BABAJIDE DUROSHOLA, general manager of M-KOPA Nigeria, a fintech company that provides affordable smartphones and digital financial services, discusses in an interview with CHINWE MICHAEL the challenges Nigeria faces in achieving its financial inclusion goals and how the company is closing this gap by providing affordable smartphones for underserved Nigerians.
EFInA disclosed that Nigeria’s financial inclusion rate grew to 74 percent in 2023 from 64.1 percent in 2020. However, the Central Bank of Nigeria (CBN) has a 95 percent financial inclusion target for 2024. Do you see Nigeria achieving this target?
The major challenge to advancing financial inclusion is the infrastructure deficit, particularly regarding connectivity. Many areas in Nigeria still lack access to reliable 4G, which is vital for enabling digital financial services.
While the goal is to promote financial inclusion, achieving this depends on access to smartphones. These devices enable users to download mobile wallets, complete basic Know Your Customer (KYC) processes and conduct transactions effectively.
Mobile money is gaining traction and making an impact, but infrastructural challenges remain. High internet costs and limited access to smartphones continue to be significant barriers. This is where M-KOPA plays a transformative role. By providing affordable access to smartphones, M-KOPA enables more people to connect to financial services.
We are making inroads in areas like Jebba and other parts of Niger State, where connectivity and financial inclusion gaps are most pronounced.
M-KOPA has been a game-changer in expanding access to financial services for underserved populations. Could you share more about the company’s business model and its impact on financial inclusion in Nigeria?
Nigeria has made progress in advancing financial inclusion, particularly through the adoption of digital technologies. With the widespread availability of mobile wallets, this has become a crucial component of financial inclusion.
In Nigeria and across Africa, mobile technology plays a pivotal role in driving financial inclusion, as mobile-first solutions often precede other innovations. Digital tools like PoS terminals, payment platforms, and other financial access points are essential, but for many Nigerians, especially those in underserved communities, basic financial activities occur through mobile phones.
This is where M-KOPA is making an impact. The company ensures that everyday earners have access to smartphones, enabling them to participate in the digital economy and carry out financial transactions. By leveraging the Internet of Things and a unique pay-as-you-go model, the company allows users to acquire smartphones through affordable micropayments.
The challenge lies in the cost of smartphones, with the cheapest devices priced at over N200,000. For many Nigerians, particularly those in rural areas, this is unaffordable. M-KOPA addresses this by offering flexible payment plans. Customers can make an initial deposit of N36,0000 and then pay as little as N900 daily over six months.
Can this service be considered as a buy-now-pay-later?
No, it’s a pay-as-you-go model, not a traditional BNPL (Buy Now, Pay Later) approach. With this model, you make payments for usage until the total cost is covered, at which point you take full ownership.
The devices have breakdowns, but I would say the cheapest device is about N213,000. For example, purchasing a Samsung A05 might start with an initial deposit of N30,000 or N36,000. Then, you continue paying approximately N900 daily until the total price of the phone is fully paid. Typically, the total payment period spans around six months, and once completed, the phone is yours.
So, with N36,000, an ID, which is either a NIN or a driver’s license, and a basic KYC check, you can walk out with an M-KOPA phone in one hour.
We also focus on high-powered 4G smartphones, and we work with amazing partners. We work with Samsung and finance their entry and mid-level devices. And then we work with Human Machine Devices to finance the M-KOPA smartphones. We have our own branded phones that are called the X20 and X2.
M-KOPA has active partnerships with OEMs like Samsung and HMDs and mobile network operators like MTN and Airtel. These collaborations support customer connectivity and digital access. For instance, MTN customers purchasing an M-KOPA smartphone receive 150MB of weekly data for the duration of their loan, promoting internet accessibility.
1 in 4 Nigerians is still financially excluded, with many citing irregular income as a barrier. How does M-KOPA address this barrier, particularly for those with unpredictable earning patterns?
The truth is that many of these people are trading locally, but providing them with smartphones unlocks new opportunities.
Now, when you give them a smartphone, you open them up to a whole new world, as they can set up shops on WhatsApp, Facebook, etc., and start selling. Digital access enables traders to connect with suppliers, expand their reach, and earn more. Increased earnings pave the way for savings and other financial solutions, creating a sustainable growth cycle.
M-KOPA has already extended over $1.5 billion in credit across its markets. How are you balancing accessibility with financial sustainability in a high-risk environment where many customers may have no formal credit history?
M-KOPA’s credit model is built on three key principles: inclusivity, fairness, and ease of payment. These values are central to our business design. When it comes to access to credit and loans, there’s a common misconception that people are reluctant to take loans. However, this isn’t the case.
When you think about how our parents and the older generation were able to take ownership of their houses, their cars, and all those things through loans, i.e. cooperative loans
However, for the M-KOPA smartphone credit facility, when the creditor is unable to pay, as economic crises can happen at any point, the individual can return the smartphone and collect his deposit back, provided the device is in working condition and is not damaged.
Our phones are embedded with IoT devices, allowing them to undergo a lock-and-unlock process. This ensures that if someone takes the phone and refuses to pay, the phone is locked, and they’re unable to use it.
If they can’t pay, the phone locks until they do. This means that when you’re not paying, the phone will lock, and when you pay, the phone will unlock, too.
Given your knowledge of payments and fintech in Africa, do you believe the African payments market can truly serve the diverse needs of its population?
We need more credit companies. Africa has about one billion people, with about 200 million people in Nigeria. So far, we’ve deployed $1.5 billion. Breaking that down equates to just over $1 per five individuals—a clear indication of the vast untapped potential for credit expansion.
While challenges like infrastructure and identity issues exist, progress in understanding customer payment behaviours will address these over time. More fintechs and payment providers in this space can lower transaction costs and expand access to credit, enabling business growth and services like smartphone loans, cash advances, and insurance.
How does M-KOPA plan to continue scaling its operations in Nigeria to reach even more customers in rural and underserved communities?
Looking at our data, 42 percent of our customers are first-time smartphone users. So, this automatically tells you that there is an education program going on there. The company approaches this through a community perspective, where our agents are equipped and trained to train individuals.
We actively invest in the education of our agents because we know they are on the frontlines of community engagement, ready to help educate many of our customers.
What should we expect from M-KOPA in the coming years?
M-KOPA plans to expand across the continent and in Nigeria. So, expanding to places like Abuja, Kano, Kaduna, Niger, Nasarawa and places in the east.
We aim to provide underserved individuals with smartphones and digital financial services, staying committed to extending credit and driving financial inclusion. Having already facilitated $1.5 billion in credit, our goal is to reach $10 billion across Africa in the coming years, ensuring our efforts remain fair and inclusive.