The launch of MyBaobab mobile app by Baobab Nigeria, a nationally licensed microfinance bank, has been garnering praise from customers since its launch in January. Its intuitive interface, data-lite load times, and functionality stand it out.
The app ticks more boxes with its robust security features, and log-in options. Customers can perform bank-to-bank transfers, view transaction history, apply for Taka loans, and manage their loan repayments on the app.
The decision to develop the app, which is available on the Google Play Store, stemmed from market intelligence which showed that declining prices of smartphones have made them more accessible to Baobab’s customer base.
Without prejudice to customers that continue to use its popular *732*348# USSD code and Quickteller channels, the app offers more in a brand-immersive, interactive environment.
According to Statista, a market and consumer data provider, the number of smartphone users in Africa’s biggest economy is forecast to grow to more than 140 million by 2025. Last year, the figure stood at over 101.7 million or 48.12 percent of the population.
With their smartphones, users are going on Facebook, Instagram, TikTok, Twitter and WhatsApp to stay up-to-date with family, associates, and customers. This is the vein of growth the Baobab hopes to tap with its app.
The launch of MyBaobab app is the latest in a series of customer-focused initiatives introduced by the microfinance bank as it adapts to dynamic changes in the market.
Under Dr. Kazeem Olanrewaju, its chief executive officer since 2014, Baobab Nigeria has built a strong market position by staying faithful to its founding principles of providing loans, savings, insurance, and money transfer products to micro, small and medium entrepreneurs.
Historically, this segment has been underserved and unserved by the traditional financial sector.
By servicing their banking requirements, Baobab fulfils its mission to improve financial inclusion, promote enterprise, provide working capital, reduce poverty and act as a driver for large-scale economic development in Nigeria.
This strategy has been rewarded with growth in its customer base and profits.
Baobab Nigeria expects to expand its branch network from 26 to 50 and catapult its customer base from 300,000 to over 2 million by 2026.
Established in 2009, the financial institution operated for years under the name MicroCred until a name change in 2018.
Since disbursing its first loan on March 8, 2010, it has lent out over N116 billion to more than 300,000 customers.
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According to a 2018 research paper titled “Credit Default Issue in Nigerian Microfinance Banks: Developing Sustainable Predictive Analytics System,” written by Saidi Atanda Mustapha, the domestic microfinance sector records a significant amount of non-performing credit, making Nigeria to have the second-highest non-performing credit ratio in Africa.
This situation discourages lenders from making loans to those who actually need them. When they do make these loans, the risk is priced in a way that puts the loans out of reach of the intended borrower segment. By applying a proprietary credit profiling system, and close monitoring of borrowers’ P&L, Baobab Nigeria has achieved one of the lowest defaults rates in the industry of less than 4 percent.
Using a standard industry metric for measuring the quality of a loan portfolio, the 30-day Portfolio-at-Risk (PAR 30), which is the percentage of the gross loan portfolio for all open loans that is overdue by more than 30 days, Baobab Nigeria loans hovered at less than 4 percent in January 2020.
This informed the board’s confidence to raise its loan limit to N50 million per obligor, probably the highest in the microfinance industry. On average, the microfinance bank disburses N4 billion in loans monthly.
Despite COVID’s impact on borrowers, it’s risk PAR 30dropped to 3.45 percent at the end of December 2021, placing it in the 98th percentile of best-performing loan portfolios among microfinance banks.
At present, its footprint covers Kaduna, Lagos, Ogun, Oyo, Nasarawa, Plateau, Kwara states, and the Federal Capital Territory (Abuja). From its inception in 2009, Baobab has disbursed about N116Billion in loans to over 240,000 customers, recovering over 94% Loan repayment consistently.
Boasting a fortress balance sheet of over N13 billion in Deposits and a Gross Loan Portfolio of N19 billion as well as shareholders’ funds of N5.4 billion, Baobab had impregnable defences to weather COVID-induced economic headwinds. At the end of 2020, its Total Asset base exceeded N25 billion. Beyond reported financial numbers, the institution has recorded a significant social impact by reversing financial exclusion.
It has also gained a reputation for banking with a difference that prioritises ethical practices and places customers at the centre of its corporate purpose.
Baobab Nigeria’s employee high retention rate lends credence to its claim that it is one of the best places to work in financial services. During the global COVID-19 pandemic, there was no staff rationalisation, and measures were taken to maintain salaries. This was a rarity in the industry.
One distinguishing factor about Baobab is how it has successfully blended Taka loans into its portfolio. This scoring algorithm rewards diligence in repayment of existing loans and allows customers access Taka as a parallel loan.
This nano-loan offers up to a ceiling of N150,000 which can be repaid over two to four weeks. Baobab built in an innovative reputational booster that incentivizes borrowers to repay on time eliminates the need to charge for risk and allows others in need to access the repaid funds.
At the helm, Olanrewaju has wrought a transformation at the company, placing it on a solid footing among the top five microfinance banks in the country.
His background prepared him well for the role in an industry faced with cut-throat competition from Fintechs, and traditional banks.
Prior to his appointment, he was managing director of Mainstreet MFB Limited for six years from 2008 – 2014.
He completed his undergraduate studies in Accounting and later earned an MBA with a specialty in Finance from the prestigious Ahmadu Bello University Zaria. He went further to enrol in the highly competitive Masters’ Degree program in Financial Economics at the University of Abuja, Gwagwalada. In 2018, he capped his academic pursuits with a PhD in Finance from Walden University, United States.
In recognition of Baobab’s strides, it won the MSME Microfinance Bank of the Year at the 2021 edition of BusinessDay’s Banks and Other Financial Institutions (BAFI) Awards.
Speaking on the bank’s impressive outing, Olanrenwaju reaffirmed Baobab Nigeria’s “goal to become the number one microfinance bank in Nigeria and Africa by constantly building its capacity, technology, and products to provide relevant and unique financial solutions for micro and SME businesses.”
Baobab Nigeria is part of the Baobab Group, a leader in digital financial inclusion in Africa and China. On the continent, it is present in Senegal, Zimbabwe, Madagascar, Ivory Coast, Mali, Tunisia, Burkina Faso, and DR Congo.
The membership of its board compromises experienced financial experts such as Yemi Adeola, former CEO of Sterling Bank Plc., Oyinkan Adewale, former Executive Director and CFO of Union Bank of Nigeria Plc., Tokunboh Ishmael, Co-Founder and CEO of Alithea Capital, Rotimi Oyekanmi, former CEO of Renaissance Group West Africa, and currently a partner at London-based Apis Partners, and Phillip Sigwart, CEO, Baobab Group.
Baobab is backed by PlaNet Finance, an international non-governmental organization dedicated to the development of microfinance worldwide whose founders include Muhamed Yunus of Grameen Bank fame, International Finance Corporation (IFC), Apis Partners, AXA Group, Maj Invest, Nordic Microfinance Initiative, and the European Investment Bank (EIB).
