The Nigerian-based Pan-African credit led digital bank, Carbon, has released Carbon Zero, a buy now, pay later web app which helps customers spread the cost of purchases into interest-free instalments, in-store or online.
Since its inception in late 2021, Carbon Zero has generated ₦2.3 billion ($5.4-million) in requests from 41,000 customers who have applied for a spending limit.
Carbon CEO, Mr Chijioke Dozie
Using proprietary technology Carbon has been developing and improving throughout its 10 years as a credit provider; Carbon’s decision engines can automatically assess affordability and give accurate credit decisions. By sharing their BVN and bank account number, millions of people can make purchases with interest-free credit.
Based on affordability, Carbon Zero allows customers to spend up to N2.5m ($5,919.17) with Carbon Zero. This is far higher than the spend limits offered by competitors, with most being somewhere between ₦150,000 ($355.15) and ₦500,000 ($1,183.83).
Carbon Zero charges zero percent interest on all purchases which are repaid on time and in full in three installments giving Carbon Zero an edge over competing BNPL providers that charge interest for short tenors.
“We believe that having access to credit and good financial services is a fundamental human right. The costs of basic goods and services are rising and increasingly out of reach for customers, so it’s natural that people need help with financing what we consider everyday modern necessities,” said Chijioke Dozie, CEO of Carbon.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
Two major players in the digital payment sector have partnered to improve the trans-border payments process across Africa. This received a boost with the collaboration between Carbon and Visa, the world leader in digital payments that will be spread over the five-year partnership period. Carbon, a pan-African fintech company providing access to basic financial services for Africans, has today announced a strategic five-year partnership with Visa, the world leader in digital payments, to offer both digital and physical issuance of Visa cards to its customers.
Carbon CEO, Mr Chijioke Dozie
Carbon is launching Visa debit cards in the third quarter of 2021, roughly a year after shifting from being a leading digital lending company to becoming a digital bank offering a range of financial services including, savings and payments. By leveraging Visa’s payment functionalities, Carbon will deploy an instant issuance process in three key markets including Nigeria, Ghana, and Kenya.
The collaboration between both companies includes financial support from Visa and will be spread over the five-year partnership period. The funds will be used to provide implementation and marketing support to help drive further growth and adoption of Visa’s payment solutions across Carbon’s products.
“Carbon is focused on delivering an unparalleled banking experience that is both safe and reliable across all touchpoints,” said Chijioke Dozie, CEO/Co-founder of Carbon. “We want more customers to enjoy some of our popular products like Carbon Zero through their Carbon card, and key to achieving this is our partnership with a leading payments and fintech-friendly company like Visa.”
With the arrival of debit cards, Carbon is building on its fast-growing user base of over 650,000 customers and a strong 2020 fiscal year which saw the company process ₦96.54 billion (~$241.35 million) in payments and ₦25.21 billion (~$63 million) in loan disbursements, eclipsing the previous year’s numbers despite the pandemic.
“The rapid pace of technology innovation has driven a powerful shift in business and consumer expectations in finance,” said Kemi Okusanya, Vice President, Visa West Africa. “Whether it is changing the way people invest, manage money, receive loans, or send real-time payments to friends and family, Visa is a natural partner for fintechs including Carbon, providing them with new ways to reach their customers through Visa’s vast network and global scale.”
Adding Visa cards to its payments stack will also enable easier access to Carbon Zero, the company’s Buy Now Pay Later product, which allows consumers zero percent financing on items they need the most but cannot afford immediately.
The partnership with Visa will undoubtedly go a long way in consolidating Carbon’s first-rate digital bank status and facilitate a robust payment experience for consumers across different demographics with unique financial needs.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
Nigeria’s innovative digital bank, Carbon has released a very impressive operational result showing $240 million in payments processed last year which is a leap from the 2019 outcomes. Founded in 2012 by Chijioke Dozie and Ngozi Dozie, the $15.8 million VC-backed company started in a niche digital lending market, but now, the company offers a plethora of services from savings to payments and investments. The company had initially kept its results away from public eyes until now. According to the CEO Chijioke Dozie, recruitment purposes and clientele trust as reasons why the company made its financials public — an exercise it has done every second quarter for two years. It’s a tradition Dozie hopes the company will keep this year.
Carbon CEO, Mr Chijioke Dozie
“Our annual report will be released in the second quarter after our financial audit has been concluded. If you recall, we released a year in review in January 2020 before we released the fiscal year of 2019 report,” he said.
In 2018, Carbon, a Nigerian fintech startup, made its financials public for the first time. Although typical for foreign private startups, it’s almost an anomaly in Africa. There have been rare cases in the past, for instance, when Rocket Internet had to include Jumia’s financials in its yearly reports after going public. At the time, the German investment outfit was a founding shareholder in the African-based unicorn.
While Carbon has been hailed for transparency and openness, it remains to be seen if it’s a trend other African startups are willing to follow. Posting audited financials can prove detrimental for a private African company for several reasons, ranging from bad marketing and PR if huge losses are incurred to regulatory clampdown if the company performs well.
The company’s annual reports reveal numbers on gross earnings, profit/loss before and after-tax, net impairment loss, total assets, liabilities and equity, among others. The company’s year on review, on the other hand, highlights payments processed, customer base, loans disbursed and investments made on the platform. As we wait for its annual report for 2020, its year in review offers a sneak peek into how Carbon grew the past year.
For the fiscal year 2020, the company, which has about 659,000 customers, said it processed ₦96.54 billion (~$241.35 million), up 89% compared to the same period a year ago. For its lending arm, disbursement volume was ₦25.21 billion (~$63 million), up 9.1% from FY2019. Also, ₦13.02 billion (~$32.55 million) worth of investments was made on the platform, representing a 365% increase from the previous year.
According to the company, factors that influenced these numbers last year included launching an iOS app that drove customer acquisition, introducing its USSD banking feature for lower-income customers and a social chat feature to enable faster transactions.
Also, in its quest to become a digital bank, Carbon acquired a microfinance bank license. According to Dozie, the license means that Carbon’s customers are afforded additional protection through depositors’ insurance via the NDIC. The Nigerian Deposit Insurance Corporation, a federal insurance agency, protects depositors and guarantees the settlement of insured funds when a financial institution can no longer repay their deposits. With that in place, Dozie says the typical Carbon wallet is now a full-fledged bank account, and customers can perform transactions on the platform as they would with any bank.
Like Carbon, other startups on the continent have followed suit by releasing year-on-year metrics. In recent memory, most of these startups play in the fintech and crypto-exchange space. But Carbon remains unique amongst this crop of companies as it releases both transaction stats and real insights into its financial performance.
Whereas transaction stats tend to highlight a seemingly explosive year-on-year growth of a company, a comprehensive view of financials will likely show a mixed performance. For instance, Carbon generated $17.5 million in revenue for FY2019, up 68% from 2018. For that same period, it recorded a 23% decrease in its profit after tax numbers, a 222% rise in total liabilities and 107% increase in assets finishing the year off with a 6% increase in total equity.
It’ll be interesting to see what these numbers look like for 2020. But that’s not the only event to keep an eye on. In addition to its $10 million Series A from South Africa based Net1 UEPS Technologies and a $5million debt financing in 2019 from Lendable, Dozie says the digital bank, which also has a presence in Kenya, is ramping efforts to raise a Series B round soon to consolidate its position on the continent.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
Nigeria’s leading fintech firm, Carbon has proved investors right by highlighting the appeal of fintech transparency with good profitability for a second year running. The company returned a whooping $17 million in revenue as its audited report records $312,905 in profit after tax in 2019. With developments occasioned by the global shutdown Carbon was able to transit from just a lending company which was its initial purpose, to a fully fledged financial services firm with units handling investments, personal finance management, insurance and small business advisory with rumours making the rounds that Carbon has an ambition of becoming a digital bank
Carbon CEO, Mr Chijioke Dozie
Looking at the impact of Carbon last year shows it close to a million loans valued at $64.1million in 2019 with the average loan at $65.8 which company sources say was the same level from 2018. But a larger income tax bill ate into the company’s 2019 balance, reducing net profit by 23.5%. However, the CEO Chijioke Dozie still believes that Carbon is work in progress as he insists there is still a lot of work to be done in terms of becoming more profitable, trying to be as diligent as possible in giving the right loans to the right people. Carbon is driven by the thinking that merely stacking new products on a shiny purple-themed app isn’t a sufficient customer acquisition strategy for a pan-African mission.
Co-founders Chijioke and Ngozi Dozie are credentialed financial professionals, with Ivy League MBAs. They are scions of the Nigerian banking family that ran a bank which, until it was acquired last year by Access, was the country’s most digital-minded bank. There’s a depth of experience and networks in both privileges to draw from while building a new African digital bank. But to truly convince potential users who are more secure with legacy banking, Carbon’s leadership is doubling down on a high level of transparency as both the catalyst and converter. Private companies are not obligated to publish their accounts. African startups who do so tend to be the exception.
However, in relatively low-trust business environments, tech startups – by their frequent reference to “disruption” – take on a burden of proof, to inspire confidence and change perceptions about dysfunction. For the earnest and ambitious, profit and loss statements do not have to be a privilege solely for investors’ consumption. Carbon lent 76% more and, with $17million, accrued 70% more in revenue. But the real metric for progress last year was in the other lines of business feeding its base in Nigeria, and now being exported to Kenya where it launched last December.
According to the report, transactions like bill payments and bank transfers from Carbon wallets increased by a factor of 23, amounting to $141.7million in value. The company introduced the wallet in December 2018 to replace the former process of sending requested loans to customers’ bank accounts. It opened the window for add-ons like loan top-ups, cashback rewards, and loyalty freebies like health insurance. A virtual card for direct withdrawals from the wallet is planned for the coming months.
This plan assumes a progressive shift away in Africa from reliance on traditional offline financial services to more trust in tech. Diversifying from lending alone also has the effect of luring users who may be averse to indebtedness. But Carbon will tailor rollout to the peculiarities of each market. COVID-19 has prevented them settling into Kenya, where there are no less than 50 digital lending platforms competing for an adult population that is over 80% financially included.
Reports of predatory lending have increased red tape in the East African country. A newly gazetted directive bars digital lenders from reporting defaulting borrowers below certain amounts to credit bureaus, among other rules. It increases the time it will take for a new entrant like Carbon to comfortably express its various services. “We haven’t really had a chance to test the engine,” Dozie says, but they have given out enough loans to calibrate their algorithm.
In Nigeria, they have reduced lending to shore up against the uncertainty caused by the pandemic, revising the repayment schedule for 9,016 loans. However, Dozie says they are currently at more than half the level achieved last year, in value and volume.Carbon’s products need overall improvement, in responding to customer complaints (see responses to this tweet) about deductions, and notification lags, among others. The pandemic’s impact on the Nigerian economy could have an effect on the company’s bottom line. Profit in the next report might as well be less impressive than what this year’s report contains.“It will be easier to beat [this year’s] numbers in naira terms, but we are all at the mercy of macroeconomics on the dollar terms,” Dozie says.
He says they will report whatever happens, as part of a long-term pitch to customers who, he believes, will be impressed by an honest expression of financial strength. Otherwise, focus remains on leveraging other strategic moves from 2019, notably the acquisition of payments startup Amplify. The latter’s intellectual property has gone into developing an SME platform, as well as in developing Carbon Express, a smartphone keypad button that can be used for instant transactions within any app.
Carbon acquired Amplify particularly for this feature and their engineering. Maxwell Obi, one of Amplify’s two co-founders who joined Carbon as part of the deal, has left the company, but the others have been instrumental in building valuable aspects like an iOS app.Another value-adding space is credit reporting. Carbon doesn’t produce the reports; they source from partner bureaus, and make them available to customers.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
In an effort to improve the experience of its customers, Nigeria’s leading digital financial services company, Carbon has launched Carbon Express – A keyboard extension that allows customers to access Carbon services from within whatever app they are using. Carbon Express enables users to initiate and complete transactions such as P2P transfers and bill payments from the keyboard without launching the Carbon App or leaving the current app that they are using. Instead, they will be able to access services from the touch of their keyboard enabling quicker Instagram or Whatsapp commerce. Carbon Express maintains the same PCI DSS compliant model of encryption, authentication, and security as Carbon’s other services, thereby guaranteeing the security of all transactions. The feature relies on the keyboard technology of smartphones to facilitate transactions. The technology adds a unique Carbon branded button to the customer’s smartphone keyboard which they can tap anytime to perform transactions. Think of sending an emoji but this time it’s real cash.
“This is a step in the right direction for Carbon as we aspire to go everywhere with our customer.” says Chijioke Dozie, CEO of Carbon. “People are spending a lot of their time on social messaging apps like Facebook, Twitter, Instagram, Whatsapp, etc, and It is only natural that some of the conversations they have on these platforms have to do with money. With Carbon Express, we are merging social conversations with financial services – meeting customers where they spend a lot of their time.”
Last week, the company also introduced Carbon Score, it’s loyalty scoring system that rewards customers with benefits such as Healthcare, additional referral bonuses as well as exclusive first access to some of its new features. “We want to continue to build a mutually beneficial relationship between our company and our customers and what better way than to reward their loyalty and discipline” Dozie adds. Carbon Express and Carbon Score are the latest on a long list of market-leading innovations from the company. Carbon (formerly Paylater) pioneered instant lending in Nigeria and was the first mobile app to provide access to credit digitally and without requesting individuals to present the documents and collateral traditionally associated with accessing loans. Earlier this year, Carbon introduced its iOS app and USSD (*1303#) service following on from its launch in Kenya in December 2019. It also announced its Disrupt Fund, a $100,000 Pan-African fund to address the lack of capital for African tech startups.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
