The Managing Director, Alekun Microfinance Bank (MfB) Mr. Joshua Ukute, in this interview, said that the level of adoption of electronic payment (e-payment) in the microfinance sub sector is still very low when compared to the number of MfBs operating in the country. Excerpt:

By Providence Emmanuel

WHAT makes loan recovery challenging for MFBs?

Loan recovery is a big challenge in the microfinance industry because we don’t have the prerequisite data in this sub-sector like in other clime where they have accurate data. With data you can track your loan customers, though the Bank Verification Number (BVN) is trying to help in this regard but as it is, the cost of acquiring the data capturing machine for microfinance banks is high.

•Joshua Ukute

Once we are able to acquire the data capturing machine and all our customers are on the machines, then we should be able to start tracking customers that we give loan to. That is one challenge. Also, if the government can put infrastructure in place to ensure that all customers are brought within the financial net, then, a customer would know that once he/she defaults, he cannot get loan elsewhere, definitely he/she would pay.

What is the level of    e-payment adoption    in the sub-sector? 

E-payment cannot be done when a microfinance bank is not hooked up or connected to the e-payment platform. Basically, in Nigeria today the e-payment platform is the Nigeria Inter-Bank Settlement System (NIBSS), but as it is, most MfBs are working towards integrating with NIBSS because without NIBSS you cannot participate, you are out of that platform. The Central Bank of Nigeria (CBN) is also working on a Unified IT platform which is called NAMBUIT. It is an IT platform whereby all the MfBs will be using the same software. This would also enable e-payment within the MfB sub sector. 

Are you saying e-payment is not working in the sub-sector?

As I speak, there are MfBs who are using e-payment; they do it in collaboration with other banks like the commercial banks. But the level of adoption is still low, if you look at almost 1000 MfBs that we have, I don’t think there are up to 10 or 15 MfBs that have adopted that.

How is your bank responding to competition in Ogun?

Alekun Microfinance Bank is located in Ogun State and some of the products that we have put in place to drive services are electronic products. For us as a bank, we have done it in a way that you can do your transaction anywhere in the country because we have a robust software that can enable you do transaction anywhere. Our customers may not need to come to the branch, we no longer do the brick and mortar type of banking.

We have electronic products with deposit and loan products that allow you do your transaction anywhere. Because MfBs were created basically to bring those who are not in the financial net to come into the financial net and also to cater for the active people in the bottom of the pyramid, we have loan products for those at the low end of the pyramid, such as group lending product, we also have micro product for those at the low end of the pyramid to deliver services to them. 

How would you rate MfBs operating    in Ogun State?

We have about 51 MfBs in Ogun State cutting across territorial zones of the state and we have about eight States MfBs and others are Unit MfB. Each of these banks is located close to the people they serve. There are some local governments in the state where we don’t have the presence of any commercial bank but the MfBs serve the people there.

We are thriving also, because we are in the same economic climate like every other business in this country, cost of doing business has been challenging because it is high and every other thing is not as supportive as it should be. But in terms of creativity and ingenuity, the banks are doing very well and I must say that, if the regulatory bodies would want to come out and do their recommendations, I think we have some good MfBs here in terms of balance sheet, size, market creation and income generation.