With barely four months to the expiration of COVID-19-induced moratorium for those who took its loans, the Managing Director of the NIRSAL MicroFinance Bank, Alh. Abubakar Kure, in this interview, charged all beneficiaries to roll up their sleeves for repayment.
According to him, nobody will be allowed to run away with the loans given out, as a water-tight mechanism has been put in place to ensure full repayment of each loan.
Not many Nigerians are aware of the activities of the NIRSAL MicroFinance Bank. What steps have you taken to create public awareness of the opportunities provided by your organization?
We are quite young as an organization. However, I believe that our activities are well-known to the public. Where we want you to help us is in the area of our campaign against fraudsters. There are a lot of people scamming unsuspecting members of the society who are desirous of or are seeking NIRSAL MFB facilities. There are so many people especially because of the limited resources, so you see a lot of desperation in that regard and some people are taking advantage of them.
Some are even going around collecting other people’s BVN (Bank Verification Number) and applying for loans. Another area of campaign I want us to partner on is repayment of the loans. We want those who have collected the loans to repay their loans promptly. If you collect and you don’t pay back the loan, you are depriving others the opportunity of also collecting similar loans.
No one can get this type of loan anywhere in the banking industry. They loans are given at 5 per cent because of the COVID-19 effects on the economy. And it will be 9 per cent after COVID-19. The rate is low and the risk profile is also lowered so that people at the very bottom of the ladder can qualify to also obtain it. There is no bank that will give you money at 5 per cent rate in this country.
What is the policy behind the NMFB?
Looking at the challenges that operators of small businesses face in obtaining facilities from the Deposit Money Banks, the Central Bank of Nigeria came and said look, we want to assist the people who have no access to finance in the banking industry. We want to finance Small and Medium Enterprises because all over the world, the SMEs are the engine of economic growth. We need to help our people to overcome poverty. We need to create jobs. SMEs form the vehicle to achieve getting people out of poverty and creating jobs. That is why we say that people who have genuine intentions of doing business should come forward and take loans at very low rates and help themselves out of poverty and help to grow our economy.
Our nation has been facing various security problems and other vices due, partly, to unemployment. We believe that if our people are financially empowered and they are gainfully employed, there would be a significant drop in the rate of the current problems facing us as a nation.
We also have success stories that we want the public to know about and we want to partner with you in that regard.
What strategies have you put in place to ensure prompt re-payment of NIRSAL loans
Part of the strategy to make sure that whoever takes our loan repays such loans is engagement. We engage all loan beneficiaries. We undertake constant phone calls, emails, WhatsApp messages. And above all, we do site visits. It depends on the size of the loan. We have different types of facilities.
For instance, we have the Targeted Credit Facilities, we have the AGSMIES (Agric Business Small and Medium Investment Scheme). The AGMIES loans are not mainly given in cash. We have designed it in such a way that 70 per cent of the loan goes into equipment. Only 30 per cent goes into working capital. The idea is to ensure that we don’t just give people large amounts of cash and then you hear stories about some people using it to marry more wives or divert it into other uses. The bulk of the money goes into the assets that they need to do their businesses.
We also have a facility for non-interest banking. For instance, if a person applies for a loan under that product and wants to open a shop, what we do is to supply goods for the individual. Not raw cash. So they can’t divert the money.
Even if they divert it, we have the Global Standing Instruction (GSI) which enables us to deduct whatever they are owing from any of their accounts within the banking sector. As such, no one can run away with our money. Besides, we have the right to blacklist the person’s BVN. With that the person will not be able to transact any business in the banking sector, can’t even use the ATM and cannot transfer funds.
Even if there is money in your account, you cannot use it. We have put all these steps in place to ensure that people do not take us for granted. We don’t want people to say, after all, it is government money. These are loans that must be paid back. Whoever does not pay back, we will apply this mechanism against them.
Our goal is to look at the people at the bottom of the pyramid and make sure that they have access to finance. These are people that cannot obtain loans from the conventional banks because the banks will look at their accounts to see the cash-flow, ask them to bring collaterals and bring guarantors, which they cannot afford. Most of them are in the informal sector who cannot meet the stringent conditions by banks. That is why we have moved in to make credit accessible and affordable to this category of people. Some of the beneficiaries are very low in their KYC (Know Your Customer). Some of these people have never received N200, 000 in their bank accounts. So when we sent them N500, 000 the money bounced back. They were in thousands. So I urged Nigerians who had the opportunity to receive these loans to know that they are privileged and so should pay back. We have to close the portal so that we can clear the backlog.
If you look at our portal, I have over 9 million Nigerians who applied for the Targeted Credit Facility. That portal has been closed since March. You can imagine what it would have been, if it was still open until now.
To what extent are your activities evenly distributed across the country?
All the six geo-political zones are adequately covered. There is no zone that has not benefited from our facilities. Yes we can do more but within the limited resources available, all zones are covered.
Is your current operation digitized? This is in view of the on-going Fintechs revolution in the sectors and the currently introduced e-Naira by the CBN.
To a large extent, our processes are digitized. To even apply for the loan, you have to log in to our portal. The volume of applications and transactions we have handled would not have been possible, if we were not digitized. Irrespective of where you are, so long as you have the internet, you can long in and apply.
We have treated millions of applications and if they were all to physically come to our office, there would be no place for anyone to enter here. The numbers we have done, the reach and the depth of what we have achieved would not have been possible if we didn’t digitize. However, the new things like e-money, that are just coming onboard, we have to test the ground first, before we can apply them to our operations.
Another area we are trying to adopt to have a wider reach is agent-banking. We are supposed to be present in the 774 Local Government Areas of the country. But you would agree with me that it will not be cost-effective to be physically present in all the LGAs. As such we are exploring ways to use agent-banking to reach more people.
Even though your organization is young and your facilities are new, could you give us an idea of the rate of repayment of your loans, especially after the moratorium?
For now, because of the moratorium, which will expire by March, I cannot say that it is very high. You would recall that the CBN gave a one-year moratorium and then extended it by another one year, on a need basis, which will expire by March, next year. Essentially the repayment of our loans will start effectively by March 2022.
I want to create awareness around that. Those who enjoyed our facilities should be ready to repay because those who fail to pay back their loans, all those mechanisms I outlined earlier would be applied against them. They should not say that the MD is too tough because this is a joint responsibility. If you have a brother that collected the loan, please put him under pressure to go and pay, so that others can also benefit from the facilities. It is a revolving loan, if those who collected the facilities don’t pay back, then there will be nothing for others to collect.