The Managing Director, Boctrust Microfinance Bank Limited, Mr. Babajide Okusaga, in this interview speaks about challenges confronting the Unit MfBs, which he blamed on neglect by the Central Bank of Nigeria, CBN and the Nigeria Deposit Insurance Corporation, NDIC.
By Providence Emmanuel
WHAT are the factors that would enhance MfB performance in 2018?
The CBN has said that every account in the microfinance bank should have a BVN, which automatically brings credibility to the industry. Most MfBs are now on the NIBSS platform where we can also verify those BVN. We are also part of the Credit Bureau, which means that people, who take multiple loans from different MfBs without repayment, would be caught because we are now on the credit bureau platform.
Lastly, there is also the Collateral Register. We can register collateral which is not only landed property, generator, among others can be used as collateral to borrow from MfBs. With that we believe there would be positive outlook and there would be more credibility in the industry this year; there will be little bad loan this year. We as a firm and some of our colleagues in the industry, have embraced IT and USSD, customers can save easily from any platform using USSD, with that there will be more liquidity in the system and it would reduce credit risk.
Are you saying there would be no default this year?
Default would drop drastically in 2018. If people borrow and do not pay, we would ensure that the person is jailed, it is a two years jail sentence. Right now some people are bribing the police, from loans they have taken from us; it is a criminal offence. Even the police that they are bribing, we are doing petition against them to ensure such policemen are disciplined. Once credit, liquidity and regulatory risks are solved, it would be reduced.
Do you agree with multiple funding for the subsector?
It is the perception. People come to us and borrow money but save their money with commercial banks, which immediately brings us liquidity risk and credit risk. That is why we are ensuring that we imbibe technology so that whatever the commercial banks are offering we too can offer. Seven years back, there were no brains in the MfB industry, but today, there are brains, not retired bankers but young people with passion to do microfinance. I am less than 40 years old and we still have people like me that are doing exploits in different areas.
We now have younger people with experience of what they never had in the MfB industry and those set of old ones are retiring because their tenure is 10years. So the new leaders in 2018 going forward would be different, there would be more young, vibrant and creative MD’s that the CBN has to catch up with.
The kind of fund given to the MfBs, particularly the Unit MfBs, is not given out of the understanding of the industry, that means they are giving something but it does not fit the industry. And there is lots of corruption within the rank and file of the people giving these funds, they give preference to people. There is a serious abandonment of the Unit MfBs who focuses on the depth. They are the ones you see all around; if they cannot be managed, then no matter what the big five or ten does, it does not have the impact because they are focused on the spread, while the Unit focuses on the depth.
What the Unit does is to move people from poverty to prosperity. Leaving poverty to prosperity can only be achieved by the Unit MfBs. Yet, the industry keeps ignoring the Unit MfBs and they do not support them to grow. They lock them up as they like, while the debtors that killed the bank would go and nobody is going after them. Because people now know that if they borrow N1million from a Unit MfB, it can die, they borrow and not pay and what the industry does is to lock them up.
How did it get to that level in the first place?
What the industry need is not just funding but proper networking among ourselves, which involve the Unit MfBs and problem solving capacity building. What has CBN, NDIC, BoI done to ensure that we are trained on proper liquidity management, deposit mobilization and treasury for MfBs particularly Unit MfBs. Sometimes they use the same criteria for National MfBs for the Unit MfBs which they do not need.
Are you saying that the CBN and NDIC have not done enough to build capacity?
Like I said, those things must be industry specific. Most of the time, you have to treat people differently to treat them the same. There is tendency to take MfBs as mass market because we are plenty but we have different board, philosophy and different location. For instance, MfBs in the South West and Lagos have different market and the issues. I can’t imagine anyone taking N6 million in Osun or Ogun State, but they are doing it in Lagos because the market is different.
We may be doing small things but consistently doing small things, it becomes a big thing. Most of us are responsible for tuning around the lives of people in our immediate environment. If you get to Lagos Island East, Boctrust can be proud of having impacted so many lives and we are less than two years old.