BANKING

What Micro-Lending Is And How You Can Benefit From It

Published

1 year ago

What Micro-Lending Is And How You Can Benefit From It

Micro-lending has been a hot topic in the financial industry for years. But for all its popularity, many people still aren’t familiar with what it is and how it works. In this article, we’ll explain why micro-lending is so good for both individuals and the economy as a whole.

Even more importantly, we’ll tell you how to get involved in micro-lending yourself and reap plenty of rewards along the way.

What is Micro-Lending?

A Micro-Lending or micro-loan is a small loan that is made to an entrepreneur, business or non-profit organization by a lender.

Micro-lending is a form of micro-finance. In this case, “micro” refers to the size of the loan and “finance” refers to the type of financing that takes place. Microloans are small loans made to entrepreneurs, businesses, or non-profits by lenders. They’re typically used for start-ups and growth capital rather than working capital needs.

In contrast with traditional lenders who focus on large projects with high returns, microloan companies lend money at low interest rates because they expect their borrowers to repay their debts in full without risk or collateral; thus they’re able to offer credit services more efficiently than other types of lenders.

Micro-lending can be used by both domestic and international borrowers.

Micro-lending is available to both domestic and international borrowers. While you may have only heard of microfinance companies helping people in developing countries, these entities actually exist all over the world. Microfinance institutions (MFIs) can be found online or in your local community, regardless of where you live.

You don’t need to visit a microfinance institution’s headquarters or meet with an MFI representative in person if you’re interested in applying for a loan from them; many offer their services online now too. The application process takes just minutes, so it doesn’t matter if you’re applying at home or on the road—you’ll be able to get started right away!

It’s also worth noting that some MFIs offer loans on an installment basis rather than providing one lump sum payment up front; this means borrowers will make monthly payments instead of paying everything upfront at once. If you’re someone who likes having options when it comes time making payments towards your debts (or any type of credit), then this feature might appeal directly towards your needs as well!

The purpose of micro-lending is to extend credit to people who are underserved by traditional financial institutions.

Micro-lenders often work with people who have bad credit or no credit, but who have a good business plan. These lenders can be non-profit organizations or for-profit companies. They’re more flexible in their criteria for granting loans than banks are. In some cases, you don’t even need collateral!

Micro-loans can be used for all kinds of things: starting a business, buying equipment and supplies, paying off bills (particularly medical bills) so that you can get back on your feet after an illness or injury—whatever it takes to help someone get back on track financially.

Get started with Micro-lending

Micro-lending can help you get started on a new business venture even if you have not been in business before and/or have bad credit.

Getting started on a new business venture is not as easy as it used to be. With so many options available, it can be difficult to know which one is right for you. If you are thinking about starting up your own business, micro-lending may be able to help you get off on the right foot.

Micro-lending allows small businesses and entrepreneurs with limited credit and collateral to secure loans that they might not otherwise qualify for at traditional banks or lending institutions.

Micro-loans are generally much smaller in size than most other types of loans, but they can make all the difference when starting up a new business or improving an existing one.

In fact, many economists believe that micro-lending has helped spur economic growth by giving small businesses access to capital they otherwise would not have been able to obtain through traditional means.

Funds received from micro-lenders may be used for almost any purpose including buying inventory, supplies and equipment as well as for operating expenses.

Benefits of Micro-Lending

Micro-lending can be used for almost any purpose. A business that uses micro-lending to expand its inventory, supplies and equipment is able to maintain lower prices. The resulting lower prices make the products even more attractive to consumers who in turn buy more of them.

So you want a new car? Micro-lenders can provide access to capital for buying new cars, trucks or vans. Micro-lenders also provide financing for repairing vehicles damaged by accidents or other mishaps so that owners can drive their cars again safely and legally.

Micro-lending can help you get the funding you need for your business when traditional sources have said no

Micro-lending is an excellent way to get the funding you need for a business or other type of new venture. Traditional sources of capital may not be interested in lending to you, but a micro-lender might welcome the opportunity.

Roadblocks to getting a Micro-Lending

There are many reasons why your small business may have trouble getting funding from traditional lenders.

Perhaps your credit score is low, or maybe you don’t have enough collateral to secure a loan. Maybe the bank doesn’t think that your product will sell well enough to pay back the loan with interest.

Whatever the reason, it’s frustrating when banks reject your application for lack of assets or poor credit history—but micro-lending could be just what you need!

Starting up a Micro-Lending business in Nigeria

When you’re ready to get started, here are the first steps:

Company name reservation
CAAC 1.1 pre-registration form
Stamp duty certificate
Payment of filing and stamp duty fees
Uploading of requested documents, which includes: CAC1.1, MEMART, Form of Identification for directors and Secretary
Proficiency certificate
Evidence of CAC payment
Submission of the original documents to any official CAC office

The Central Bank of Nigeria (CBN) is the sole regulator of micro lending business in Nigeria. As a result, all microfinance institutions in the country are required to adhere to the CBN’s Micro Finance Policy which was last updated in 2017. The policy mandates that all MFIs must have at least N25 million as capital base and are required to register with their respective regulatory bodies before starting operations.

In addition, there are two other laws that govern micro lending business in Nigeria: Federal Capital Territory Financial Inclusion and Accessible Credit Act 2016 as well as National Policy on Microfinance Institutions (NPIMFI). These laws also set out minimum capital requirements for MFIs with branches within each state or federal territory respectively

MFB licence

A Microfinance Bank (MFB) licence is one of the most important documents a micro lending company needs to operate in Nigeria. Without it, you cannot start a business as a micro lender.

What is a Microfinance Bank Licence?

This document is granted by The Central Bank of Nigeria (CBN) under the CBN Act 2015, and it gives you permission to operate as a micro lender. As part of your application process, you will be asked to provide information about your banking history, including previous loans granted and defaulted on. If these numbers show that you are trustworthy and capable of paying back your clients with their loans plus interest rates on time every single month for years at least—you might just get approved!

Operating without MFB licence

You are operating a microfinance business without a licence. This is illegal, and you could be imprisoned or fined. You cannot apply for a microfinance business licence with MFB, the Microfinance Banks Association of Nigeria (MBA). Furthermore, you cannot be part of the MBA if your business has not been licensed by MFB; this means that if your company were to be caught operating without a license, it would also be expelled from being part of the association.

Managing micro lending business in Nigeria

The success of any business depends on the sound management of risks and a good governance structure. These are the main areas that you need to focus on when starting or running your micro lending business in Nigeria.

Have a sound business plan: A good business plan outlines all the essential elements of your business, including its objectives, strategies and resources required to achieve them. It also provides an estimate of costs associated with starting up and running your project as well as measuring its profitability (or loss) over time.

Have a management team: You need to have capable people who can lead your team members towards achieving their goals by providing guidance on how best they should proceed with their work every day so as not only grow but also remain competitive in this market which is highly dynamic due to changes in technology among other factors that affect businesses’ performances at different levels such as local/national markets.”

Conclusion

Micro-lending is a great way for those with limited financial means to access the resources they need. It has become a popular form of support in recent years, and is something that you may consider if you are looking for a small loan to tide yourself over until payday or help out with some unexpected expenses.

If this sounds like something that might benefit you, then do some research into finding out what micro-lenders are available near where live so they can get started today!

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BANKING

Afreximbank Acts as Joint Lead Manager on Ecobank Transnational Incorporated’s USD 400mn Senior Unsecured Note Issuance

Published

2 months ago

Christopher

The proceeds of the note will fund general corporate purposes of the issuer, including refinancing of a USD350 million senior bridge-to-bond loan facility that was jointly coordinated by Afreximbank in March 2024.

African Export-Import Bank (“Afreximbank”) (www.Afreximbank.com) is pleased to announce that it has successfully acted as Joint Lead Manager and Bookrunner on a USD 400 million 10.125% Rule 144a/RegS senior unsecured note issuance by Ecobank Transnational Incorporated (“ETI”) due in October 2029.

The note issuance achieved peak orderbook oversubscription of 2.1x, backed by more than 70 high-quality and diverse investors comprising development finance institutions, asset managers, commercial banks and insurance companies from Africa, the UK, USA, Europe and the Middle East.

Professor Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank, commenting on the transaction, said: “We are pleased to have supported Ecobank Transnational Incorporated (“ETI”) in placing the first public Eurobond issuance by any Sub-Saharan African financial institution since 2021, following our bridge financing support earlier in the year. This transaction underscores Afreximbank’s capacity and readiness to structure innovative market access solutions for our pan-African banking partners.”

Afreximbank’s Advisory and Capital Markets (ACMA) department acted as Joint Lead Manager and Bookrunner on the issuance, working alongside international and African partners.

Distributed by APO Group on behalf of Afreximbank.

BANKING

International Islamic Trade Finance Corporation (ITFC) and the Central Bank of Nigeria Successfully

Published

2 months ago

Christopher

International Islamic Trade Finance Corporation (ITFC) and the Central Bank of Nigeria Successfully

These workshops form part of ITFC’s Integrated Trade Solutions (ITS) framework, aligning with the organization’s goal of providing holistic trade financing interventions in OIC member countries.

The International Islamic Trade Finance Corporation (ITFC) (www.ITFC-idb.org), a member of the Islamic Development Bank (IsDB) Group, in partnership with the Central Bank of Nigeria (CBN), successfully concluded a workshop on Non-Interest Banking and Trade Finance in Nigeria. Held from 17th to 19th September 2024 in Abuja, the sessions aimed to enhance capacity and knowledge in Islamic banking principles, trade finance products and services, and how different financial toolkits are applied in Islamic finance from operational and business perspectives.

International Islamic Trade Finance Corporation (ITFC) and the Central Bank of Nigeria Successfully

Nigeria’s Islamic finance industry, valued at US$3.8 billion, is one of the major Shariah compliant industries in Africa. Despite some challenges such as low public awareness and a smaller capital base compared to conventional banks, Islamic finance has been substantially contributing to reduce financial exclusion and improve access to affordable finance in the country. The three-day workshop was designed to bridge prevailing knowledge gaps focusing on key areas such as Sukuk issuance and main non-interest banking products basics.

Delivered under ITFC’s Integrated Trade Solutions framework, the workshop equipped professionals with the skills to promote Islamic finance in Nigeria while also highlighting ITFC’s wide range of trade financing services.

Participants reported a significant boost in understanding Islamic banking and trade finance, and the workshop showcased ITFC’s contributions to economic development through sustainable financial solutions.

Eng. Nasser Al Thakair, ITFC, remarked: “ITFC is committed to supporting Nigeria’s efforts in Islamic finance, tailoring this workshop to address the unique challenges faced. We will continue to provide the expertise and financial backing needed to grow Islamic finance in Nigeria and beyond.”

Over 30 professionals from the Central Bank of Nigeria, non-interest banks, and other financial institutions attended, further advancing Islamic finance in the country.

As Nigeria positions itself as a leading market for Islamic finance in Africa, ITFC remains dedicated to advancing trade finance and supporting the growth of the sector for long-term economic impact.

Distributed by APO Group on behalf of International Islamic Trade Finance Corporation (ITFC).

About the International Islamic Trade and Finance Corporation (ITFC):

The International Islamic Trade Finance Corporation (ITFC) is a member of the Islamic Development Bank (IsDB) Group. It was established with the primary objective of advancing trade among OIC member countries, which would ultimately contribute to the overarching goal of improving the socioeconomic conditions of the people across the world. Commencing operations in January 2008, ITFC has provided over US$75 billion of financing to OIC member countries, making it the leading provider of trade solutions for these member countries’ needs. With a mission to become a catalyst for trade development for OIC member countries and beyond, the Corporation helps entities in member countries gain better access to trade finance and provides them with the necessary trade-related capacity-building tools, which would enable them to successfully compete in the global market.

FINTECH

Kazang Pay launches card acquiring service in Zambia

Published

2 months ago

Christopher

Kazang (www.Kazang.com), the prepaid value-added services (VAS) and card acquiring business within JSE-listed fintech Lesaka Technologies, has launched its Kazang Pay card acceptance solution for merchants in Zambia. Kazang Pay makes it affordable for merchants to accept card payments on the same Kazang terminal they use to sell prepaid products and services.

Kazang Pay launches card acquiring service in Zambia

The Kazang Pay enabled terminal in Zambia accepts VISA debit and credit cards as well as mobile wallet payments. Payments are settled to the merchant’s Kazang wallet on the same day. It’s as easy as letting the customer tap or insert their bank card and enter their PIN on the secure scramble PIN pad.

Kazang operates around 12,000 VAS terminals in Zambia. The goal is to enable the majority to accept card payments over the next six months. Benefits to merchants include low transaction fees and no monthly terminal rental fee for those that meet a modest monthly transaction threshold as well as the opportunity to grow their business through card acceptance.

Kazang is Zambia’s largest VAS point-of-sale terminal provider, enabling mobile money payments, bank and mobile money cash in and out, bill payments, airtime, Zesco, and many other prepaid services on one platform. The addition of card acceptance makes the platform even more comprehensive for merchants and consumers alike.

The launch of Kazang Pay in Zambia follows the introduction of the solution in South Africa, where around 60,000 small and micro merchants use Kazang Pay to accept card payments. In Zambia, there are around 3.8 million debit, credit and ATM cards in issue and 41,000 point of sale (POS) terminals in place. The value of POS transactions has grown to K 111.4 billion by 2022 from less than K 20 billion in 2018, according to the Bank of Zambia.

Says Leon de Wit, managing director at Kazang Zambia: “Zambia has made enormous strides in terms of financial inclusion, with card usage and penetration growing at a rapid pace. With Kazang Pay, merchants can now easily accept card payments on the same all-in-one terminal they already use for vending of VAS products.

“Card transactions help merchants to grow basket sizes and potentially attract more customers, and at the same time, reduce the risks and costs of handling cash. Moving towards digitalised payments will also enable merchants to track sales, manage cash flow, and create a footprint that could make it easier for them to access loans.”

Ashley Naidoo, director of Kazang Pay in South Africa says: “Our Zambian merchants have eagerly embraced our card acquiring service as a valuable part of our one-stop solution. Following the launch of Kazang Pay in Zambia, we have seen higher VAS sales across our merchant base and much-improved merchant retention and with our card acquiring solution we now appeal to a broader merchant base.”

Distributed by APO Group on behalf of Kazang.

ABOUT KAZANG:
Kazang (www.Kazang.com) is a leading provider of cash and digital solutions to merchants in Southern Africa’s informal economies. Our fintech solutions include a diverse range of value-added services (VAS), card acquiring, secure cash vaults and supplier payments platforms. Operating with a network of approximately 90,000 active devices, we process approximately 2.2 million transactions daily in markets such as South Africa, Namibia, Botswana, and Zambia.

We are dedicated to helping small and medium merchants grow and succeed, through increasing their sales, making their businesses more efficient and reducing their risks with its holistic portfolio of products and services. Kazang is a member of Lesaka Technologies (https://LesakaTech.com).

ABOUT LESAKA TECHNOLOGIES, INC:
The Connect Group and Kazang was acquired by Lesaka Technologies, Inc. in April 2022. Lesaka Technologies, (Lesaka™) is a South African Fintech company that utilizes its proprietary banking and payment technologies to deliver superior financial services solutions to merchants (B2B) and consumers (B2C) in Southern Africa. Lesaka’s mission is to drive true financial inclusion for both merchant and consumer markets through offering affordable financial services to previously underserved sectors of the economy. Lesaka offers cash management solutions, growth capital, card acquiring, bill payment technologies and value-added services to retail merchants as well as banking, lending, and insurance solutions to consumers across Southern Africa.

Lesaka has a primary listing on NASDAQ (NasdaqGS: LSAK) and a secondary listing on the Johannesburg Stock Exchange (JSE: LSK). Visit www.LesakaTech.com for additional information about Lesaka Technologies (Lesaka ™). $LSK / $LSAK