust between lenders and clients. We help companies understand the financial situation of customers and whether it is advisable to offer them loans. We also recommend an eligible amount for lenders to lend to customers.

For clients, we also help by informing companies of the terms of their previous loans. We will notify the company of customer default on previous loans if the loan terms are so unfavorable that repayment was virtually impossible.

On your website, it says that all the data you use is authorized by the user. How do I get user permission?

Kingley: First of all, we are compliant with the Nigerian Data Protection Regulations (NDPR), which means that all data we collect must be authorized by the user. We collect their permission by asking each lender who wishes to use our platform to send a consent form through us. Typically, most platforms give you a memorandum of understanding or non-disclosure agreement to sign. We ensure that the consent form is provided to the client, and after completing it, he must indicate that he wishes to authorize the lender on our platform to access his credit history.

When completed, a dashboard that is shown to companies reveals the results. Without the consent form, lenders cannot access our platform.

How much have you collected so far?

Kingley: We raised a $240,000 pre-seed round.

How did you choose your investors?

Kingley: We have tried to be very strategic in choosing investors who will add value to our business. We look at investors’ current portfolio and whether they have invested in similar businesses to which we can add value. We raised investments from Atom Capital. They led our pre-seed cycle and they invested in us through referrals. Chipper Cash CEO Ham Serunjogi has also invested in us and for us this is very strategic. Chipper Cash operates globally, and we believe we can connect to this growth when we want to scale our services. We have also raised funds from ID Ventures which is led by Gbolade Emmanuel, the CEO of Termii. Adamantium Funds, owned by Olumide Ogunsanwo, has also invested in us and it has been so influential in bringing us the companies that we have integrated onto our platform and our growth strategy. Isaac Ewaleifoh has also invested in us to gain value for his help in introducing investors. Assembly Investors also invested in us.

What is your plan for using your pre-seed funding?

Kingley: Our goal is to build more robust technology and expand our team and marketing efforts. We also want to pursue more profitable partnerships.

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Ruth R. Culp