‘Microfinance banks have impacted more lives than commercial banks’

Adegoke Elijah Adegbami, a financial management consultant who is also one of the pioneers in microfinance bank management in Nigeria, is currently the managing director of Mainstreet Microfinance Bank Limited in 2009, a subsidiary of Skye Bank Plc. In this interview, he speaks on prospects and challenges of running a microfinance institution.

What is your appraisal of the microfinance sector in Nigeria, do you think it has lived up to people’s expectation?

We must put the issues of expectation in perspective. Customers have their expectations from microfinance banks. Some of the expectations are right while others are wrong. Because when people don’t know what to expect, then they begin to expect just anything. Some expect that they collect the money and give you reasons why they should not repay. Regulators and government also have expectations. Our shareholders and investors also have expectations from us. Our staff have expectations too. Then there is the general expectation from the Nigerian microfinance subsector based on the global microfinance standards. I believe the global standard should be used factoring in some peculiarities in our own local environment. If you use this standard, the microfinance subsector has not done badly. The subsector is still relatively young and evolving. But we have impacted lives. I am tempted to argue that the microfinance sub-sector is making more positive impacts on the people than even the money deposit banks. We are the ones that attend to the needs of the people. We attend to people who have not much to offer us. Some of our customers would rather put their small life savings in the commercial banks and then come to us for loans. I think the person that is giving to them must be commended than the person that is taking from them. They only lend to people who are already rich. We lend to people who are poor, believing in their future. Even though the microfinance sub-sector has its own teething problems, but we have done comparatively well and have impacted people’s lives.

We understand that some banks use illegal means to collect debts from customers, how do you recover yours?

It depends on what you mean by unlawful or illegal means. If you owe, then you must be prepared to pay. At Mainstreet Microfinance Bank, we ensure that customers sign undertaken saying if you don’t pay us we will take your items and sell, but that is the very last option because even if people don’t know us they know our parent bank.  So, it is easier to say a subsidiary of this bank did this to us. We don’t do things that are illegal or involve violence. We have our name to protect. By training, we know that we don’t need to go that far. The default in effect may be an indication that we did not do the selection properly from the beginning.  If you do the right thing, it’s not as bad as people think. Let me tell you if you do microlending the way you are supposed to do it; out of about every 100 people, I can categorically tell you that 80 people will pay you without giving you any single problem, 80 out of 100. They don’t have that kind of thing in the commercial banks. Just make sure you don’t overexpose them, you don’t give them more than they need and you treat them very well. Also be sure you don’t have your staff trying to connive with them because sometime you have staff who can even go to influence the customer to default because they want to get something out of it. If you take all those things away, every 100 naira you lend to customers, 80 naira will be paid without any pressure. Of course, there is a problem that people don’t take note of, often times; a microfinance bank wants to compete with a commercial bank. You are not dealing with the same set of people, if we are competing with them, you will go for the wrong customers. There are people that come here and we say no we are not dealing with you, you are not our customer.

Because we are dealing with people who can see us as their role model, people we can talk to and guide them on how to do their business not people who think they know it all. If you select your customers very well, it is not as bad as people paint it.

What is the customer base of Mainstreet Microfinance Bank as of 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 massively 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 outskirts of Lagos, like many parts of Ikorodu, Abule Egba, Ikotun, Ejigbo and so on.

What is your five years projection for Mainstreet Microfinance Bank?

Five years from now, Mainstreet Microfinance Bank is going to have a balance sheet of N20 billion, and like I said, our customer base is going to be a minimum of one million people, our stretch within the next five years would have covered at least one-third of the Nigerian states. Of course, we are very selective of the places we go because it’s not every place that is viable but we have targeted places that we want to go and I can also say that within those five years, we also want to have other arms, the insurance and health services. We have a training school today which we believe would have been upgraded within the next five years to be able to service other people beyond our own bank alone. Our staff complement will be around 2,000 staff at the end of five years. We also want to go into payment system and collaborate with reputable Fintech companies.

We want to improve on our social corporate responsibilities. There are going to be people by virtue of having been with us for a specific number of years; we should be able to give them what is called health insurance for free. We really need to have another outfit that can work with other medical outfit across the nation. We are also going to have the charity arm that is going to be around the end of the fifth year, we will have a charity arm where we can provide scholarship for some indigent people and our target is that they are going to be children of our customers. We give them scholarships from primary to the higher institution, so those are the things we have in mind and I also want to say that as a person, I believe that maybe it’s a gift or whatever but when people hang around me, they must grow so within the next five years, all the people that are here today with us, we want to see that they have grown five times more, financially, morally and their exposure and every other thing.

We are not only involved in business, but we will groom the people, we will train them on business, we will also give them other training that will be useful for them in their private lives, because we want a situation whereby people that have worked with us for a number of years should be able to say; okay at this particular age, I want to retire and I want to go into this business. Of course, we are not putting you on a life pension, but we would be able to equip you while you are with us and we will encourage and open your eyes to how you can plan your life and when you are out you will be happy for it.

Do you subscribe to any particular management style?

Interestingly, I look at management more from leadership perspective. I believe that all of us must strive to be leaders in our area than managers. At personal level, I am a leadership coach. I teach people how to succeed. You must have read some of my books on business and leadership. This reflects in the organisation that I lead.

I normally classify leadership styles into four- the amiable, the analyser, promoter and the director. Each of us has these leadership qualities in different measures. They reflect in all that we do, including managing an organisation. I am in the class of what I call directors. I am goal-oriented and objective driven. I can expect too much from myself and people who work with me. I like rewarding people handsomely only when our common objectives are achieved. I don’t complain and I don’t like people complaining. I like freedom I don’t want to dominate people. I have very strong capacity to drive and motivate people towards a common objective. I could be very quiet and reserved but can also confront people when it becomes very necessary.

Directors can also challenge status quo when necessary. I like working within procedures but know when to walk around the procedures without jeopardising the overall objective. I am a big dreamer and I don’t see impossibility.

I thank God I have very good people around me in this bank. They have learnt to tolerate me when my expectation from them appears too high. I am more conscious of the fact that I have wonderful people around me that know that I have management or leadership capacity. The people here are so wonderful and supportive. I thank God for them.

What advice do you have for young people, who aspire to attain this height of yours professionally?

Hard work pays. Young people must have value for knowledge. Readers are leaders; they must be ready to read extensively and intensively. One problem of our continent today is that we have a system that throws up people who are never prepared for leadership. Young people must prepare for leadership. Leadership is more than talent or gift. It can be learnt, it can be cultivated. They must value human lives above money and ego. Finally, young people should develop interest in entrepreneurship. It holds the solution to the major part of our economic problems. Also, in this dispensation young people must learn to think business.