Trust Machines: What Crypto Actually Does for Credit in Africa | Favour Aniogor @Web3LagosCon

Jam. Hi everyone. My name is Favoro. Um the founder and CTO of old. Um so I'm going to be talking on topic what crypto actually does for credit in Africa.

If you could walk into any bank right now or today or tomorrow and ask for a loan at a fair rate and you know that you will get it, please show. Okay. No one um I'll make it simpler. If you know right now you look into your wallet and you can pull out a credit card, please show your hand. Just one, two, three.

You guys have credit cards in your wallet right now? Wow. I mean, I think I'll see you guys later so that you can plug me in. So, yeah. So um basically due to the number of ends shown we in a room of let's say 100 people we only had around two ends being shown that oh they've they have access to credit card whereas in a country like America an average American adult possesses three credit cards while here in Nigeria according to stats by what bank is shown that less than two people in a room of 100 people have actually held a credit card.

So based on this that you can see that we live in a country that is highly denominated by debits. And the basic difference is a debit card allows you spend your money while credit card allows you spend trust. And we have millions of people with a debit card and no credit card. And that's because our system in a way cannot manufacture trust. Right?

So this is a stat by word bank that shows private credit to GDP. So as you can see I can Nigeria is 9.6, South Africa is 89% and the US is 201%. What this data just shows is basically for let's say Nigeria as a whole country makes 100 NRA right less than 10 error is attributed to loans basically sorry so it's not that we as a nation don't like to borrow I mean we have tons millions of loan apps everywhere and they have tens of millions of downloads. our most popular micro finance bank that we use of course they always put it in your face come and we have people that are lending right it's just that the trust itself isn't there like what data backs the fact that when I give you this fund you're going to actually pay back And we know that for every striving society, credit is practically needed because for every business venture, you need a line of credit to fuel that growth.

Even though you might have assets to back whatever you're doing, credit is really important. So yeah, I'm going to share a story real quick. How many of us remembers 80 salat? Oh, I'm clicking it for a while. How many of us remember it at Salat 08 to Niger for life?

Yeah. So, it salad took a $1.2 billion loan from 13 of our big banks in Nigeria and they signed the contract. The depth was in dollars. They were earning NRA.

They were like the fourth biggest telecom we had in Nigeria with more than 20 million subscribers at that time. But what happened? Inflation hit. And when inflation eat, they were servicing a debt that they brought in dollar in Naira and before you knew the amount they were to pay back was grossly multiplied and they could not. And even when they defaulted the the courts and the banks could not retrieve their their receiverhip basically.

And what happened they had to wind down and sell off their IP to L mobile basically and the banks also had to eat their loss. And that just shows you that from in that system trust itself is now hard basically cuz after that event with 80 salat the banks became you know uptight and what is the fee for trust basically that's why when you go to the bank you kind of say I want to borrow and they're telling you you pay back 40%. Which is quite on the high side. Now when it comes to lending, every lender in history always asks three questions for you. What do you have?

Will you pay? And what happens if you don't? Right? Those are the three questions. The guys in the credit bureaus, the the credit lender, right?

They look at the assets you have the banks they basically like okay look at your account history what what assets are you bringing in and all that right and you have our local lending market which you have the guys that do the aure theu and all that stuff and it's based on I know him I know her and that's why we can basically give out right so if you look at what happened with it salad, right? All the three questions were answered. I mean, when when you look at the salad story, um what do you have? You had a big consortium backing them, right? Um we you pay of course telecommunication business is viable, right?

What happens if you don't pay? And that's what really failed because at the end it is Salad ended up paying 42% of what they owed. That was around 500 to 600 something million. And the banks themselves had to write off the rest as bad debt. Right?

So now we are going to actually be looking at what happens when the blockchain does it. Now what you have verified you proof on chain which is your tokens your BTC your Ethereum your USDT your USDC will you pay well you have overization I mean current defy lending platform do overization and that doesn't matter yet what if you don't then the smart contract enforces it law So now you might be asking me but if I have Bitcoin, Ethereum, USDC, why don't I just spend directly? Why do I need to vaccize to get a loan? Well, just see it as a form of building wealth because back in the day, your grandfather did not actually need to sell his land or your dad, they could easily collaterize it and borrow against it because it was not just money to them. It was a piece of wealth, right?

It was in the family and most times or some of times you get to leave stuff for your other generations to inherit basically. And in this period of time, the bitcoins, the ethereum, they are where most of our investments are. And when you have investments there, you want your investments to yield for you and you don't have to spend your investments basically. And that's why you might want to consider like collaterizing your investments while your your investment earns use for you and you can still spend while doing so. So blockchains makes people trustworthy, right?

So trustworthiness can be built and proven over time and they make it very unnecessary because you lending on chain I don't have to go after you I just trust is what happens if you don't pay the smart contract enforces it come back so yeah this is a metric for the amounts of loans that has been acted for and not given basically remember in the onset I talked about a lot trust society we don't have the trust mechanism and this is a report from the small businessme finance forum on how manymemes in subaran Africa that you have your central Africa your west Africa your south Africa that basically asks for loans and they don't get it and this is the amount and in Nigeria Neria alone you have around $ 32 billion and we have over 40 millionmemes in Nigeria and about 10% of that actually gets loans to run themes and nobody is actually doing anything to boost and this is the infrastructure we're trying to build. So yeah um I'm going to introduce old. So what is basically old? Old is a live credit platform. So what we allow you do is we allow you build wealth by giving you the ability to spend basically and these datas are our cake.

We like call our cake basically. So yeah, currently old is 9 weeks old and in the 9 weeks that we have we have dished out about 22 loans on an average price of 65,000 NRA per loan basically and what you just say is or one pattern we've seen is people are willing to borrow is shortterm I mean I want to get data I want to I want to pay my house rent I don't need to liquidate my Ethereum or my BTC to actually like pay because the person that liquidated BTC January 2023 paid three times that now where you could have just collaterized pay your rent and just pay back some couple of interest and you still get to hold your wealth basically. So yeah, so why we would um overcolaterization is the first step towards building that um um credit infrastructure cuz you might ask me basically that but the farmers in the in the um in the farm don't really have anything to overcloize, right? But it's just look at it from this step. We can't manufacture trust.

So we let you build trust. The first step you overcolorize, you pay. Then that you start building what we call your credit score and to the point where we trust you enough to give you an undercolorized debt. Right? So every repay loan creates a credit history that never existed and everything will be on chain portable and ours.

And we would build the credit beauty um the credit bure this never had one loan at a time. So yeah, this is old. You can verify it yourself. And this is my contact if you want to reach out. Thank you very much.