In her new year message and words of encouragement to members of the National Association of Microfinance Banks (NAMB), Lagos chapter, Clara Oloniniyi, its chairman, warns members against being too bullish in taking on bigger loans but to be cautious in their risk management approach, especially until the elections are over and the next administration is sworn in.
“I welcome my colleagues into the new year 2015, which I believe holds much prospects for the market. Though it is a year of election, and the government purse is leaner because of the falling oil prices, we still expect the microfinance industry to do well this year because we serve the grassroots and households.
“I therefore advise my colleagues to concentrate on the core business of micro-financing. Research and experience has shown that even when growth rate in the macroeconomy is slowing down, the growth at the microeconomic level can be relatively stable because people will meet the basic needs of life before saving and engaging in other luxuries,” according to Oloniniyi.
It is always good to maintain all regulatory ratios within the tolerable limits as these rations are put there to guide and protect the business and the market, she says, saying “caution is the word. If the regulator requires a liquidity ratio of 20 percent there is nothing bad in doing 30 percent, if they require single obligor of 5 percent for corporate, there is nothing bad in doing 3 percent or 2 percent. Why must you expose 5 percent of your shareholders fund to only one customer and over-concentrate your risk when you can spread your risk.”
Oloniniyi stresses the need for members to reach out to the underserved segments of Lagos State, as some areas are underserved while others are over concentrated with operators.
According to her, members need to be customer centric in the new year, especially in the area of generating feedback from customers to know the critical areas of discontent and try to improve on those areas.
“Pricing is important but that’s not the only thing; what of delivery, speed, process, communication, and customer service that goes with it. Those soft issues are also critical in improving our business and revving up confidence in the sector.
“As we can see clearly, the market has improved significantly in the last two years and we expect the consolidated figures from the regulators to confirm this trend. The industry is already coming out strongly from the ashes of the distresses that affected the market badly about four to five years ago. We need to sustain this momentum through continuous training, retraining and all-round human capital development generally. I advise my colleagues to make appropriate allocation of funds for training this year,” she says.