Fintech is heating up in Africa as startups vie to compete with traditional financial institutions. Quartz reports how One Finance’s recent “BB” credit rating is a milestone for this sector in Africa.
“We want to look at pockets of funding in Nigeria and it’s easier if you have a credit rating,” Chijioke Dozie, chief executive of One Finance, tells Quartz.
Global Credit Rating, a leading African credit ratings agency, assigned the score, following a “rigorous” and “testing” process, according to Quartz.
It was the latest sign of Nigerian payment startups gaining traction and winning respect as well as funding from financial giants such as Mastercard, Stripe and Visa.
This credit rating ensures that One Finance will be “held to the same levels of transparency and scrutiny as other leading financial institutions in Nigeria,” explains Dozie. It also potentially expands their current access to local capital to institutional investors, including pension funds.
This comes at a welcome time given the growth of One Finance’s lending app Paylater, which is already approving over 1,500 loans a day just two years after its founding. The average loan is $80.
“CBN improving regulation doesn’t mean you can’t innovate. Yes, it might stifle innovation but we also have to watch out for the protection of the customers.”
The credit rating approval is also a stronghold for One Finance as Nigeria’s central bank (CBN) explores pricey regulatory practices that would raise the costs of licenses for fintech companies.
While many in this sector gripe about the CBN’s policies, Dozie sees this move as a sign of the industry’s maturity. “CBN improving regulation doesn’t mean you can’t innovate,” he told Quartz. “Yes, it might stifle innovation but we also have to watch out for the protection of the customers.”