CredPal completes $15m debt equity funding, set for Ghana, Kenya expansion

CredPal, a digital lending startup, has announced a $15 million debt financing from Credit Direct, a subsidiary of First City Monument Bank (FCMB); Greenhouse Capital, a finance-focused venture capital firm; and a few unnamed financial institutions and new investors including LongCommerce, Uncovered Fund, First Circle Capital, and Adii Pienaar, co-founder and former CEO of WooCommerce.

CredPal accepts Buy Now, Pay Later (BNPL) online payments. Customers can easily access small amounts ranging from 2,000 Naira to 5 million Naira with an instalment and flexible payment approach.

The company has raised $15 million in debt and equity to expand its consumer credit offerings throughout Africa. It has collaborations with other major platforms and is looking to add Airtel to its list. The new investment is a mix of equity and debt to support the company’s expansion into other African markets, primarily Kenya, Egypt, Ghana, and Cameroon.

This latest round of funding comes on the heels of a $1.5 million raise in 2020.

CredPal was established in 2017. (but became fully operational in 2018). It has made short-term loans available to customers while collaborating with merchants from various sectors to offer, buy, eat, lounge, travel, and pay later to working-class Nigerians.

Customers can shop, enjoy discounts and cashback offers from over 12,000 merchants, and pay later. The startup aspires to become Africa’s largest consumer credit brand and to fulfill its mission of providing easy access to consumer credit through all payment channels.

While explaining CredPal’s ranking in the growing BNPL Fintech competition, Fehintolu Olaogun, CEO, emphasized the company’s uniqueness as an omnichannel approach to BNPL.

 “We’ve built out a merchant suite to cater to those who have like full-fledged e-commerce websites to those with brick and mortar store and social commerce merchants. We are merchants agnostic and also our tech allows consumers to be able to interface with CredPal across a wide range of channel

Fehintolu Olaogun

What is the significance of BPNL?

With BNPL gaining a foothold in the Nigerian market, Fintech BNPL platforms are gradually replacing the traditional Nigeria loan scheme, as BNPL can be seen as a major win, especially with our growing population, vis-a-vis an inflated economy, purchasing power that’s almost non-existent, and not to mention that the minimum wage is still 33,000 Naira ($79.37).

Because of this disparity, BNPL has emerged as a viable option for the average Nigerian consumer to pay for goods and services.

Though this type of payment plan has been available for years, its popularity skyrocketed during the pandemic as more people shifted to online shopping and others couldn’t afford to buy what they needed.

How BPNL systems function

BNPL does not charge interest on late payments. Customers’ credit ratings are determined by matching their monthly income to monthly spending, resulting in a clear and concise approach to repayment options.

During the checkout process, you will be given the option to break up your total purchase and pay a smaller amount now, rather than the full balance.

For example, if your total purchase is 70,000 Naira, you will pay 10,000 Naira at checkout, and they may have three remaining payments of 20,000 Naira due 30 days apart. If you make all of your payments on time, you’ll have paid off your purchase in three months.

However, if you’re struggling to pay your bills or save for an emergency, avoid buy now, pay later. It is possible to overspend with BNPL due to its ease and convenience. You may be charged late fees or sent to collections, both of which will harm your credit score.

CredPal’s Solution

This new funding brings CredPal one step closer to creating a safer, more innovative, and less expensive way of borrowing money without having to worry about late fees or exorbitant repayment prices.

A lot of people like to buy things and most importantly, everyone has needs so having access to a service like this helps consumers meet their needs conveniently as they can get or do what they want without having to pay for it all at once.

Olorunfemi Jegede, COO, Co-Founder of CredPal

In line with this concept, CredPal is looking to collaborate with telecom operator Airtel Nigeria in its efforts to expand, both product-wise and geographically, to allow low to middle-income earners to purchase smartphones in installments.