The Domino Effect of Credit
4 mins read
How much does it take to change a life?
Our quest for an answer to this question leads us to a market in Egbeda, Lagos, on a sunny Tuesday afternoon.
We trail after Yetunde, a Field Officer for Sytiamo Technology, on a pathway sprinkled with old periwinkle shells and semi-shaded by market stalls. Several traders call out to her on our short trek through the market. She exchanges friendly banter with some and hugs with others – every interaction underpinned by each trader’s genuine excitement to see her. It is a curious sight, even more so when Yetunde informs us that this is not her loan collection day. One might think her presence might inspire anxiety from the traders, but there was none; only a quiet camaraderie as many invite her to linger by their stalls.
“We try our best to build good relationships with them”, Yetunde says to us over her shoulder, as we make our way to the stall of our first interviewee. “As it is we have very few issues with non-repayment of the loans. Most of our people are excited to pay back because it helps them build trust with us which will enable them receive larger loans.”
Her words echo those of the CEO and co-founder of Sytiamo, Michael Ogbaa, whom we spoke to a couple of days prior.
When we arrive Gift Paul’s stall, which she later tells us she has been selling from for 16 years, she is chopping up vegetables for sale. She pauses her task to give Yetunde a hug and listens intently as Yetunde explains why we are here. She obliges us with a warm smile and tells us her Sytiamo story.
In her own little way, Gift Paul, a recipient of credit, has also become an extender of credit. She talks about trust and how it is the bedrock of this little operation. She adds that, without receiving credit herself, she wouldn’t be able to extend this service as she simply could not afford to receive delayed payments. It is here, in Gift’s little corner of Egbeda market, we see the true, microeconomic effects of access to credit. Because Gift has received credit, she can extend credit and her customers and her business are better for it.
Our next interviewee greets us with a boisterous laugh and friendly banter with Yetunde. His crisp and colourful outfit belies his profession and, as he speaks with us, one of his boys chops away at a cut of beef, preparing it for send-off to a customer.
He introduces himself as Chief Wasiu Arewa and the introduction itself is infused with dignity; he is a titled man and a seasoned businessman.
As we talk to Chief Wasiu, we get the sense that this relationship with Sytiamo may not have been possible if the iyaloja, the head of the market, had not been the one to make the introductions. His years in business have taught him to be wary of loan sharks and it was only the presence of a trusted go-between that gave him the confidence to trust in Sytiamo.
There is, perhaps, a lesson here, not just for lenders but for innovators hoping to break ground with products and services that deal with niche communities. Communities have leaders that they trust, admire and/or respect. To break in, you must also earn the trust and respect of these leaders. To succeed, you must build a cycle of trust.
Our final interviewee is Folake Owolabi, whom Yetunde fondly refers to as “Alhaja”. She welcomes us into her stall by inviting us to sit, giving up the bench she had previously been sitting on and moving to a low, wooden stool. Something about her stall – perhaps it is the array of home and kitchenware or the warmth of the trader herself – feels incredibly cozy.
Sytiamo is not the first microlending company Folake has been a customer of, but she says that they are the fairest – both in terms of pricing and loan periods.
It’s interesting to hear about the “right kind of funding” here, in this little corner of Egbeda market. In this singular moment, Foluke it is easy to understand that all business people, from the traders in marketplace to the startup founders can only succeed with funding that works for them. For Foluke, who cannot sell “equity” in her business, debt financing with rates that work for her, is a surefire means of growth and progress (a word she mentions many times as she speaks).
So how much does it take to change a life?
The simple answer is: however much is needed.
Gift, “Alhaja” Foluke and Chief Wasiu all do different kinds of business and require different kinds of funding. For these people, seeking support from traditional financial institutions will prove at worst futile and at best extremely difficult due to the stringent lending policies these institutions employ. This contributes to the over $300b lending gap in Africa and emerging markets today. At Advancly, our ultimate desire is to work towards closing this gap by connecting entrepreneurs with affordable financing. This is why we partner with organisations like Sytiamo, to change the lives of those who run the businesses that power our economy, with money.