Borrowing money from family and friends has been a traditional means of getting financial support, particularly among young people in Nigeria. However, borrowing from loved ones can sometimes lead to strained relationships, leading to the emergence of fintech like Sycamore, which aims to address this problem. In partnership with TechCabal, we conducted a study to investigate the informal borrowing market in Nigeria, its impact on the economy, and the possibilities for technology in the space.
The study revealed that the informal borrowing market is significant in Nigeria, with a large majority of Nigerians borrowing from family and friends for various reasons such as emergencies, business ventures, and personal needs. However, the study also highlighted major challenges in the informal borrowing process, including difficulties with repayment, trust issues, and communication breakdowns.
To address these challenges, we developed a product called Loan Friends, which aims to make informal borrowing sustainable by offering a platform for borrowers and lenders to connect and manage the lending process seamlessly. The platform includes features such as automatic debit, repayment reminders, and other tools that make the lending process more efficient and transparent.
The study demonstrated that technology is transforming the informal borrowing market in Nigeria, creating opportunities for fintech startups to provide innovative solutions that make informal borrowing more efficient and sustainable. As the digitalization of lending continues to grow, informal borrowing is likely to become more mainstream, providing a viable means of financial support for many Nigerians.
In conclusion, informal borrowing remains a significant lending channel in Nigeria, particularly among young people, although it comes with its challenges. However, Sycamore has premiered a fintech solution called Loan Friends, leveraging technology to create innovative solutions that address these challenges and make informal borrowing sustainable using Tech. We believe that lending to friends and family is a looming industry that can contribute significantly to the growth of the Nigerian economy.