Hope Moses-Ashike, Author at Businessday NG

Dollar rises to N755 on increased demand

Dollar trades at N765 as demand slows

Hope Moses-Ashike Feb 23, 2023

The value of naira, which reflects the cost of one dollar, has steadied at N765 since the beginning of this...

Rewane sees weakening naira in 2026, warns of rising debt

Explainer: Why Nigeria needs to adopt free-floating exchange rate

Hope Moses-Ashike Feb 23, 2023

Nigeria is projected to adopt a free-floating exchange rate regime post-election, according to Bismarck Rewane, managing director/chief executive officer of...

Banks net domestic credit rises 37.57% in one year

Hope Moses-Ashike Feb 23, 2023

Nigerian banks Net Domestic Credit (NDC), consisting of loans to the private sector and the government, has maintained a steady...

Sterling Holdco eyes N121.8bn earnings in Q1 2025

Customers can access N20m in Sterling Bank, Credit Café partnership

Hope Moses-Ashike Feb 23, 2023

Under a recent partnership between Sterling Bank Plc and Credit Café Africa, a digital lending platform, customers can get a...

Access’s Oxygen X reports N631m profit in first year

Access Bank’s valentine campaign offers discount on retail products

Hope Moses-Ashike Feb 23, 2023

Access Bank, Nigeria’s retail giant is offering several discounts and mouth-watering freebies on its retail products and services to celebrate...

Here are gainers and losers from naira redesign

Hope Moses-Ashike Feb 22, 2023

The redesign of high-value naira notes, which has sparked a cash crisis in the country, has created losers and gainers....

Thabo Mbeki at breakfast, and the moral implosion of South Africa

Commonwealth observer group calls for peaceful elections in Nigeria

Hope Moses-Ashike Feb 20, 2023

Commonwealth Observer Group of Nigeria has urged the country’s political parties, candidates and their supporters to play their part in...

We exclusively focus on SME lending – Auto Bucks CEO Olasukanmi Olaoye CEO, Auto Bucks Lenders Limited, one of the subsidiaries of Alert Group, in this interview with Hope Moses-Ashike, speaks on challenges facing lending to Small and Medium Enterprises (SMEs) and other issues, excerpt. What specific risk management strategy did you implement to maintain portfolio at risk below 1 percent? In our inaugural year of operation, we disbursed over N80 million in loans. The income generated from these disbursements, coupled with the fact that they constitute a healthy portfolio, mitigates any risk associated with our portfolio. Therefore, the revenue derived from fees and charges enables us to generate income without exposing our portfolio to risk. The robust health of these portfolios significantly contributes to the achievement of our income targets. How did you manage costs and operational efficiency to achieve profitability within seven months? To achieve profitability within seven months, we implemented several strategies. Firstly, we focused on securing cheaper funds, as lower financing costs enhance operational efficiency significantly. Secondly, while maintaining competitive pricing, we ensured that our rates were adequate to cover our cost of funds and other operational expenses. Moreover, we kept our management expenses minimal, contributing to overall cost reduction. Leveraging technology was another key aspect of our approach. By deploying advanced technological solutions, we streamlined various business processes. For instance, our electronic collection system eliminated the need for manual cash transactions, enhancing efficiency and reducing the need for field officers. Through these measures, we optimized operational efficiency and effectively managed costs, resulting in positive outcomes within the initial six months of operation. You mentioned disbursing approximately N80 million; how many individuals or businesses were beneficiaries of this loan? We exclusively focus on SME lending. To date, we have successfully disbursed loans to over 1,000 SMEs. This achievement underscores our deliberate commitment to positively impact the Nigerian economy through targeted support for SMEs. Since our inception, every loan disbursed has been directed towards SMEs, reaching a total of over 1,000 beneficiaries. How do you ensure that the beneficiaries are utilizing the loans provided to them for business growth and to contribute to the economy? The primary way we ascertain the proper utilization of the funds we disburse is through their repayment behavior. If beneficiaries have diverted the funds and not invested them in their businesses, it would reflect in their repayment patterns. Additionally, we implement rigorous monitoring mechanisms once the loan is disbursed. This ongoing monitoring allows us to assess the impact of the funds on their businesses and on the economy as a whole. Furthermore, maintaining a positive credit appraisal is crucial. A strong credit record not only facilitates future loan requests but also enables beneficiaries to potentially access larger loan amounts. Therefore, we emphasize the importance of maintaining a favorable credit history. When you mention that your portfolio at risk is below 1 percent, does that imply that you do not encounter other challenges? The strategy we’ve employed acknowledges that some clients may face difficulties in repayment, particularly during certain business cycles such as festive or fasting periods. For instance, clients in the fast-moving consumer goods (FMCG) sector may experience reduced returns during fasting periods due to decreased consumption levels. Our proactive monitoring of these clients helps mitigate potential challenges and aids in the recovery of funds. As previously mentioned, we exclusively provide loans to SMEs with a minimum of 12 months of consistent business operation and cash flow. This ensures that our borrowers have a track record of financial stability, as evidenced by their bank records. We do not extend loans to startups but rather focus on established businesses with a proven track record. Our credit analysis process is thorough and detailed, assessing the borrower’s financial history and ability to repay. For instance, if a borrower has transacted less than N500 million in the past 12 months and seeks a N5 million loan, we evaluate their monthly turnover to ascertain their repayment capacity. This rigorous process ensures that loans are utilized effectively and that borrowers can comfortably meet repayment obligations. Additionally, we implement regular monitoring to ensure that funds are used appropriately and not diverted for non-business purposes. We are mindful of seasonal factors, such as festive periods, to prevent misallocation of funds. Our commitment to responsible lending practices and diligent monitoring safeguards against potential diversions and ensures that our support truly benefits the MSMEs we serve. What are some of the other challenges your business faces? In the current macroeconomic landscape, businesses encounter various hurdles. The high cost of operation is a prominent issue, compounded by volatile market conditions. Fluctuations in prices, especially due to foreign exchange (FX) challenges, pose significant obstacles. Even after procuring goods, market dynamics can swiftly impact prices, leading to uncertainties. Moreover, macroeconomic indicators like inflation rates, currently at 33.2 percent, further complicate business operations. Elevated inflation affects purchasing power and overall business viability. Additionally, the cost of funds presents a considerable challenge. While securing financing is crucial, prevailing market conditions have increased the cost of capital, with investors demanding higher returns on their investments. Despite these challenges, we actively seek solutions to mitigate risks. This includes sourcing affordable and stable funding options while prioritizing long-term relationships with fund providers. We also recognize the importance of stable economic policies in fostering a conducive business environment. Efforts by the federal government and the Central Bank of Nigeria to stabilize the economy, particularly in areas like FX markets, are crucial for SMEs to plan and navigate business operations effectively.

CIBN, bank CEOs say lenders to remain open

Hope Moses-Ashike Feb 20, 2023

The Chartered Institute of Bankers of Nigeria (CIBN) in collaboration with the body of banks’ chief executive officers has assured...

Attacks: Stay at home, ASSBIFI tells bank staff

Hope Moses-Ashike Feb 17, 2023

The Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI) has asked all bank staff to stay away...

Court grants Emefiele bail, demands N2bn sureties within 72 hours

CBN denies directing banks to collect old N500, N1,000

Hope Moses-Ashike Feb 17, 2023

The Central Bank of Nigeria (CBN) on Friday denied directing banks to collect old N500, and N1,000 notes. Officials of...

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Hope Moses-Ashike

Dollar trades at N765 as demand slows

Explainer: Why Nigeria needs to adopt free-floating exchange rate

Banks net domestic credit rises 37.57% in one year

Customers can access N20m in Sterling Bank, Credit Café partnership

Access Bank’s valentine campaign offers discount on retail products

Here are gainers and losers from naira redesign

Commonwealth observer group calls for peaceful elections in Nigeria

CIBN, bank CEOs say lenders to remain open

Attacks: Stay at home, ASSBIFI tells bank staff

CBN denies directing banks to collect old N500, N1,000

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