Experts task MFB operators on savings mobilization

By Amaka Abayomi

Financial experts have tasked microfinance operators on the need to cultivate savings mobilization strategies that would enable them increase financial inclusion and reduce poverty level of their customers.

Speaking to microfinance operators, Managing Director of Women Development Microfinance Bank, Hajia Talatu Bashir, and Founder, Country Women Association of Nigeria, Mrs. Bisi Ogunleye, said despite its demand and importance, savings mobilization has remained a big challenge for many microfinance institutions.

According to Bashir, “If MFBs would adopt and localize sound savings mobilization strategies; there would be a reduction in cases of illiquidity experienced in some banks.

“Focusing on good saving mobilization can deepen and expand MFBs’ outreach as a large numbers of customers choose to use savings services instead of credit which has limited access. Savings help the poor to better organize their financial lives and deal with emergencies and accumulation of assets from savings helps improve quality of life.

“Good savings mobilization strategies ensure the sustainability and growth of the banks as the main funding source for sustainable growth is savings, which is less costly than loans which many MFIs rely on.

“It ensures stable source of funding and improves public image and confidence. When MFBs cultivate good savings mobilization strategies, it instills strong demand oriented business model, creates the desired organization culture, and provides an environment for effective financial intermediation”

For Mrs. Ogunleye, nearly 70 per cent of Nigerians still live in the rural areas, making them a sizeable population to mobilize.
“Not all that works for international MFBs must work for us in Nigeria due to the different cultures and economy. Thus, local experience must be key in whatever we do, and we must discard the mindset of one solution to all problems.

“Looking at international best practices, we need to look at our environment, what we have and adapt only those ones that we need.”
They listed the challenges facing savings mobilisaton to include capacity, culture, perception and image issues which impair ability to scale up savings mobilization.

Cost inhibitions which prevent quick change of delivery challenges such as new branches, ATMs and systems to support savings products. Access to payment systems and clearing houses

Others are skills needed to manage savings which are different and more complex that those needed to manage micro-credit and often come at high costs that most MFI structures can’t afford. Quick fix attempts to hire staff from conventional banks to fill the bank which often ends in conflict of culture and poor strategies.

Factors for successful mobilization of small and micro-savings, according to Bashir and Ogunleye include better organization and delivery channels as the closer the MFI gets to its customers, the better the chances for mobilizing a large number of depositors. Branch network and access points as savers need convenient and ease of frequent access to their deposits.

Others are simple technology to support branch connectivity and ease access and lower costs of savings mobilization essential such as lean branch structure supported by technology solutions.