For Nigeria’s tech sector, the recent decade represented a turning point. With a fresh culture of entrepreneurship, the urge to utilize technology to address issues increased, helping firms to revolutionize how thousands of Nigerians participate in the digital world.
This is never more evident than in the financial services industry. Fintech companies are taking on banks and changing their traditional procedures by providing digitally native products and services, a simpler challenge given the country’s low bank account penetration.
CrowdForce, based in Abuja, is one of these firms, having just announced a $3.6 million pre-Series A investment.
The equity-and-debt deal was led by Aruwa Capital Management, with HAVAC and AAIC also participating.
The firm plans to utilize some of the funds to grow its personnel, regional operations, and marketing in order to triple its active agent network to 7,000 this year.
CrowdForce will utilize the funds to deploy more point-of-sale terminals to its partners over the next 12 to 18 months, as the business wants to provide financial services within one kilometer, or 15 minutes, of all Nigerians.
Formerly referred to as MobileForms, a data-gathering agent network, CrowdForce was founded by Oluwatomi Ayorinde and Damilola Ayorinde in 2015.
The objective was to collect and generate trustworthy offline data which accounts for 90% of the country’s economic activity and deliver insights to penetrate remote and semi-urban regions for enterprises, NGOs, and development groups.
With its 20,000 agents, MobileForms completed KYC on 4.5 million qualified traders and enrolled them in the TraderMoni program.
But transferring money into the hands of these merchants was also a hurdle because the majority of them were unbanked. Getting the money transferred to bank accounts was impossible, and for those who did have accounts, they had to walk long distances to secure transactions.
When these agents are out of funds, their liquidity suffers. When liquidity is in short supply, it creates issues because clients’ confidence is eroded.
So, over 200,000 agents in Nigeria often refinance their working capital by walking considerable distances to banks or fintechs they work for, such as TeamApt.
There are emerging alternatives, like Moni, a YC-backed float-as-a-service firm that offers low-interest loans to brokers via a referral and screening system.
CrowdForce, on the other hand, takes a different strategy. The startup forms relationships with larger businesses like gas stations to transform them into mobile bank branches that provide float services while keeping customers’ cash in a PayForce digital wallet.
Takebuild’s Take
Fintech firms, which are flexible, deploying technology to give customized financial service solutions to people and businesses have posed a significant threat to the financial services industry worldwide.
Investors are flocking to Nigeria’s burgeoning digital ecosystem, fuelled by appealing factors such as the country’s young and computer-savvy community, rising smartphone, internet adoption, and a particularly significant unbanked population, among others.
Nigeria has seen a boom in digital payments. Startups like Flutterwave and Paystack, which pioneered simple payment options for consumers and businesses, contributed to this growth.
Across the board, investors believe Nigerian companies are worthwhile ventures that will yield fruits, including cross-border payments businesses, digital savings businesses, and agency banking companies.
The difficulty of obtaining financial services, particularly for the unbanked and underbanked, has led to the development of agency banking.
Through a network of agents, this branchless banking approach brings financial services to the most remote community.
CrowdForce sells its POS terminals to a variety of industries, including pharmacies and reseller networks, adding to petrol stations.
To expand its supply chain, the firm stated it has worked with 19,000 gas stations, 20,000 resellers, and 6,000 pharmacies.
CrowdForce professes to have the most liquidity among Nigerian agent banking networks, straining more than 1.7 trillion through its partners, thanks to this methodology.
Across all boards, the Nigerian agency banking institution takes a 0.6 percent commission to its partners. CrowdForce claims to have been cash positive since 2020, rising 25% month over month to service 1.9 million unique clients across 25 Nigerian states.
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