Enhancing its digital transformation projects and adoption of agency banking to drive financial inclusion are some of the focus areas of Baobab Microfinance Bank Nigeria this year. Kazeem Olanrewaju, managing director/CEO, in this interview with Hope Moses-Ashike, speaks on the bank’s plans for 2021 and achievements in the last 12 years of operation in the country. Excerpt.
Baobab MFB is 12 years by March. What can you say are your achievements?
There are so many achievements that one can talk about. We thank God that this company has survived the crisis that has happened in the North in the past and even at the moment. But by way of achievement, I think the first, is to start from the objective of setting up the Microfinance Bank, one of it is to see that we help the country in social economic development and reduction in poverty.
So the first thing would be how many lives have we touched in the last 5 years. We have been able to do and help over 300,000 customers in the last 5 years. We have been able to do well in excess of N2 billion by way of loan that we have disbursed over this period and even by way of contribution to the economy.
Today we have 22 branches in seven states of the federation and we are still counting. We offered employment to about 600 staffs in Nigeria. In terms of corporate social responsibilities we supported during the COVID-19. We also have a program on girl child education which is up and running especially in the north. We’ve also helped Nigeria railway, providing them with chairs, if you go to the railway station you will see them branded in the name of baobab.
We supported the police too by way of cooperate social responsibilities. Today we have well over 140,000 customers who are having different kinds of account, which could be loan accounts, savings account, or people we do insurance for. All these people get financial services which otherwise they wouldn’t have gotten from anywhere else, even from the regular commercial banks. Today we have over 25,000 customers having outstanding loans well over N15 billion. When you put all these together that’s a whole lot of contribution that we have done to Nigeria.
On the average, our disbursement now is about N3 billion every month. The minimum of loan disbursed to various people, is about N20,000 and maximum is about N200 million. So N3 billion on monthly bases, you know what that means, these are some of the contributions we have been able to do over the last 5 years.
It is very important to talk about the transfer of knowledge and technologies, Baobab is in 12 African countries and in China and you see ideas coming from other African countries with which we are building Baobab Nigeria. There’s transfer of knowledge, there’s transfer of idea and there’s transfer of technology. All these are the things that one can point to our achievement in the last 12 years.
Having covered such a milestone in the last few years, what are your plans for 2021?
We have ambitious plans for 2021. COVID-19 has been a subject, an issue in 2020. Our plan is to be able to see how we can recover the lost ground of last year. What are the things we are planning to do? We are planning to enhance our digital transformation projects that we have started. Presently, our customers can use USSD code. They also can use their cards to access their funds on our systems, and we have auto pay and a whole lot of platform for which our customers can do transactions.
We are in partnership with Nigeria Interbank Settlement System (NIBSS) and with Interswitch for our customers to have seamless transactions. In terms of enhancing the business of our customers our plan is to disburse about N3.5 billion on monthly basis and that will give you between N30 billion to N40 billion disbursement plans for 2021.
We are also planning to expand our network by adding three more branches. We already have the approval from the Central Bank Nigeria (CBN) to open the three new branches. We will be going to areas where at the moment we are not present for which our customers are yearning to have. We will also be doing agency banking to be able to increase our financial inclusion which is our priority – to be able to get more people to enjoy our banking services.
We are going to introduce some products to the markets and expand the existing once. For instance, our housing products have been very limited and we want to expand it this year. We are going to be bringing in some consumer products, and we are also bringing in some non-financial products like solar panel, alternative sources of energy. We have three bottom line in Baobab Nigeria. We want to look at the social side to be able to help people, get them out of poverty. We also want to look at the environment; it is under the environmental bottom line or environmental plan that we are bringing in solar panel or what we can call green energy so that we can make some contribution to the environment.
We are hoping to increase our corporate social responsibilities, we are supporting a couple of organizations and we are going to do more in this year. New people will be employed in a country where you have a high rate of unemployment so we are taking some people off the unemployment market so we can create jobs for them. On the whole our plan is to grow in our reach so you can call it the length and the breadth growth of the volume of loans we disburse to people, the financial services that we give them, the insurance that we give them and also create avenue for them to make a lot of savings.
We have a couple of savings products like our ‘Ajo’ product – it is high yielding product. It can help people in an economy where interest rate is going down, to compensate our customers and make them happy. These are some of the plans we have this year and providing general platform for our customers to operate under the covid-19 environment. We have adjusted our business plan to be able to suite the reality of the day, which means reducing personal contact with our customer but still giving them that excellent service delivery. So these are some of the plans we have for 2021.
You talked about opening three branches this year, which area do you intend to do that?
Presently, we have two branches in Ibadan and we would be adding another one. We will open another one in Abeokuta, which is also very close to Ibadan. We are relocating our branch in Kafanchan to Jos. We already have approval from the CBN. These three branches will be up and running this year. If we can do that quickly, we will open another one in Lagos. Presently we have about 12 branches in Lagos. So we are looking at doing at least three or four branches in 2021.
You mentioned earlier that you are recovering your ground lost, what exactly did you lose?
There was lockdown in the month of April – May 2020 and you know we started skeletal operations in June. So you can say that almost a quarter was lost to Covid-19. Our customers could not get the normal services and disbursement in April was zero. In April, it was like about 20 percent of what we normally do. In May, it was 20 percent and in June, it rose to about 50 percent. If you put all these together, it was more than the disbursement for two months. If we are doing average disbursement of about N3 billion, that will give you about N6 billion.
This year we want to find a way to enhance our capacity to be able to increase the disbursement we would have done this year ordinarily plus the six we lost last year. Our plan is to empower people to be able to bring them out of poverty. If they are not getting this fund or they are not getting financial services, we feel that this year we can accelerate and part of it is opening more branches, adding more staff, putting technology to make people be able to access our services. So the services we lost last year, we want to be able to ensure that those customers get the benefit this year.
The Covid-19 pandemic has affected businesses and disrupted a lot of things, how has this affected your bank in terms of portfolio at risk?
It is a major issue; Covid-19 has affected the cash flow of a lot of customers. They are not able to sell and they are not able to receive payment from their various customers, so their cash flow is down. The first thing we did was to restructure the loans that were affected by low cash flow. By the time we granted these loans we had an understanding that you make sales and then you come and repay us. During the lockdown, it was impossible to make sales. What we did was to restructure those loans. We did the restructuring in three folds – either you come and pay the arrears when the lockdown was lifted or we extend the tenure of the loan where you can pay, plus extra months. All these we did to help customers and even to help the global picture of our loan book.
We limited the restructuring for three months (90 days), you can get an extension of three months. With this in mind, of course our portfolio at risk, 30 days is less than 5 percent. It is very interesting to say that by June 90 percent of our portfolio was restructured but as we speak today, it is less than 12 percent. This means that we have over 88 percent of our loans as normal loans. We expect that before the end of March, all these would have been paid down.
The other things that we try to do is to minimise the write off by also giving incentive to our customers. There are lots of waivers we gave those that were challenged, in terms of interest, in terms of penalty, to encourage them to come back. For those that were able to pay, we were able to extend new loans to them.
How do you see your bank benefiting from the African Continental Free Trade Area (AfCFTA)
We are studying the document for AFCFTA to see how this is an advantage for us because the movement of goods and persons and even funds within African countries should become a lot easier than what we had in the past and so we want to take advantage of that, this recent thing that just started 2-3 weeks ago, there had been foot dragging among African countries, we are sitting down to review this and we’ll definitely take advantage as a group to see how we can move funds, how we move goods, and how we can move persons within African countries. So we believe there is going to be a huge advantage to Nigerians giving the fact that we the population, we have the size, we have the economy. There’s no doubt that this is going to help us build Baobab Nigeria better and stronger.