CDcare’s buy and “pay small small” model wants to fix Nigeria’s shaky credit culture

Entrepreneurial stories are told using various narratives, which all have two things in common: It’s not a walk in the park. It’s not for the faint-hearted. Some founders have a clear path, which leads them to another direction. This brings with it the opportunity for a business idea. But others stumble on entrepreneurship.

For Oluwatobi Odukoya CDcare co-founder/CEO. Ayodeji Farohun the co-founder and chief operating officer of CDcare, was also a father figure who established a credit system in the community. A supportive academic environment encouraged entrepreneurial spirit, as well as a knack for solving problems.

CDcare is an online marketplace where users can shop for gadgets and home appliances at the regular market price. Users also have the option to pay in installments at zero interest. It all began when Odukoya was a 100 level chemical engineering student at the Obafemi Awolowo University (OAU), Ilé-ifẹ̀, Southwest Nigeria.

As his mom saved for months to buy him his first computer, he saw the seed of his idea. He decided to start a Loan-a-Laptop scheme in the university’s environs.

“My mom saved for roughly over eight months to get me my first laptop. When I was in school, I realized that this was something many parents did. Because my father ran a microfinance company back home, and I helped him manage it, I had some experience with credit systems. So I started out with laptops. I’d help students buy laptops, and they’d pay little by little.”

However, his entrepreneurial journey started one year after he got into the university. He created a small company that allowed students to access important files even when they were formatted.

“Before getting into OAU, I had never sat down in front of a computer. When I first came in contact with one, it was a great experience. It taught me how to repair small hardware flaws. This was my discovery of my ability to solve problems. In my first year, I found that students in the final year lost their projects due to viruses. I began to investigate and came up with a solution. With the help of my brother’s Internet connection and computer, I found a way to format computers without people losing their files.”

Odukoya believes that the OAU environment promoted entrepreneurial pursuits which contributed significantly to the growth in computer repair businesses.

“OAU has a very supportive community. Some students at OAU were able sell groundnuts and pure water to other students. When you start a business, everyone would suddenly begin to patronize you rather than an outsider.”

Graduates who left the boundaries of Ilé-Ifẹ́ for the job market recommended him to the companies they worked in to fix their computers. They opened a Lagos branch to cut out the challenge of transporting these computers from Ilé-Ifẹ̀ to Lagos.

“As my business grew, I started training other indigenes so that I could focus on school. Recently, I sold the OAU unit of that business. Computer Doctor is still the Lagos arm. Paystack is one of our top clients. Flutterwave is another. We were able to land these clients thanks to people who patronized us in school and then recommended us to their companies after graduating,” he adds.

Running CDcare

Although the Loan-a–Laptop program was initially a school project, it was already a fully-fledged business that was affiliated with his father. Computer Doctor operations by 2013, around Odukoya’s final year in the university. He was thrilled to have landed a partnership deal with a major distribution company.

“I had been going about my regular computer business dealings with the Loan a Laptop scheme when I met Adedeji, who currently is my co-founder. We met as classmates, became friends when he bought a computer from me and started co-running this scheme. After a few years, we were able to form a partnership with Fouani. We’d been dealing with them for the scheme because we delved into electronics and appliances and had gotten enough units to be partners. So we decided to start CDcare.”

Because he couldn’t afford a developer, Odukoya had to learn to use Flutter, a software design kit with ready-to-use codes and tools to build websites and apps developed by Google.

Fouani Nigeria Ltd, a subsidiary fouani Group licensed distributors of electronic devices made by Hisense and LG, is Fouani Nigeria Ltd. Odukoya was able to make bulk purchases with his partner at a discounted price through this partnership. Today they are partners with other companies such as Apple Nigeria and Vitafoam.

How CDcare works

Although they are not as popular today, it is still a significant part of the financial system. the concept of community-based savings schemes in Nigeria dates back to the country’s pre-colonial era. Individuals joined together to make daily/weekly financial contributions. A reputable person was responsible for recording the funds and providing credit financing if needed.

Odukoya insists that CDcare is not a fintech platform, but an online marketplace that allows users to purchase goods in small amounts for up to 12 months and receive them after the first half is paid at zero interest.

“It’s simple; we offer a ‘pay small for gadgets and appliances with zero interest’, and at normal market price. Our customers collect their items at the end of each installment. We have installments that range from two to twelve months depending on how often you earn. CDcare is a great way to save money and then buy something. And because we have our marketplace, it is easy to ensure quality.”

To give you an example, users get their items shipped when they pay the first installment of a two-month plan. A feature on the platform that buyers can use to have their items shipped and delivered is a perk for those who are regular users. It also allows them to make the first payment for a 3-month plan. CDcare3 is an additional feature. CDcare is now available. Google Play Store and Apple App Store additionally, you can also find it as a web application.

It’s not unreasonable to wonder why CDcare uses a normal market price and zero-interest model, in contrast to other Buy Now, Pay Later schemes like QuickBucks, Carbon Zero, Specta, AltMall, etc. But Odukoya explains.

“Loan companies in Nigeria are missing out on nuance in the Nigerian populace. While it may not be a major factor, it is something. Nigeria is home to a large number of Muslims. Interest schemes are taboo in Islam.

“So, one reason we have a lot of northern customers is the zero interest rate. The African aversion towards credit is another factor. Owing is seen as a shameful thing in most Nigerian communities, so this model makes the buyers feel like they’re saving to buy rather than the feeling of taking a loan.”

CDcare had sold more than 15,000 products to Nigerians as of the writing. The question for many customers is how does CDcare make money, given its model?

“A lot of people wonder how we make money. We’re leveraging the fact that most people would rather save up and buy at a normal market price than take out a loan and pay interest. Our partnerships with companies allow us to control the quality and increase our user base. We get goods at very discounted prices, so we can sell at a reasonable price without tampering with the market price,” Odukoya says.

He also stated that they have never received funding from any external sources and have only received an angel investment of $10,000. He does acknowledge that investing will accelerate their 20% month-on-30 growth.

“We are open to investments because there are a lot of plans in place that only adequate funding can help us carry out. We are currently talking to investors to try to raise funds. But I think that the time spent convincing investors can be better spent educating customers. We have been able to achieve great success because of our dedicated team and the word-of-mouth from our customers. Our focus right now is on getting more customers.”

Challenges so far

Trust is a critical issue in online retail. This was a huge challenge when CDcare was founded. Odukoya believes in trust as a two-way street in eCommerce.

“When we started, getting people to trust us was quite a challenge, and to solve this, we started posting products like kettles and other cheap items after users purchased them, and it got to them as they ordered, they would then come back to buy products like MacBooks, deep freezers, and more expensive gadgets.

“On the other hand, there are times that we have had to go to people’s homes to retrieve products due to defaults in payments. We also issue a loan receipt that signifies payment deficit when the items are sent at the middle of their payment plan.”

He also shares that solving the logistics was an issue, and at some point, all the company’s profit was going into shipping products. They have partnered with logistics companies and charged delivery fees.

This is a Nigerian saying that’s very well-known: problem no dey finish. This can be loosely translated as ‘tough times are an inevitable part  of life.’ Odukoya shares that there have been challenges at several phases in CDcare’s life, challenges he believes are bound to come up as the business grows.

“At the beginning, it was the issue of building the app as we couldn’t afford to pay a developer; I leaned Flutter, and we solved that. Flutterwave also helped us with payment issues. As we grow, we expect to face challenges such as managing logistics and speed of response, as well as other unforeseen issues. But as we get to these points, we will figure out a way to sort them out.”

Looking to the future, growth plans

Startups consider traction the same as wind for their sails. It is one of the most vital phases in a startup’s life cycle, and for Odukoya and his team, one near growth plan is product expansion, with the closest being vehicles and home purchases.

“By 2022, we intend to start selling cars on CDcare, and I would like to put it out that we would love to partner with brands like Innoson Motors and Toyota to make this happen. Most Nigerians settle for Tokunbo because there’s really no way to ‘buy and pay small small’ for cars. We also want to partner with real estate companies such that you can start making payments for a house at say age 25 and save up with us to own it at, say, 35.”

He shares that there is a plan to expand the business geographically. This includes a move to other African countries and a push into Ghana. But the main goal is to get CDcare Marketplace to Africans, online and offline.

“Our big vision is getting CDcare to a point where that mechanic on the road can get a small Nokia phone from us, that welder can get a small generator to make his work easier, and the mom/dad can get a blender to make grinding the tomatoes easier. As we speak, we have begun building the framework for this, and it is being experimented.”

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