Commercial bank - industry verticals prioritisation

Business needs

Moniepoint requires that the products we build for commercial banking do the following:

• Build on Moniepoint’s current differentiation and strengths

• Build products that give high revenue and margins

• Drive customer stickiness

• Enable seamless customer acquisition

How we will achieve these business needs

[reorder to focus on the principles for what will be built]

• Build on Moniepoint’s current differentiation and strengths

  • Product-led vertical focus. As a fintech build technical solutions that deeply solve needs of clients within each industry vertical

  • Build product around Moniepoint’s strength in payments and collections

  • Build solutions that build on our ability to access USD

• Build products that give high revenue and margins

  • Focus on servicing the entire supply chain in an industry, to allow:

    • Moniepoint to retain deposits within our system (which are the cheapest form of capital, and enable more lending)

    • A large proportion of payments to be internal (which reduces costs and instability of payments to third parties)

    • Lending, where we have data on the entire supply chain (to minimise losses)

• Drive customer stickiness

  • Build ERP solutions. This integrates Moniepoint with a client’s workflow, automates tasks for the client, and reduces theft

• Enable growth by seamless customer acquisition

  • Build products optimised for the specific requirements of that industry, to make the value of the product high for other clients in that industry

  • Focus on building for the entire supply chain, to make the value of the product high for other clients in the same supply chain

  • Use our access to USD to bring client’s better pricing for USD-based products

  • Allow instant payouts for incentives to sales staff

Prioritisation criteria

We have prioritised industries based on the following criteria:

• Collections in NGN

• Collections in USD

• Complexity of collections

Methodology

We have gathered data to assess the prioritisation against the above criteria. The data is from:

• Internal sources- data from current customers

• External sources- data from government reports

Prioritisation- assessment against criteria

Moniepoint internal data - collections

The most profitable industries from Moniepoint customers today are Oil & Gas, Retail & General Trade, Food & Drinks, and Healthcare.

Travel & Leisure has a high proportion of top 30% companies by profitability, however there are a relatively low number of total customers in this industry vertical.

However profitability can be heavily influenced by lending income, and doesn’t give a true reflection from a collections point of view.

Stripping out lending, we can see the size of industries from a collections standpoint below. The greatest volume of payments today is led by the same four categories, with the addition of IT/Electronics.

External data - size and growth of industries

Agriculture is the largest industry in the Nigerian economy by real GDP. Crop production accounts for 88% of this. Agriculture is an area Moniepoint has relatively low exposure to today, from the perspective of number of transactions.

Trade and IT & Telecoms are the industries where Moniepoint has natural presence, and are major contributors to the economy.

Breaking this down further, the largest sub-industries as of FY 2023 are:

1. Crop production: N47.8tn

2. Trade: N27.4tn

3. Telecommunications & Information Services: N25.5tn

4. Construction: N22tn

5. Food, Beverage and Tobacco: N13.9tn

6. Crude Petroleum and Natural Gas: N13.1tn

7. Real Estate: N10.5tn

8. Financial Institutions: N7.9tn

9. Cement: N7.1tn

10. Textile, Apparel & Footwear: N6.8tn

The highest growth areas as of FY 2023 are:

1. Metal Ores mining: 50.3%

2. Financial Institutions: 28.9%

3. Water Supply, Waste Management & Remediation: 12.7%

4. Telecommunications & Information Services: 8.9%

5. Water Transport: 8.4%

6. Air Transport: 7.4%

7. Chemical and Pharmaceutical Products: 6.4%

External data - exports

In 2022, Nigeria exported a total of $70.7B, making it the number 51 exporter in the world.

During the last five reported years the exports of Nigeria have increased from $49.7B in 2017 to $70.7B in 2022.

Greatest exports are in:

1. Crude Petroleum: $52.1bn

2. Petroleum Gas: $9.0bn

3. Nitrogenous Fertilizers: $2.0bn

4. Refined Petroleum: $1.0bn

5. Gold: $0.8bn

6. Special Purpose Ships: $0.6bn (note: related to Oil & Gas industry)

7. Cocoa Beans: $0.5bn

External data - remittances

Inbound remittances to Nigeria in 2021 had a total volume of $19.5bn