What makes Bosak Microfinance Bank Limited different from other microfinance banks (MFBs) is that while some microfinance banks focus on small enterprises for on-lending Bosak channels 80 percent of its credit portfolio to the poor.
Testimonies abound of the bank’s poor customer who borrowed N10,000 initial facility but can today account for about N150,000 worth of business.
“The product development is targeted at the poor and that is one thing that differentiates us. The second thing is we are not competing with the commercial banks. If you notice, you will not see an automated tell machine (ATM). How many of our clients can remember their pins? How many can use an ATM? For us, everything that determines what we do has to do with the class of people that we serve,” according to Kola Bello, managing director/CEO, in Lagos.
He, however, encourages his customers to ensure that they play within CBN regulations, when it comes to the cashless economy.
The bank converted to satisfy the international financial reporting standard requirement in 2013. It became profitable in August 2012, about two years and two months after it started operations, and because it started with individual lending methodology, the level of losses it had to cover from its profit was huge but as of today it is profitable. On a monthly basis, its income is able to cover its expenses and leave something substantial.
Profit before tax in 2013 was about N17 million. “For 2015, we are projecting to do something in the upper end of eight digits figure in profit,” Bello said.
The bank last week held its group leaders’ congress, which is done twice every year. “It is a forum which gives us the opportunity to interact with the leaders of the various groups in the bank. Our aim is the group lending methodology, which helps us reach our clients because the operation is field based; we don’t really get to hear directly from these clients because we take banking to their door step.
“We sit with them and listen to issues they have in relation to the group learning programme; we also use this avenue to bring them up to speed, and in respect to what the institutions’ plans are. So, we hear from them and pass information across to them. It is also a forum to train them based on the trends we have noticed, because many of these poor people may not be deeply aware of what we expect of them,” the chief executive said.
With the group lending methodology, the bank closed 2013 with about 13,500 active borrowers and over 2,500 savers. In 2014, it recorded about 22,000 clients/borrowers and 40,000 savers.
“Our plan this year is to hit 45,000 clients/active borrowers. We started as a unit micro finance institution; our paid-up capital when we were starting was about N130 million. Currently, we are serving over 25,000 locations in Lagos. Oshodi, Iyano-Ipaja, Ikorodu, Orile-Iganmu, Berger, among others.
“We have those branches, though we may not be physically present there. Now that we have approached CBN for state licence, in a matter of few weeks, it should be approved, then we can now establish branches. The good thing is that there are already businesses in those locations that may start and become profitable immediately. So, that is what we are doing to hit 45,000 clients this year. For staff members, we are over 170,” he said.
Source : BusinessDay