Mr. Daniel Ogun is the Chief Executive Officer of the Triple A Micro Finance Bank Ltd. A onetime Chief magistrate and a retired director, programme management in the Directorate of Technical Corporation in Africa under the Ministry of Foreign Affairs in Nigeria. In this interview with CHIBUNMA UKWU, he spoke extensively on the impact of micro finance banks in the socio-economic development of the country as well as the reason CBN clamped down on some micro finance banks in the recent past.
What is awareness of Micro, small and medium scale enterprises about micro finance Banks?
The awareness is not so high yet but of course, micro finance banking is not entirely a new phenomenon in Nigeria. We know that at a point, there was people’s bank, at another point, there was community bank, followed by empowerment and advancement programme of the federal government to individuals, at another point, there was family Support programme by Miriam Babaginda.
All of them are initiative in their own ways of micro finance programmes at different levels but the idea of micro finance banking came on because government thought of a formal platform that will give small credit and if you ask me, micro finance bank is the opposite of commercial banks.
This I say because the big commercial banks look for big customers and big credit that they will do, but micro finance banks look for small customers with small money. Unlike the big banks, micro finance banks de- emphasise collateralisation.
Therefore, the micro finance environment is good and is coming up because more people are getting more aware that the government cares for them and have provided platform that will make access to credit less labourious and less stressful.
How has your bank been able to positively impact in the business of your customers?
God has helped us in this regard. There has been testimonies on how this bank has opened access to people that have no access in traditional commercial banks, we had a cooperative made up of widows that were close to 30 and some of them were tomatoes sellers, onions sellers, recharge card sellers and how much money did we give them that made the difference?
Some were given N50,000, N70,000 and N100,000. There were some people who have experienced growth in their businesses because of intervention from our banks. I remember a case where I was interviewed on Radio station and someone from Gwagwalada who listened to the programme with passion, came to the Bank to make more findings and today, he has a big salon because of our intervention and there are several cases like that.
So, my joy is that we are able to make impact but we also find out that we are still unable to make yet, the level and scope of impact that we want. This is because young men and women who should take advantage of this platform are more interested in white collar jobs, so if you introduce these opportunities to them, they are most of the time, thinking big.
For example, we once gave an opportunity to a young man to think out a business that is within the scope of our intervention. He wanted to start selling diesel (AGO) and he was asking for millions but it is unfortunate that nobody gives money to start business in millions. We have also had another case where a woman wanted to start up a block moulding industry after which she will extend it to selling cement in trailers but after rendering business advice to her, she started small in selling ten bags of cement.
From that point, she grew in the business and is now in the block industry that she also wanted and she is doing well. So, because she started small, she was able to understand the industry. One fact is that nobody jumps into an industry with a heavy capital. These are the vigorous areas we want to intervene but much more, we want to do.
We want to see young men and women who want to be cobblers, painters, ceramic and interlocking tiles layers. We are ready to train and empower such men as these as we have people who are in these industries that we could attach these young ones to enable them learn the skills.
We are also launching out another programme where politicians will be used to sponsor people into a particular trade. They will partner with us to impact their constituencies. We are making contacts and the result will show once we are through.
What do you think about the business environment in Nigeria?
The business environment in Nigeria is volatile. Of course, we know that the banking sector is the most regulated sector all over the world. It is volatile, subject to heavy regulation and things are played by the rules. People come to us for their many businesses. So we find out that infrastructural challenge is a big challenge in our business environment. We also find out that trust and confidence building is another challenge in our business.
The micro finance banking which emanated from Bangladesh, started with women who borrowed money to return with no interest rate and the good thing about the system there was that everybody knows somebody but here in Nigeria, everybody does not know anybody. That is why we find the issues of identity a big challenge in our business environment.
The micro finance business deals more on trust and character. We find the general character issue as a major challenge. Somebody comes to you and tells you stories. There has been a situation where someone came to borrow money for a particular business, but he ended up not doing the business.
On that, he equally changed his address. However, we were able to trace and find him but it was all stories, so we find our business environment in terms of character a major challenge.
Coming down to security, it has become a challenge we woke up to find ourselves in, people go to work not being sure they will come back. The investment drive will also be highly limited. One wonders why he is investing when gunmen may come and drive out everything.
The other time, I went to Kogi State and realised that it is gradually becoming congested as people are relocating from Kano and other northern states and if you happen to make a deal with somebody that has not really settled down, but is still migrating, you will find out that your money may have to go with migration. So that is the situation our business environment is in.
Can the micro finance banks grow the economy with what they are doing?
Micro finance bank can grow the economy if we are allowed to do what we are supposed to do with government support. I said that because much higher percentage of our population is on banks. In the villages, people keep their monies in the house or buried somewhere. Even in the cities, we find this class of people that are not used to the saving culture.
They live daily and spend as the money comes but micro finance banks are meant to inculcate the saving attitude in people. A person may not be earning enough but if he makes it a culture to be saving N2,000 monthly, he would and multiplication of N2,000 over a period of time become big. That is what micro finance banks do.
They inculcate people with the saving culture as well as introduce the unbankables into the banking environment and then you find out that by the time you create the entrepreneurs, you will be creating jobs and people in line with the chain will also be employed.
For example, if I am a vulcaniser and through the help of a micro finance business I grow and open another vulcanising shop, I will employ someone to manage the place for me, that way, I have created job. Thus, there is a huge opportunity for job creation just as there is a huge opportunity which will have multiplier effect when the micro finance is aligned.
However, a lot of the challenges is on the needed fund to do this massive intervention. Though the government has said that there is a fund for micro finance intervention that the government is packaging, it’s been on the theory line but we wish to see it on the actual line. If that happens, then the micro finance banks will have much more capital and impact more on the economy.
Still on the economy Sir, with the present economic challenges in the country, is there any hope of growth and development of micro, macro businesses?
Well, If we look at the present statistics being given by the Central Bank and allied organisation, they said that our foreign reserve has grown, they said that we have macro growth in our economy but what pertains to me as an operator of a micro finance bank is not those figures but if in the villages, somebody is able to provide three square meals for himself and his family, if my sister who did not go to school but has an entrepreneurial sense of making moi- moi for sales has an improved environment or whether the family that decides to do farming has enough implements to support his farming activities in order to pay his children’s school fees.
There are many of our customers that come at school resumptions to take loans to pay their children’s school fees. So we want to see a situation where it becomes very convenient for households to pay their children’s school fees.
So these are the macro level of impact that we look forward to and I am sure that over time, we will get there because the current micro finance banking has learnt from all the mistakes that the government made in the community Banks administration and other interventions. Regulations keep coming out so that we would have an improved micro finance environment.