OKash Micro-Lending Scheme Doles Out $250m in Q3

OKash, the micro-lending scheme has doled out loans valued at $250 million over a three-month period.

In a report by Techcabal, between the months of July and September 2019, the lending platform gave out credit facilities to 5 million people in Kenya, India and Nigeria.

First launched in Kenya and owned by Opera, the Norway-based software maker, OKash uses credit scores and other insights to provide short-term loans within a few minutes and a refund period of 60 to 90 days in line with Google’s new lending apps policy.

When OKash began operation, it served as the lending arm of OPay until in December 2018 when Opera acquired OKash for $9.5 million and later in 2019, grew and expanded OKash to Nigeria and India.

Although it still operates under the OPay app, OKash is “…leveraging the OPay wallet to transfer funds to and from its users,” says Opera, but outside the shore of Nigeria, the OKash app stands on its own.

The lending service is already recording remarkable growths with just two months of its launch, the company reportedly processed $99,000 worth of loans on a day to day basis. In the last quarter of 2018, OKash issued 280,000 loans and made $1.7 million in revenue.

In the first three months of 2019, OKash’s revenue was $6.5 million, which was 16% of Opera’s total revenue and the figure doubled to $11.6 million. As of now, OKash now accounts for 42.8% of its entire revenue, up from zero a year ago, according to OPays financial reports.

In the third quarter of 2019, OKash provided an average of $50 and underwrote approximately 5 million loans, giving it a total loan value of $250 million. “We have funded the increased loan book by a combination of local bank debt and our own cash,” Opera’s Chief Financial Officer, Frode Jacobsen said.

Although OKash made its first expansion a few months ago, Kenya is no longer its biggest market. Its loans in Kenya averaged $40. But the story is different in India, its fastest-growing market. Indian loans averaged $50.

Meanwhile in Nigeria, OKash loans are “really quite insignificant still compared to the totality of microlending,” Jacobsen said. But the company expects this to change by 2020.

In March 2019, the service lost $1.7 million worth of credit. This figure jumped to $5.4 million three months later. Between July 2019 and September 2019 alone, it recorded credit losses worth $20 million.

Opera took the blame for this. “Given our focus on gaining scale,” Jacobsen said, “our credit losses moved slightly higher relative to revenue from the prior quarter.”

Opera wants to fix this with improved credit scoring and more experience. Importantly though, the company signalled that it would cut back on aggressive growth and grow “at more normalized levels than what we have reported to date”.

Regardless, OKash is looking to expand to more countries. Opera executives told investors that it plans to expand its financial services between the next six months and 12 months. But they did not disclose where.

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