• Tuesday, June 18, 2024
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BusinessDay

Microfinance and management by all of us

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Traditional microfinancing aims to reach the very poor in society, with “fitted services” but more importantly, they aim to sustain such services. This idea is encapsulated in the twin concepts of outreach and sustainability. In the next few weeks, we shall be looking at some factors that help a microfinance institution (bank or non-bank) to achieve sustainability or viability – two big words in microfinance that mean something and nothing but the ability to recover costs, make profit and sustain the services of the institution to its clients.

While sustainability may be a medium term objective for Non-Governmental Organizations (NGOs) in microfinancing, commercial microfinance institutions, as exemplified by our current group of microfinance banks, have sustainability as the opening verse of their survival scripture. To get to the top, the adage goes, is the easy part. To stick to the top and hang in there very comfortably is the job you need a great guy to do.

Monitoring or supervising the activities of others is often looked upon as drudgery or a routine category of work, lacking in lustre and glamour. Such jobs are sometimes overlooked and or assigned to those with the weaker credentials among the staff. This happens because somebody has the erroneous belief that monitoring and supervising can be done by anybody or could be appended to other, probably, more flashy jobs, and the business won’t even notice. But that’s the biggest of the many errors managers commit. Managers must return prominence and importance to the traditional function of proper monitoring and supervision of transactions. This is very important if we are to climb down from the mounting of aging delinquencies. It is very important if we are to make microfinance, microfinance again.

Managing a routine, especially when it involves chasing after what other people had done, may not be the most fashionable part of the job of leaders in most establishments, including microfinance institution. However, any organization that takes them for granted may have unwarranted challenges to deal with. Usually, and by the nature of the average person, we are easily attracted to the glamourous aspects of whatever we are doing. And this cuts across all human endeavours, but the life and soul of every organization lies in the not so showy part of the business.

Until bankers and their customers turned marketing into a nightmare for their staff, and this is not my conjecture being a fact in the public domain, most bank workers loved and often opted for what was then known as the Credit and Marketing function. It was the kind of job that allowed one to go out for a working lunch and meet new people almost on a daily basis. And as if the conspiracy against other job functions was complete, it became a tradition, especially in the merchant banks to have the top leaders of the bank always come from that department.

Management of many financial institutions tended to create a culture that diminished the importance of monitoring and supervisory function like Credit Admin. And so, people began to overlook the importance of monitoring and supervision of transactions. Credit officers were unwittingly encouraged to grow their risk assets without much or a concomitant emphasis on what I call the “after sales service of a credit relationship”. Most people began to loath “the back office jobs”, which began to look like the place for substandard staff. And that is when trouble is likely to come calling.

Every microfinance institution must give priority to the monitoring and supervisory functions, especially as they relate to credit facilities. We may emphasise the fact that as microfinance institutions, we do more than microcredit; that is a fact. But the truth is that for most commercial microfinance institutions, the real gist is the microcredit function. This function, which is intense and multi-faceted, ensures that more than half the action of every level of management is open to others to cross-check and help fine tune.

How does this come about? Monitoring and supervision should aim at corporate effectiveness. Every member of staff of a certain stature must know what others are doing. This will be possible when the organization is broken into units with small effective teams and groups, under competent hands-on leaders that have deep interest in what their colleagues are doing. For example, a set of credit officers must be supervised by a competent Unit Head, who in turn is supervised by a higher level manager. This officer too will be supervised by another higher level officer- each higher level manager monitoring officers than the one below him. This is the way to get everyone to sing from the same page of the sae hymn book at the same time. Monitoring and supervision in this collegiate fashion creates a positive environment for healthy work. I call it Management by All of Us.

The gist of this emphasis on monitoring the activities of tram members is not in the mere breaking of people into groups. That is not an invention. What is important here is making sure that monitors actually monitor. There are several establishments in our country where supervisors get paid for doing everything other than supervision. That is why the conveniences in many of our public institutions stink all day, under the supervisors’ watch and no one gets fired. Do that in microfinancing you race heedlessly towards a holding action under the regulator’s big hammer.

 

Emeka Osuji