Allawee credit card launch in partnership with Mastercard, in line with Credicorp 2030 mandate
Allawee, in collaboration with Mastercard, Providus Bank, and Remita has launched a credit card in Nigeria. The launch aligns with Creditcorp's 2030 mandate.
Allawee partnered with Providus Bank, Mastercard, and Remita to launch a credit card for Nigerians. This launch follows the establishment of Credicorp and its mandate to “…accelerate access to consumer credit to 50% of all working Nigerians, by 2030.”
Launched in 2023, Allawee Technologies Limited is a licensed Digital Money Lender (DML) in Nigeria.
Providus Bank is the BIN sponsor. So, without becoming a direct member of Mastercard, Allawee can co-brand and issue cards to its customers. Providus Bank’s Head of Cards, Lanre Ogundare said, “We have a track record as an issuing bank in fostering secure and efficient card products thus we are proud to collaborate with Allawee to make this happen…”
“We are thrilled to collaborate with Allawee on this innovative credit solution, which aligns perfectly with Mastercard’s commitment to bringing one billion people into the digital economy by 2025,” said Folasade Femi-Lawal, Country Manager and Area Business Head for West Africa at Mastercard.
With the card, users can receive 30-90% of their net income in credit, capped at ₦1,000,000 ($605). Users can make payments with the credit card, as they would their normal debit cards. They can shop online using the card details, or make payments at hardware terminals like ATMs and PoS devices. Also, users have up to four months to repay, with payments made in no more than three instalments.
“Allawee will roll out this card offering in phases to the public, with the first target audience being Federal Government Civil Servants & NYSC Corpers. Subsequent phases will include consumers from key sectors like FMCG, Manufacturing, Logistics, and more,” the company said in October 2024.
The collaboration with Remita lowers the risk of default and helps facilitate (re)payment collection. Remita is a payment system plugged into the Nigerian Government’s payroll system, IPPIS (Integrated Payroll and Personnel Information System).
According to the National Bureau of Statistics (NBS), 70% of Nigerians with a bank account don’t have access to credit.
President Tinubu wants to change the state of consumer credit in Nigeria. In April 2024, he approved the takeoff of a ₦100 billion ($65 million) Consumer Credit Scheme. The Nigerian Consumer Credit Corporation (Credicorp) operates that scheme. Its mandate is to “…accelerate access to consumer credit to 50% of all working Nigerians, by 2030.”
Allawee added “This launch comes at a pivotal moment, aligning with the Nigerian government’s recent focus on consumer credit, following President Tinubu’s approval of the Consumer Credit Scheme. The mandate of CREDICORP is to eliminate structural, market, and policy barriers, aiming to expand consumer credit access to 50% of all working Nigerians by 2030. Allawee’s innovations directly support CREDICORP’s vision, playing a critical role in driving this mission forward.”
A press release posted on December 16, by one of the startup’s card partners listed Creditcorp as a “collaborator”. This has now been corrected.
In a statement to Condia, Allawee CEO Ikenna Enenwali said, “We noticed a mix up in the communication for our credit card product; while our innovation is in complete alignment with the Credicorp’s mission, there is no formal contract or partnership at this time.”
But we couldn’t help but wonder what a potential Credicorp partnership, with Nigerian lending fintechs could look like.
Credicorp, a game changer for Consumer Credit in Nigeria
In the statement issued by the then-Special Adviser to the President on Media and Publicity, Ajuri Ngelale, working Nigerians were asked to register their interest on the Credicorp website. Civil servants are first on the line.
Credicorp and Bank of Industry (BoI)
Credicorp is a development financial institution (DFI) in Nigeria, like the Bank of Industry (BoI). BoI is the oldest and largest DFI operating in the country.
The MD/CEO of Credicorp, Uzoma Nwagba was the former COO of BoI, in charge of driving micro-credit and other financial interventions at the institution.
A pyramid showing the phases of disbursement. Culled from Credicorp’s website.
Credicorp will partner with eligible financial institutions to disburse the loan. Financial institutions (FIs) have to apply to be selected. Depending on the FI’s preference, Credicorp will issue a wholesale loan or provide a credit guarantee to them.
Wholesale loan vs credit guarantee
The difference between the wholesale loan and the credit guarantee is that, in the former, Credicorp provides the on-lending capital, at an agreed interest rate while in the latter, Credicorp only shares credit risk with the FI.
The Allawee app and card
What is “Allawee”?
This is a popular slang in Nigeria. It’s from the word, “Allowance”. More specifically, it’s the same term used to describe Government payments to civil servants, like corps members.
How Credicorp will strengthen Nigeria’s credit ecosystem
Credit history is important for getting loans. Yet, many Nigerians do not have a comprehensive one.
“We launched this card to help Nigerians gain access to instant, affordable credit while building their credit history,” said Enenwali.
Less than 5% of banked Nigerians own a credit card. This is because banks are doubtful to extend credit to the mass market. A senior banker at GTBank told Condia that, “Banks have been cautious with credit cards due to the high levels of bad debt. Many customers default on their payments, which makes it risky for banks to offer credit widely.”
Credit utilisation and payment history make up 65% of one’s credit score, under the FICO scoring model. The President hopes that the activities of Credicorp will strengthen the country’s credit reporting systems. On the other hand, Nigerians will be able to take the personal equity they have built into their credit score, everywhere else.
Ngelale’s State House Press release stated that,
“The Nigerian Consumer Credit Corporation (CREDICORP) achieves its mandate through the following:
(1) Strengthening Nigeria’s credit reporting systems, ensuring every economically active citizen has a dependable credit score. This score becomes personal equity they build, facilitating access to consumer credit…”
With Credicorp on-board, figure 3 shows what an ideal card partnership ecosystem might look like for FIs.
Figure 3: Showing an ideal Credit card partner ecosystem for lending fintechs in Nigeria
To expatiate, a bank provides the BIN sponsorship; at least, until the fintech can afford to be its own issuer (IIN). The Card scheme facilitates the communication between the issuer and acquirers. A local payment partner can collect payment in all the prevailing methods (direct debit, bank transfer, card) that a borrower might want to use to pay. And Credicorp can be a key source of on-lending capital with affordable rates which can be passed down to borrowers. Also, with Credicorp onboard, collaboration with other stakeholders like the credit bureaus for reporting, NIBSS for global standing orders becomes smoother.
All of these activities will feed into the licensed credit bureaus, thereby strengthening the quality of data the industry has on borrowers. This will lead to faster decision times, interest rate personalisation and ultimately more access to credit for Nigerians.
Could Credicorp’s existence be the key to unlocking credit card penetration in Nigeria?
