F-Squared Episode # 2 - Beyond Banking and Lending - The Story of Carbon so Far with Ngozi Dozie

How Carbon turned Nigeria’s massive credit gap into a fintech success story, defying banking norms and economic crises - Also how Carbon is restructuring itself as an enabler for SME success

Listen on Spotify or Apple Podcasts

Why I Wanted to Have This Discussion

First, I’d like to pass my condolences to the entire Dozie family for the passing of their late father and Patriarch, Pascal Gabriel Dozie. An icon in Pan-Africa business and an inspiration to many.

I remember back in 2019 when I read Carbon’s financial results. I was surprised and impressed in equal measure that a Fintech was publishing audited financial results and importantly, was actually making money in the growth at all costs era. From then, I’ve been keen on the Carbon Story and watched their progress from a far.

The Context - Nigeria, Africa’s economic giant, has long suffered from a staggering credit gap, with only 2–5% of its population accessing loans annually. Building a lending business in this environment—where banks shunned retail credit for risk-free bonds and lacked credit infrastructure—is a daunting task. It’s even tougher when you’re navigating economic volatility, cultural skepticism about borrowing, and a global pandemic. I wanted to unpack this challenge with Ngozi Dozie, co-founder of Carbon, who’s spent over a decade reshaping Nigeria’s financial landscape. From paper-based loans to AI-driven SME banking, Ngozi’s journey with Carbon is a masterclass in fintech innovation and resilience. As someone who’s seen the grind of entrepreneurship, I was eager to explore how Carbon overcame setbacks, built trust, and redefined what banking can mean in Nigeria. This conversation is packed with insights, and I’m excited to share it with you.

What You Will Learn

In this episode with Ngozi Dozie, listeners will discover:

• Why the Dozie brothers chose entrepreneurship despite the trappings of a world class education and jobs at the worlds most reputable firms;

• The roots of Nigeria’s credit gap, driven by banks’ preference for government bonds yielding 18–20%, weak credit bureaus, and failed early credit card schemes.

• How Carbon’s origins as a debt collection firm revealed banks’ poor lending practices and Nigerians’ surprising willingness to repay, sparking the creation of OneCredit. Hint: Bankers told them that the model would never work only to approach them asking for personal loans.

• The evolution from paper-based salary loans to the digital Paylater platform, leveraging smartphone growth, Bank Verification Numbers (BVN), and payment systems like Paystack for 5-minute loans.

• The power of proprietary credit scoring, maintaining a 10–13% loss rate through crises like COVID-19 and currency devaluations, and counterintuitive findings, like higher-income borrowers defaulting more.

• The organizational keys to building a robust credit department: mission-driven culture, analytical talent, and data-driven risk assessment beyond traditional banking norms.

• The misstep of rushing into full-service banking, underestimating the complexity of diverse customer journeys and the trust gap compared to legacy banks’ physical presence.

• The brutal impact of COVID-19, where slashing credit limits spiked defaults and strained customer trust, and the lessons learned about prioritizing loyal borrowers.

• Carbon’s pivot to SME banking after discovering 50% of retail borrowers were small business owners, with an acquisition of Vella Finance to offer invoice discounting and payroll services.

• How Carbon differentiates in a competitive market by solving SMEs’ operational challenges—like AI-powered cash flow analysis and payment reconciliation—beyond just lending.

• The vision for Carbon as a “superpower” for customers, using AI and automation to offer personalized advice and prevent loan dependency, inspired by global models like China’s WeBank.

• The critical role of trust in banking, where even satisfied loan customers hesitate to save with fintechs, underscoring the enduring power of legacy bank branding.

• The strategic importance of metrics like talent density, conversion rates, and platform engagement to drive Carbon’s recovery and future growth.

• The challenges of Nigeria’s volatile economy, with inflation at 30% and devaluations shrinking consumer capacity, pushing Carbon to focus on SMEs as economic bedrocks.

• The cultural shift needed to destigmatize borrowing, promoting credit as a tool for growth rather than a sign of irresponsibility.

• The value of learning from global fintechs like Tinkoff and Capitec, adapting their models to Nigeria’s unique context.

• The operational intensity of fintech, where broken backend pipes demand automation to achieve 24/7 service and lower costs.

• The counterintuitive lesson that gender doesn’t significantly affect default rates, challenging assumptions about women as better borrowers.

• The entrepreneurial journey of balancing ambition with fundamentals, admitting early neglect of culture and customer-centric data.

• The aspiration to build a “bank of the future” that solves customers’ root problems—health, operations, growth—before they need loans.

• The critical role of leadership in fostering resilience, learning from crises, and aligning teams around a mission to empower customers.

This episode is a treasure trove for fintech enthusiasts, entrepreneurs, and anyone curious about building impactful financial services in challenging markets. Join us to hear Ngozi’s candid reflections on Carbon’s triumphs, missteps, and bold vision for Nigeria’s financial future.

Transcript

Samora Kariuki: So Nigeria is one of Africa's largest economies. depending on the stats, uh it's anywhere between a 350 billion-400 billion economy. I think if it wasn't for the recent devaluation, it would be by far the largest economy in Africa. On top of that, it's got one of the largest populations. But yet, despite all that, depending on the stats, the number of Nigerians who've taken a loan in the last 12 months based on whether you're looking at World Bank or IFC stats is close to 2 to 5%. When you compare this to countries like South Africa and Kenya that range between 25 and 20%, it's very clear that there's a massive credit gap in uh in Nigeria. And who better than to discuss this conversation with uh than Ngozi Dozie

Samora Kariuki: uh who's been in the industry for over 20 years uh you know from a financial perspective but has been building in the lending space in Nigeria for quite some time. , so I'm very excited to have Ngozi on the show. My name is Samora Kariuki, founder of Frontier Fintech and with me today I have Ngozi Dozie. I think I've said it properly, Ngozi Dozie, co-founder of Carbon. He's been building the credit space for the last uh what over a decade. So, welcome Ngozi.

Ngozi Dozie: Thank you. Good to be here. A big fan of your writing. It's great to be here. Thank you for the invite.