Investing in Owotutu
I love banking, if you take a look at my work experience in Nigeria, you’ll agree with me. I’ve been an engineer, consultant, entrepreneur and investor around the industry - from Wallets Africa, Wema Bank, Interswitch, Workpay, Suregroup and PayHippo.
As you can imagine I spend a lot of time thinking about areas I like in banking, there are several but I like to talk about three:
Payments: The most popular form of banking in Nigeria is payments, one major reason people open bank accounts is to receive their pay check directly. Cards are used to withdraw cash and make payments online and offline. There are banking apps that run on web, mobile and USSD; the apps offer money transfer, bills pay and other VAS. Since bank transfers are instant, it’s the most preferred means of payments in Nigeria, and is second only to cash in transaction volumes.
Savings: Nigerians have a “do not eat with all your hands mentality”, they save for rainy days and capital projects. People usually operate two accounts, one for making payments and the other as a “no non-emergency debits” account. Conservatives and corporates prefer to work with traditional wealth management firms and younger people use savings, stocks and crypto apps that offer higher returns on investment.
Credit: Small businesses rely on loans to pay suppliers, handle urgent expenses and make payroll. To get credit, they work with Microfinance banks, a company licensed by the Central Bank of Nigeria CBN to carry on the business of providing financial services such as savings and deposits, loans, domestic funds transfer and non-financial services to micro-finance clients.
Traditional banking meets software
A few months back, Owotutu, which aspires to be the top Microfinance bank in Nigeria approached us for investment. They specialise in loans to small businesses who trade in markets on the Lagos mainland as well as suppliers of hotel chains on the island.
It makes a lot of business sense for us:
Owotutu is located in Mushin, a central business area in Lagos, known for it’s vibrancy, it’s people and proximity to the major markets of Ladipo, Tejuosho, Oshodi and Lagos Island.
Owotutu operates savings and current accounts; they take deposits from walk in customers and also via site visits by their marketers.
Owotutu takes collateral from creditors and judge credit-worthiness based on transaction history with the bank and local reputation.
We are a software technology company and at the time we invested, Owotutu didn’t have a domain name, they were operating a fully offline model impressively. The bank has now setup technology partnerships with commercial banks, switch and card providers that would help digitise the bank’s offerings and create more business opportunity for Nigerians.
It’s why we are so excited to be investing in Owotutu Microfinance Bank. The founder, Chief Gbenga Olowokere as described by friends is a genius and a visionary who has not just led a vibrant bank but ensured its good reputation and profitability for the past 27 years.
I’m honoured to support Chief, the team and help Owotutu become a top tier bank in Nigeria.