Nigerian lender, Lidya, is set to take its business to Eastern Europe, targeting specifically Poland and Czech Republic. It plans to disburse over $1.1 billion in loans over the next five years to small businesses unable to get bank loans.
According to Ercin Eksin, co-founder of Lidya in an interview with Bloomberg, the company will seek customers especially in the agriculture, pharmaceutical and retail sectors.
Last year the digital financial services raised $6.9 million in a Series A investment round led by Omidyar Network to scale in Nigeria and also enter new markets in Africa
Lidya prides itself of having an effective online scoring system that captures data with the aim of making fast decisions on whether to grant short-term loans.
To assess credit risk, Lidya uses nearly 100 data points to evaluate each applicant and builds a unique credit score. Businesses can apply for loans ranging from $500 to $50,000, without the need to go to a physical location, present audited financials and projections, or provide collateral. Repayment schedules and fees are agreed upfront and with total transparency.
Lidya has issued around 10,000 loans since inception averaging $3000 per customer.
Launching in Eastern Europe will be a real test of Lidya’s platform as the average loan amount is higher, at $10,000 per customer. However it has started on a good note by hiring the former head of Polish factoring company Idea Money SA to run its operations in the country. Lidya also doesn’t expect an economic slowdown caused by headwinds buffeting western European economies to impede its growth.
“Together with the long-term investors on our side, we are basically agnostic to business cycles,” said Tunde Kehinde, another co-founder of the firm. “During slowdowns, banks restrict themselves from taking risks while businesses still need to function and finance their operational expenses.”
Lidya plans to enter as many as four countries each year, including further potential eastern European markets. It will initially make $10 million of new capital available for financing companies’ operating expenditure and said it is able to provide an additional $200 million in pursuit of the expansion.
