Madame Flora and the Catfish

The fintech start-up Lidya is helping Nigeria’s SMEs build a credit score and access financing quickly, helping these enterprises grow.

By David Schnapp in the Credit Suisse Bulletin

Madam Flora with Lidya's Muneeb Ahmed

“An example for others”: investment officer Muneeb Ahmed and fish merchant Flora Edojah.

Despite her small stature, Madame Flora Edojah is a force to be reckoned with. A 53-year-old catfish merchant, she is the epitome of a businesswoman. Her stand at Ijesha Market in Lagos, the capital of Nigeria, has been a mainstay of the local fish trade for decades. The catfish is the most popular fish here, and for the hundreds of women who sell it, Madame Flora is a symbol of success.

With the heart and soul of an entrepreneur, Flora is building a mini-empire. And now “Lidya” enters the picture. Lidya offers a digital platform to facilitate access to financing. The company is supported by Accion Venture Lab – the world’s leading seed-stage investor in fintech for the underserved. The name Lidya comes from an ancient Greek kingdom that was located in Western Anatolia. Lidyans are credited with introducing the world’s first ever gold and silver coins, which revolutionized the way the goods are traded.

In May 2017, Lidya entered into an agreement with Triton Aqua Africa, a Nigerian supplier of catfish, frozen fish and chickens. Lidya issues fast loans to distributors who buy these products, based on their previous purchases. When Lidya was looking for a borrower in southeastern Nigeria, there was one person Triton Aqua Africa could wholeheartedly recommend: Flora Edojah. Originally from Nigeria’s oil-rich Delta State, she moved to Lagos in 1986 and began to sell small quantities of catfish. When Nigeria’s economy started experiencing a boom at the turn of the century, demand for catfish rose. Madame Flora saw the potential for working with larger customers like supermarkets and hotels. Because of challenges associated with obtaining loans from Nigerian banks, however, it was virtually impossible for her to enter the large-scale market. “There’s too much stress involved with it,” says Flora Edojah, now a successful fish merchant. “Lidya makes it very simple for me.”

Solid Basis for Business

According to the development bank IFC, which is a member of the World Bank Group, Nigeria and its more than nine million SMEs need another 30 billion US dollars in loans from traditional banking institutions. In 2016, the financial services provider Lidya began to close this gap, allowing small and medium-sized enterprises to submit applications for loans of between 500 and 50,000 dollars using their mobile phones. Lidya uses dozens of data points to evaluate their creditworthiness within 24 hours, then pays out the loans immediately. Muneeb Ahmed, an investment officer at Lidya, also helped Madame Flora open a bank account and obtain a bank verification number to establish and boost her credit rating.

“Madame Flora is an example for others,” says Ahmed, pointing out that Lidya’s work is not just about issuing loans, but also about putting businesses on a secure footing. Flora Edojah uses these loans to purchase catfish. She no longer keeps her earnings under her mattress, but in a bank account. Now she is in a position to do business with major players, such as supermarkets and hotels.

A version of this post appeared previously in the Credit Suisse Bulletin.

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