BusinessDay 18 Feb 2018

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C002D5556 22 BD SUNDAY Sunday 18 February 2018 Business Interview ‘It is dangerous to use commercial bank knowledge to run microfinance bank’ Adegoke Adegbami, MD/CEO Mainstreet Bank’s Microfinance Bank, in this interview with Seyi John Salau said that the knowledge gap was largely responsible for the failure of a number of Microfinance Banks in the country. According to him, some operators were looking at microfinance as a small commercial bank. He warned that it is very dangerous to use the strict commercial bank knowledge and methodology to run a microfinance bank. Adegbami also spoke of the principles that help his bank. Excerpts: How would you assess Microfinance in Nigeria; is it really working? I think we need to basically go back to the definition of microfinance. Microfinance means providing financial services to the small and low income earners. But when you look at the Microfinance, there are some that are in the SME group, there are some that are very micro, i.e. those trading in petty markets and so on; so it depends on what you want to focus. For a microfinance bank you can’t attend to all of them. For instance, if you want to tackle the issue of poverty, are you going to get everybody on the street to come and do business with you? Some of them will come but they cannot really save their money, some of them are actually involved with one small business or the other. These are the ones we call the active ones because they are actively involved with something so these are the ones we target; the ones we believe if it’s effectively done they will bring their money to save in the bank and they will also be requiring small loans and also employ someone else. They also get their businesses better structured, better planned and maybe need to expand when it gets better with time into a limited liability company. What’s your take on the closure by CBN of a number of Microfinance Banks during the ‘economic recession of 2009? The 2008 global economic meltdown drew a lot of issues and challenges. There was the challenge of people losing their jobs and then looking for something to do. Microfinance provided an opportunity where they could get some money, those people that lost their jobs for example could start some small scale businesses. Each of them can also provide jobs for two or three other people. There were also people that lost their jobs in the commercial banks and saw microfinance as the natural alternative. Shortly before the meltdown, there was the banking consolidation in Nigeria. Consolidation reduced the number of commercial banks in Nigeria from 82 to about 25. Many people in the money deposit banking space lost their jobs in 2006 and 2007 due to reorganisation, rightsising and Adegbami downsising following the banking consolidation. The next thing was for those people to get jobs in the emerging microfinance space. In a typical Nigerian way, many of these people believed that microfinance means the smaller version of commercial bank. They believed the commercial banking knowledge they had was enough to run microfinance business. They were wrong. At the regulators level, many of the examiners were using their commercial bank orientation to examine microfinance banks. The microfinance market operates on a different ideology and methodology. It is very dangerous to use the strict commercial bank knowledge and methodology to run a microfinance bank. The market is different. The people we are dealing with; their lifestyle and their needs are different from that of an average commercial bank customer. For instance, there was this belief that you can use the microfinance bank license to mobilise cheap deposit to either fund the micro credit programme or other businesses. The truth is that Microfinance Bank cannot even become self-funding in the first two to three years. You are dealing with a net deficit section of the market and so you must get money to bring into that section of the market. Therefore, the knowledge gap was largely responsible for the failure of a number of Microfinance Banks. People from commercial bank background also had this problem of wanting to keep their expensive lifestyle. So they put on Microfinance Bank the kind of expenses that are unsustainable. Things have changed today. The operators and regulators know better now. Even our customers now know better. They know that microfinance loan is not a share of national cake. CBN has organised and sponsored certification training for operators. For you to be in a management role a microfinance bank in Nigeria now, you must be certified. There are also training programmes for the non executive directors of Microfinance Banks. We must also remember that a number of Microfinance Banks have done well over time, particularly those that took the issue of capacity building very seriously. Mainstreet Bank Microfinance is one of those that have done well. Here, we don’t joke with the issues of training and planning. What is the customer base of Mainstreet Microfinance Bank like as at today? We have over 80,000. Some of them are on loans while some merely save their money with us. Will you really say Mainstreet Microfinance Bank is playing at the grassroots level? Our customers are broadly divided into two categories. We have those in the rural areas and those in the semi-urban areas. In Lagos, for example, the places where we operate are what you can call semi-urban. If you look at the outskirts of the Island, you look at the mainland and also the rural areas these are the places that are densely populated so we are targeting them. Even most of our customers who are doing business in the major markets on the Island are people who reside in the outskirt of Lagos, like many parts of Ikorodu, Abule Egba, Ikotun, Ejigbo and so on. What are the challenges facing Microfinance Banks in the country presently? There is the issue of capacity building which is being addressed by the day. There is the issue of funding. Microfinance needs stable funding both from private commercial and development sources. Poor credit culture in our society is also a major problem. I also think that Microfinance in Nigeria is currently being strictly regulated compared with what obtains in many East African, South African and Asian countries. We know that the regulators, objective is in response to the nature of our own society. But we should get to a point were some small scale microfinance can operate just like the modern forms of our typical Alajo or Esusu system. Those people will not need twenty million naira to start their businesses, particularly in our remote villages. Their activities would be guided by other business related parts of our laws, pending when they will grow to the level of strict regulation. At that point, they will be compelled to list for regulation. Also, lack of public infrastructure makes the business of microfinance to be very expensive. Microfinance is naturally expensive because of it small loan sizes and the labour intensive nature. But Nigerian environment is more challenging because of the absence of public utilities. Is Mainstreet Microfinance Bank involved in any corporate social responsibility? We can say we are doing corporate social responsibility. Microfinance itself has a social aim, so that is why Mainstreet Bank MFB is doing Microfinance. But basically what we do by way of what you call corporate social responsibility are things like providing capacity building opportunities for customers, especially the group loans customers. Before we give them, we educate the people, we teach them basic skills like book keeping. Let’s assume that you did a business of N50,000 and you got N55,000. N5,000 is your profit. Profit means you have to meet up all other expenses like transportation and the likes. But we have also been involved with some social activities too in form of training our staff and also organise some get together party for members of staff to interact and have fun and also network. We give them training that are not necessarily needed for the job but for their personal development. Our leadership disposition fuels our passion for success and the setting up of people and also training them on wealth creation, entrepreneurship mentoring and on capacity building while creating awareness for young entrepreneurs to start their own business. We do some health awareness campaign in our organisation. We have also organise retirement training for some of our consumer loan customers.
Sunday 18 February 2018 C002D5556 NewsmakersOfYesteryears SUNDAY BD 23 Margaret Ekpo: Nigeria’s pioneering female political icon SIAKA MOMOH Margaret Ekpo, unlike the likes of Dr Nnamdi Azikiwe (‘who know book pass bookshop), Chief Obafemi Awolowo – legal icon, F.R. A Williams –‘Timi the Law’, Dr. Abdul Atta, Ibrahim Dasuki, Kingsley Mbadiwe –‘Man of Timber and Caterpillar; Moses Majekodunmi - renown medical practitioner, and a long list of others, was not that Nigerian who had the priviledge of being part of the highly rated professions of the colonial age. But she had that leadership trait in her early enough. She had native intelligence. She was concerned about the challenges of her immediate environment; she keyed into it, was focused and fired on with all cylinders. According to historical records, Margaret Ekpo (June 27, 1914 – September 21, 2006) was a Nigerian women’s rights activist and social mobilizer who was a pioneering female politician in the country’s First Republic and a leading member of a class of traditional Nigerian women activists, many of whom rallied women beyond notions of ethnic solidarity. She was a grassroots player and nationalist politician in the Eastern Nigerian city of Aba, in the era of a hierarchical and male-dominated movement towards independence. Growing up Born in Creek Town, Cross River State, to the family of Okoroafor Obiasulor and Inyang Eyo Aniemewue, she reached standard six of the school leaving certificate in 1934. The death of her father in 1934 forced her to put on hold her goals of further education in teachers training. She then started working as a pupil teacher in elementary schools. She married a doctor, John Udo Ekpo, in 1938. He was from the Ibibio ethnic group who are predominant in Akwa Ibom State, while she was of Igbo and Efik heritage. She later moved with her husband to Aba. In 1946, Margaret had the opportunity to study abroad at what is now Dublin Institute of Technology, Dublin Ireland. She earned a diploma in domestic science and on her return to Nigeria she established a Domestic Science and Sewing Institute in Aba. Politics According to Wikipedia account, Margaret Ekpo’s first direct participation in political ideas and association was in 1945. Her husband was resentful with the colonial administrators’ treatment of indigenous Nigerian doctors but as a civil servant, he could not attend meetings to discuss the matter. Margaret Ekpo then attended meetings in place of her husband. The meetings were organized to discuss the discriminatory practices of the colonial administration in the city and to fight cultural and racial imbalance in administrative promotions. She later attended a political rally and was the only woman at the rally, which saw fiery speeches from Mbonu Ojike, Nnamdi Azikiwe and Herbert Macaulay. This lead to organizing a Market Women Association in Aba to unionize market women in the city. She used the association to promote women solidarity as a platform to fight for the economic rights of women, economic protections and expansionary political rights of women. Global awareness Margaret Ekpo’s awareness of growing movements for civil rights for women around the world prodded her into demanding the same for the women in her country and to fight the discriminatory and oppressive political and civil role colonialism played in the subjugation of women. She felt that women abroad including those in Britain were already fighting for civil rights and had more voice in political and civil matters than their counterparts in Nigeria. She later joined the decolonizationleading National Council of Nigeria and the Cameroons (NGNC), as a platform to represent a marginalized group. In the 1950s, she also teamed up with Funmilayo Ransome-Kuti to protest killings at an Enugu coal mine; the victims were leaders protesting colonial practices at the mine. In 1953, Ekpo was nominated by the NGNC to the regional House of Chiefs, and in 1954 she established the Aba Township Women’s Association. As leader of the new market group, she was able to garner the trust of a large number of women in the township and turn it into a political pressure group. By 1955, women in Aba had outnumbered men voters in a citywide election. In the Eastern Regional House of Assembly She won a seat to the Eastern Regional House of Assembly in 1961, a position that allowed her to fight for issues affecting women at the time. In particular, there were issues on the progress of women in economic and political matters, especially in the areas of transportation around She felt that women abroad including those in Britain were already fighting for civil rights and had more voice in political and civil matters than their counterparts in Nigeria Margaret Ekpo major roads leading to markets and rural transportation in general. With the demise of First Republic, courtesy of the military, she took a less prominent approach to politics. In 2001, Calabar Airport was named after her. She died in September 2006 at 92. Highpoints of Margaret Ekpo’s life * Beyond ethnicity, Margaret gathered women and encouraged them to protect their interests by taking part in the political advancement of the nation. * In an era of a male-dominated movement towards independence, she played major roles as a grassroots and nationalist politician in the eastern Nigerian city of Aba. * Margaret encouraged the participation of the women folk in Aba as she was the only woman at political meetings organised to discuss the discriminatory practices of the colonial administration and to fight cultural and racial imbalance in administrative promotions. * She wanted more women to become members of the Aba Market Women Association, so that she could pass on information from her meetings to them, but their husbands would not let them. But ‘Salt Allocation Strategy’ gave her victory: -After World War II, there was a general scarcity of salt. -With this, Margaret went round the shops and deposited money for all available bags of salt, giving her control of its sales. -She ordered that any woman who was not a member of the association should not be sold to. With no choice, all the men released their women to register. * Aware that the movements for civil rights for women around the world were growing, Margaret intensified her demand of the same for the women in her country. * She fought the discriminatory and oppressive political and civil role colonialism played in the suppression of women. * She later joined the decolonizationleading National Council of Nigeria and the Cameroons (NGNC), as a platform to represent a marginalized group. * As leader of the new market group, she turned it into a political pressure group. * By 1955, women in Aba had outnumbered men voters in a city wide election. * In 1961, she won a seat at the Eastern Regional House of Assembly, a position that allowed her to fight for economic and political issues affecting women.
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BusinessDay 18 Feb 2018

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