Eyowo, one of Nigeria’s digital banks, has had a difficult year. While it has bold plans for the long run, it has to take care of cashflow challenges, frustrated users and a revoked Microfinance Bank licence.
On Wednesday, Nigeria’s Central Bank revoked the working licence of 47 microfinance banks. One of the licences revoked was Eyowo Microfinance Bank, which the digital financial institution, Eyowo, controls. According to the CBN, the revoked licences had been both inactive, bancrupt, didn’t render returns, closed store, or ceased to hold on the kind of banking enterprise for which they had been licensed for greater than six (6) months. While it stays unclear the particular motive Eyowo’s licence was revoked, the corporate’s CEO, Omoseinde Olobayo, instructed TechCabal that it’s nonetheless “engaging the CBN to understand and resolve the issues.” This week’s licence revocation caps a really stormy year for the digital financial institution.
Following CBN’s announcement, Eyowo—owned by Softcom—stated that interbank transfers, which its Microfinance financial institution powered, could be on maintain. It instructed prospects by way of electronic mail, “Over the next few hours, you will experience challenges sending and receiving money with Eyowo. This may take up to 24-72 hours to completely resolve, we will keep you abreast of the progress made and the next steps.”
Eyowo’s timeline will expire on Saturday, May 27. In the interim, prospects stay cautiously optimistic. An Eyowo buyer, Jethro Will, instructed TechCabal, “I basically don’t have access to my hard-earned money. My friends use Eyowo as their main banking app; now we are all praying.” *Tunde, who makes use of Eyowo account for enterprise, instructed TechCabal, “I didn’t know they had an issue until someone tried to send me money on my business account and said it failed.” But TechCabal understands these switch delays began just a few weeks earlier than the digital financial institution’s MFB licence was revoked.
Eyowo’s product struggles
Weeks earlier than Eyowo’s licence was revoked, users of the digital financial institution already started experiencing delayed and failed transfers. The firm didn’t share the rationale for these failures. And on May 19, Eyowo’s CEO, Omoseinde, shared in a video posted on an replace on Twitter that it might not enable new users to register on the app till July 1. Omoseinde acknowledged some of the problems users had skilled on the app and stated that the pause on new registrations was to repair these points. A supply near the state of affairs instructed TechCabal that Eyowo had been revamping its app in the previous couple of months.
In April, Omoseinde instructed TechCabal solely that Eyowo was experimenting with some options. He stated, “One important thing for us is that we’ve been asking ourselves questions about how you enable financial growth. For example, how do you deliver value to businesses? This seems to be where the value lies for us as a company.” At the tip of the experiment, Eyowo’s CEO stated that it aimed to attach entrepreneurs who promote merchandise to a big market of prospects. Essentially, Eyowo was trying to join the enterprise house owners it served to its prospects. It appeared like a later model of GT Bank’s Habari, an app that lets users discover music, store, and do their banking transactions.
From the dialog with the corporate’s management, Eyowo was betting that the corporate’s future was an identical social commerce play. But first, it must encourage a whole lot of staff to maintain engaged on the product regardless of a number of wage delays.
An sudden sacrifice for a promising product
After a number of unconfirmed stories, Eyowo confirmed in April that it was owing employees salaries however didn’t verify what number of months it was owing. It was not the primary time the corporate would owe salaries. One report in December 2022 claimed Softcom, Eyowo’s mother or father firm, laid off 20 individuals and that employees hadn’t been paid their November salaries.
Yomi Adedeji, Eyowo’s Co-CEO, instructed TechCabal that the missed funds had been “unexpected sacrifices” for “a promising product” that the corporate was on the precipice of launching. He stated the product analysis and validation took longer than anticipated, resulting in the corporate spending greater than anticipated on the analysis. “Using the revenue we had accrued as a [bootstrapped] company over the past years, we were doing experiments and research for a new [e-commerce] product. In the middle of that, COVID hit. It’s been quite some sacrifice for everyone, including the workforce and those who have served us as partners or another business,” Yomi stated.
“About 150 people have gone through this moment of sacrifice with this mindset. It is possibly just 5% or 10% who may feel frustrated.” Yomi admits, nonetheless, that there might have been some communication gaps alongside the road. “When there is uncertainty, you can only inform people as you get clarity. When you are dealing with a company of about 180 people, information may take 3rd-party interpretations that may not have come from the company itself.” The firm confirmed in April that it has come to the tip of its experiment and is proud of the outcomes. At the second, the corporate was going by what he calls “recapitalization” to guarantee that it has all of the monetary assets that it must succeed long run.
But Eyowo will not be but out of the woods. One supply instructed TechCabal that staff have now been paid half of what they had been owed. While it continues participating the Central Bank within the hopes that its licence revocation will likely be overturned, there are a lot of different existential questions that Eyowo has to reply if it’ll realise its ambitions to offer worth to companies by connecting them to a big market.
…. to be continued
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