The founder of SwiftaCorp, a pioneering African software and technology services group, Victor Asemota says no business can survive without credit.
He said this in a series of tweets on his verified and official twitter handle.
Asemota said when we keep looking at small business in Africa independent of their value chains, we miss it all by a wide margin.
The first time I had to supply computers to a client, I had no money and no registered company or bank account. I went to my uncle and he called a guy called Eme Iheanacho who would give me the computers on credit but guaranteed by him. Then his wife allowed me to use her company
I supplied it, paid Eme and made a profit of 100k Naira. This was several times my previous annual salary and I was still in school doing my MBA. I learned more from that transaction than what my MBA lectures were teaching. This was how most business happened in Nigeria.
Supplier finance is based on trust. I later found out that Eme was also getting his computers from one of my old bosses at GICEN called Wembly Ukwa. I traced it further and found Wembly’s supplier. A doctor in Surulere who imported the computers. He became my supplier too.
The doctor could trust me with credit after I did the first three cash transactions with him. In fact, when I told my uncle how cheap it was from the doctor, he bought a computer for his kids at home which also became my computer and my path to the Internet. That’s how it started
I searched for cheaper sources until I found my good friend Charles Mezu of Palette computers. Some of the largest deals I did were financed by his supplies. Charles was an ex banker turned tech trader and he understood credit better than all the others. He automated everything.
I had an account ledger with Palette and even Task computers started by Leo Stan. They still exist today. They saw how much I had traded and credit was a percentage of my volumes with them and payback times. It is interesting that I tried to build a product on this but left it.
Right from when I was selling canned tomatoes at Eki Osa market in Benin at age 11 during my holidays, I saw this credit system play out. As an adult, my friend Nanik who ran Niki Biscuits in Benin City gave me my first ever computer supply credit for a printer.
Nanik understood credit very well as his transporters took his products out for sale on credit. He sometimes had tens of millions out on credit and I used to ask him if he wasn’t worried? He told me that the credit he gave out was the lifeline of the business. This was true.
Most of retail in Nigeria is powered this way. I discovered it again when we did our first airtime project for a telco. Saw it again in Mobile Money implementations. I realized it was NOT only in Nigeria but all around Africa. The lending is bigger than total bank lending.
When we keep looking at small business in Africa independent of their value chains, we miss it all by a wide margin. No business can survive without credit. Credit is already there but invisible. Making it visible requires more creativity than Silicon Valley thinking.