By Providence Obuh
Letshego Microfinance Bank (MfB) has said that it is poised to make financing more accessible for micro entrepreneurs and small business owners in the country. Group Managing Director, Letshego Holdings Limited, Mr. Chris Low, said this in an interview with FV, highlighting rationale behind its purchase of FBN MfB and stating that Nigeria funding is primarily driven through a combination of bank borrowing and customer deposits.
What informed your purchase of FBN MfB
I would start with the opportunity, the size of the market, the size of the under-served in this market which is 37 million about 18 times the population of Botswana, the opportunity is very large.
Secondly, we saw a large number of micro-finance businesses doing similar things without any differentiation which we think would be an opportunity to bring to the market, whether it is in the education, health or agriculture and we do low income housing.
How do you intend to sustain FBN’s existing customers
During our first six months of ownership, we have seen loyalty from them, we hope that they are beginning to see some changes in our service practices in terms of speed of response, in terms of the way we handle our customers. Indeed, one of the things that motivated us, particularly with FBN was the engagement we saw between the customers and our staff, we think is a DNA in a business we don’t want to lose.
It comes down to what we call customer experience, at every touch point the customers have with us, we treat them professionally and listen to their needs and meet those needs by providing for them what they really want. Over time, they will recognize Letshego in10 countries with a market capitalisation equivalent to five or six than your market place and that we are a substantial African player with good intention for the under-served in Nigeria.
What plans have you put in place for Nigeria micro and small businesses
I would respond to that by saying that we want to make the financing that they are after, more accessible and we would change the model from the typical branch model and introduce subject regulation and other access channels, be it mobile, third party agents and commission base sales. We already have this in several countries. Secondly, we are going to be introducing overtime specific solutions to their needs, so that street traders can have a fair working capital and turnover.
We would want to provide ready access to that finance so that when an opportunity comes, they know that they can dialogue with letshego and get access to that, whether it is a supply chain in agriculture. We are looking at a number of supply chains in east Africa such as dairy, seed farmers, we might be looking at the coffee farmers and also look at the supply chains in Nigeria, I am not familiar with your agriculture but there would be a number of supply chains in fishing, dairy, there would be a number of crops, we are going to look at and understand the market and then take what we already know as a framework and adopt it to the Nigeria market.
What mechanism are you putting in place to capture the rural women and the unbanked segment
That is a very good question because we have already said that we want to capture the rural economy in terms of providing them access. The economy is dominated by successful women entrepreneur, but at this stage we don’t have any specific product or solution for women, if I can put it this way, I suspect is much more about giving them access to solutions that we have than giving them specific solutions that is beneficial to women entrepreneur.
What would you be doing differently on interest rate to attract potential customers and further encourage borrowing.
In Nigeria, funding is primarily driven through a combination of bank borrowing and customer deposits, we have to build that trust with the customers, so that we can access high level deposits which generally are cheaper than bank funding and that would enable us to look at our lending rates to our borrowers. We would always want to play at the market rate, we don’t want to be on top of the market.
Overtime we would restructure our interest rate, but we cannot give away our whole margin in the early days, we have to study the business model and look at alternative sources of funding such as the capital markets, financial inclusion fund being set up by the Government/CBN. These are opportunities and we would be taking advantage of them and the beauty of Letshego as a large multinational that gives credibility and accessibility to a more diverse and fuller cost of funding source.
Due to economic situation of the country, a lot of companies are downsizing, what would you be doing in this regard.
When we were looking at acquiring FBN MfB, the country was not what it is today, however, timing is never perfect, but the fact that we have come in now, actually, we could turn around and say we want to get our business model right. Without pressure of why are you not growing faster or not lending more, we can be cautious and ensure we have the right platform that is fit for growth. I am very optimistic about this economy and the continent.
Competition is evident, how do you want to compete with existing MfBs
There is a huge under-served market in Nigeria, so the power is large in terms of the opportunity. We are not coming to take other people’s business. I would rather sort partnership with other microfinance businesses where we can both share knowledge. We have not come to create fear, we have ambition of being Africa’s leading financial inclusion group and that would require us to be one of Nigeria’s leading MfB. It is difficult but we are committed to achieving them.