Wanda Rich, the editor of Global Banking & Finance Review, recently spoke with the CEO and MD of Mainstreet Microfinance Bank, Elijah Adegoke Adegbami . Having empowered micro enterprises and low-income earners in Nigeria since 2008, Mainstreet MFB collected 3 titles at the Global Banking and Finance Awards in January, including the Banking CEO of the Year Nigeria 2020 for Adegbami.

Wanda Rich: Congratulations on your award-winning success. What initiatives do you feel have led to it?

Mr. Adegbami: A number of initiatives have contributed to the success. First is the people’s initiative. Whatever we have achieved, it is because of the type of people we have, our communication and the motivation with which they work. Don’t forget, the year 2020 was a very challenging one considering the impact of COVID-19. It is about the people and how we inspire them. We make good communication our priority. This same initiative is extended to our customers. We now have a call centre that responds on the spot to our customers’ enquiries, and reaches out to our customers even before they complain. Our technology initiatives have also assisted in no small measure. The mobile banking, USSD, ATM deployment, online loan origination platform, and online marketing and promotion tools have all been very instrumental to getting to where we are now.

Next is about our product initiatives. We design and deploy products that particularly address people’s needs. One of these products was our Auto Finance which actually earned us one of our awards. Among others, we also have a special liability product with a very attractive interest rate. It is a debt note that corporates and individuals can invest in and get one of the best returns possible. The product was well accepted in the market. We also ensure that our brand is well marketed and promoted with customer satisfaction as the ultimate. We ensure good communication with our customers, too. This bank also has a very good strategy of compliance with regulations, laws and best practices.

Wanda Rich: As CEO, what is your vision for Mainstreet Microfinance Bank?

Mr. Adegbami: We are building a financial supermarket that will outlive all of us. This is not just my vision as the CEO. It is the vision of the bank, starting from the board of directors. We are all committed to that vision. We have specific aspects within this vision that are captured in our strategic plan which we are currently executing. We have today an asset base of N10 billion. By the time we are through with the execution of the current strategic plan, our asset base will be at a minimum of N25 billion. We want to be a model for customers and people-centric financial institutions. We want to be the leader, not only in Nigeria but also in Africa. We are building an institution that customers will be proud to associate with and employees and investors will be proud to be part of.

Wanda Rich: In Nigeria, financial inclusion has always been a challenge. How is Mainstreet Microfinance Bank helping to bridge the gap and make financial services more accessible?

Mr. Adegbami: Financial inclusion is all we do here. This is our goal. We drive that by ensuring that our services and products are targeted at people and businesses that are not attended to or considered by the regular commercial financial institutions. That means that they are excluded by the regular financial system. Some of them don’t even know that they can or should be served by the financial system. We take pains to see values in them and do our best to develop these values. We have testimonies of people and SMEs that have grown with us multiple times over the years. There is a particular customer who used to collect a N500,000.00 loan from us some years back. We normally gave him N500,000.00 at six months’ repayment. His business has grown over the years and we can now give him about N100 million at a time, at up to twenty-four months’ repayment. This is just one of the many stories we have like this.

As a principle, we don’t compete with the regular commercial banks. We look for those customers who will not normally be attractive to them. The mistake many of our peers make is attempting to compete with the commercial banks. We have special products that are targeted at specialised groups and women. These are the ways we drive financial inclusion.

Wanda Rich: In your opinion, what are the biggest challenges facing the microfinance sector in Nigeria?

Mr. Adegbami: Among others, the business environment where we operate is very hard and volatile. The cost of doing business is very high. This is not particular to us but it bites us more because of the segment of the society that we serve and our business model. Microfinance is naturally expensive to run, particularly because of our loan size, labour intensiveness of the business and low deposit. All these put together raise our costs of doing business compared to those of an average business. Another challenge is that of lack of access to funding. It is difficult to run only on commercial funding, especially at the early stage of the business. It is even very difficult to get the commercial funding from our commercial banks in Nigeria. We were about to get an overdraft facility from a commercial bank in Nigeria recently. This was an overdraft that was to be secured against our fixed deposit or treasury bills. I was surprised when they brought documents for me to sign as the CEO – a personal guarantee and assets declaration. I then called the manager to ask him why I should be required to give a personal guarantee for a cash-backed overdraft. In reality, the commercial bank is not actually lending us any money. The cash we have with them is at least 110% of the purported loan they wanted to give us. This is one of the funny experiences we have on a daily basis.

Another challenge is that of human capacity. It is very difficult to get people who have the knowledge, commitment and integrity to work with us. Sometimes you have people with only one of these qualities. At another time you have people who don’t have any of these qualities. The credit culture here is also very poor. To make matters worse, you still have people who think microfinance money is national cake. Unfortunately, you now have some middle-class customers who believe they can collect microfinance loans and begin to use some roadside lawyers to harass the lender. A particular customer requested a loan of N50 million from us. This is from a previous loan of N5 million which he’d just paid down, apparently for him to get a bigger loan. When we analysed the business, we discovered there had not been any fundamental growth to warrant disbursing a N50 million loan to him. We discussed with him that he could only get an enhancement of N2.5 million, making a new loan amount of N7.5 million, which was in line with our policy. He agreed with us, applied for N7.5 million and was granted N7.5 million. When we followed him up for repayment, the next thing he did was to institute a court process against us claiming damages that we gave him N7.5 million instead of the N50 million he requested. Apparently, he together with his lawyer believed that on seeing the court process we would become jittery, since we are a microfinance bank. How wrong he was. We are there to serve those people who are neglected by the regular commercial banks, but you will be surprised to see some of these people don’t mean you well.

There are other challenges like poor infrastructure, poor identity system in the country and so on. The good news is that we do our best to still get along, despite all the challenges.

Wanda Rich: How does the bank assist micro-businesses and SME clients to better understand where they are financially and plan for long-term financial stability?

Mr. Adegbami: One thing with our type of banking is that we offer advisory services as an added value to our numerous customers. For the high-net-worth customers of the deposit money banks, they can afford to hire expensive professionals as employees and consultants. Our kind of customers cannot afford such expense. Hence, we are the ones who fill that gap for them. There are some of them who have taken advantage of our free advisories to develop their businesses. There are others who take the advisory for granted, simply because it is free. Some of our advisory services come together with our products, while others are rendered on a case-by-case basis. Generally, there is a business development process embedded in a good credit analysis process.

Wanda Rich: What advice do you have for businesses to ensure their survival post-COVID-19?

Mr. Adegbami: My focus is on SMEs and individual small business holders. For the big corporates, they are equal to the task and can hire all the advisers they require. For the small business people and individuals, my advice is that people should invest in capacity building. They should invest in general business management knowledge and the specific knowledge for their own types of businesses. When you learn better, you will earn better – this is an age-long principle. They should get familiar with government policies and global business practices and development. They should also be very prudent with money handling and know the difference between business money and personal money.

Wanda Rich: How is Mainstreet Microfinance Bank meeting the challenges of technology development? How important is the digitisation of services to the bank?

Mr. Adegbami: A conclusion we reached a few years back was that the way to go is the way of technology and digitalisation. In the past three years, we have done a bit of it. This was the reason we were able to continue to serve our customers, even during the lockdown for coronavirus. With our mobile app, customers were able to continue to do transactions with us during lockdown. They were able to make payments and withdrawals using our ATM cards. Some of them used our USSD. With any of these, they could pay their bills, buy data, recharge their phones and so on. Today, it is possible for our customers to make loan applications online without a physical visit to any of our offices. We have also used technology to promote our products and our brand, and we are prominent on all major social media platforms. Most of our staff and management meetings are held virtually. Even our board meetings are now held mostly via virtual platforms.

Wanda Rich: How has the bank adapted to the current pandemic?

Mr. Adegbami: Our first response was to ensure the safety and health of our staff and customers. We stopped the majority of our staff from coming to the office, even before Lagos and federal governments declared lockdown for coronavirus. It appeared we were going to lose money, but our philosophy was life first, safety first. We also provided necessary information and updates to all of our staff and customers on the pandemic and how to keep safe. On return from the lockdown, we provided things like gloves, hand sanitisers and facemasks to all of our staff. We also provided hand sanitisers, water, soap and hand washing basins in all of our facilities. Social distancing is strictly enforced in all of our premises. We have since continued to get our business more and more digitised.

Wanda Rich: What is your strategy for continued development and growth?

Mr. Adegbami: Innovation is the answer. We have continued to be innovative as we strive to serve our customers.

Elijah Adegoke Adegbami, MD/CEO,Mainstreet Microfinance Bank