Net1 UEPS has acquired a 25% stake in One Credit, a Nigerian consumer finance company focused on providing credit to unbanked, salaried Nigerian consumers.
The company has also agreed to provide One Credit with a credit facility of up to $10 million in the form of convertible equity-linked loan notes.
"One Credit was established three years ago to meet the needs of the average Nigerian salaried worker who has limited, if any, access to formal credit. The company has experienced tremendous demand for its consumer finance product offering and has become one of the leading consumer lenders in the highly-fragmented Nigerian market," says Net1.
According to the company, the Nigerian consumer finance market has experienced 35% compounded annual growth from 2005 to 2012 and still remains relatively under-penetrated, with over 90% of Nigerians never having applied for a loan.
"According to a recent McKinsey report, the Nigerian consumer finance market is expected to grow in line with the consumer market and is estimated to reach $1.4 trillion by 2030, from $400 billion in 2014," the company notes.
Net1 UEPS believes it can assist One Credit to grow its market share through the provision of its financial technology products and services. These, it says, have been designed to address the biggest challenge facing Nigerian financial institutions - the ability to provide seamless and cashless services in an environment that poses significant logistical and infrastructural obstacles.
"In addition, Net1's solutions will enhance One Credit's credit risk management and expand the current product offering to these customers. By acquiring a significant minority stake, the company will be able to actively participate in the formulation and execution of the One Credit business plan, including its delivery platforms."
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