By Agatha Emeadi
Mr Andrew Okpeh is the managing director/CEO of FIT Micro Finance Bank Ltd.
He is a seasoned banker of many years standing, who the mantle now rests on his shoulders to drive the FIT Micro Finance Bank Ltd business.
As the bank is about to kick off its business activities, Okpeh in this exclusive interview with Sunday Sun x-rayed the nitty-gritty of FIT MFB, the capital base, merits and demerits, among other issues.
As you are about to hit the ground running with the latest micro finance bank, how much have you earmarked to support micro and small businesses in the first two years of operation?
Our capital for the Micro Finance Bank is N200 million. But we will surpass that, at the moment, we are at about N255 million. That too now include the breakdown of people that have assets, both fixed assets and intangible assets. But by the regulation of Central Bank of Nigeria (CBN), it is not supposed to be in excess of 20 per cent of that amount of money. So, what we set aside for business itself is in excess of N150 million from micro credit to medium small businesses. Though, we still have projections because we are looking to grow our deposit base further. So, for the next one year, we are looking forward to creating quality risk assets in excess of N200 million. Our funds are going to come in from prospective investors who are the parent owners of this company. We are looking and target our high network customers within our axis who we have started meeting already and they are pledging to support us as we take off. In the next one year, we are looking forward to an excess of N150 million.
How prepared are you to face competition given that there are many established Micro Finance Banks (MFBs) in the system already?
I want to let you know that most MFBs in the system had long stayed in the system and their operations are mundane. But we are leveraging on digital innovations to reach out the unbanked and under-banked within the system which is a very wise thing that in Nigerian financial system they consist about 65-70 per cent of the banking population.
So, how do you want to achieve this?
We have partnered with a global Information Technology (IT) company that in the past has over 20 years experience in microfinance bank software. This allows us to function like what we have today in Monie Point, Opay and PalmPay, etc. Our vision is to compete at that level because virtually in all the states in Nigeria, one does not see any branch of Monie point, but a whole lot of works is going on. Digitally, they are up there. Their systems are seamless and we are partnering our operations towards that too. Right now, at this stage we are leveraging on technology to reach out to these areas. For our Internet service provider, we went a step further to launch through Starlink. It is a guarantee that with Starlink, the uptime is over 95 per cent. Then in the next one year, my projection is that we too will leverage on the point of sales and it will not be less than N50,000 to reach out to all nooks and crannies of Enugu State, and the entire Southeast and beyond. This is where the real money is. Every Southeast operator that is using you on the site is an e-branch. From there they can open account do what we call payment services that transfer to further banks. They do cash transactions too and we support them. Now, anything that will be approved for customers, there are those charges that will be shared between NINs, service provider and the bank itself. So, we are looking at the fact that for every transaction, our POS operators, out of that N100 or above will be earning about 45 per cent of those money. It may look small, but cumulatively, depending on the total transactions per day, you will be arriving at a very substantial amount of money. Monie Point’s recent capital base is in excess of $1billion. So, we want to leverage on that because we have the form and capacity to reach out to the unbanked and under-banked sector in this system. With this, in one year, in the entire Southeast, FIT Micro Finance bank will be the number one in terms of technology, various innovations. With the artisans and market women, all will be reached out to. We will be deploying and streaming our marketers with a device on their android. Our marketers can get to a shop owner with their device in your shop, you will get the account details with just minimal requirements to open that account.
How do you intend to go about this?
This android is empowered and digitally inclined to capture the customer’s deposit and post, then get the SMS alert of the credit of the money given to those agents in the field there and you get an alert immediately credited into your account. At that point, when they come back, we now reconcile the account and balance up their books. Now, we will provide security for them as they go to the field. For the insurance, NDIC is there with them. For other insurance against theft, burglary, we are with Leadway Assurance already and our transactions are cloud-free, physical natural disasters might not affect us and we are putting up a strong Nigerian Data Protection Council (NDPC), our IT Head here is CISCO satisfied. He is on training with the NDPC to up his itinerary to see how our data, while even the clouds are well protected with firewalls, so we cannot easily be hacked into. We have also deployed our websites where customers can get information about the bank, download forms and templates from there, subscribe to so many of our products and services where one can apply. One must not visit our location to assess our credit facilities. We are leveraging on technology, even to help us further with special recognition, IT and address verification, utility bill will be very fine and so much more that we have done. Soon, I will consolidate my discussion with IPPIS authorities because when we give federal workers credit, and even the low income and middle income earners can access our source, we will deduct ours as a partner of IPPIS. We are looking forward to doing so many innovations. The problem with the microfinance space which is a bonus is that every customer has as identity, for one to do any banking-related transaction in Nigeria, one must have a Biometric Verification Number (BVN). BVN is one of the best collaterals in Nigeria.
How is BVN a unique identifier?
That everybody has just one BVN, even with 10 accounts, all are linked to one BVN. This BVN is one of the best collaterals because even if one takes a loan from us, but have funds from other banks, yet refusing to pay; at the point of taking this loan, you would have signed to an agreement that we can deploy every means both technological, legally to recover our money. Unlike other Fintech agencies that would be scandalizing one’s name and broadcasting, we are a responsible bank and will not do that; because we will be breaching the confidential agreement between our customer and us which is a legal issue. So, what we intend to do is to use the new software called ‘Recover’ that has been developed organically in Nigeria to digitally and legally pursue to recover our funds. We do not deploy this means; so, wherever all your account are in Nigeria, that are attached to one BVN, we use that BVN to trigger it. On the day we will trigger the account, it will go visit all your accounts in Nigeria and mop them up, all the cash in those account and deploy it to us.
With the ongoing tough economic reforms of President Tinubu administration, many are concerned that more Micro Finance Banks may soon collapse. Do you share this view and what in your opinion should the government do to stabilize the industry?
I disagree with them because if one sets up a bank which is running smoothly, and are also guided by the policies and procedures of the regulatory authorities, and working in tandem with what is happening, the bank is a growing concern. Now you have money you have been trading over the time, if you follow the rules by the book and doing the right thing, there is a tendency for you not fall into the pit. The reason some micro finance banks went under is because they are not mindful of what the regulatory authorities tell them. Most of them were one-man business that does as it pleases him. The family members can come and take loans based on his approval and not based on credit approval even when they did not meet up with demands. Then when they do not pay, it becomes damage control. There are a lot of portfolios at risk in excess of the allowable percentage which is not supposed to be more than seven per cent of one’s capital. Your bad loans are not supposed to be more than seven per cent of the capital to which one does business in the bank. But contrarily, one finds out that their percentage are in double digit which is a red flag already. Most of them already have liquidity issues in fixed deposit they are using to trade. FIT Micro Finance will not be like that. We tend to play by the books profitably. That is why we are deploying every necessary technology to our own advantage. The worse case scenario is when it gets bad, one deploys legal means. Legal means could take another dimension like a legal court arbitration takes place, then both parties re-negotiate new terms to which that loan would be paid. At this point what one is supposed to do as a banker is to stop every interest on that loan because it has gone bad already. All penalties that will increase the amount, the customer has taken and what he has taken before as differential, then it will be spread to a thin line to which one will be able to meet with the obligations and finally clean the books.
Recently, cashless and technology failures in many banks have created fear in the mind of some customers that the industry is sick. Many now prefer to keep their money at home or with some Fintech companies, what is your advice to such customers?
I am sure that before you put your money in a bank, you google the bank to find out about the bank. There are some banks in Nigeria that are very unhealthy. One should not take their money to those banks. Such customers are at their own peril.
But banks would not let customers know this?
Yes, that is why I said we should not be carried away by emotional blackmail to deposit money in a bank that is about to go under. That is what is happening. Now, before you put your money in bank, google the bank and find out. There are some banks in this country that have not submitted their audited financial statement in the last three years, which is a red flag already. The Central Bank is aware and the bank is willing to pay the fine to CBN because once they publish their audited statement and run their AGM, that is where it will be in the public domain; then the public will know that the bank is not healthy. The fault is not from the bankers, but instead from the regulatory authorities because if the bank is not doing well, and they will tell you they are protecting the bank, though the authorities have the right to protect the bank, which means protecting the economy. So, I understand their fears. Note that any bank in Nigeria that is constantly sacking its boss, GMD, saying they are injecting fresh funds into the system, look at that bank very well, do not take your money there. There are new banks who are coming up, very strong, check out their capital base, monitor them at the end of every financial year, find out the necessary things. Some of them have been removed from the stock market while gigantic buildings are still there. The world is a global community now, Fintech drives the banking industry as we speak. Guess you do not know where Monie Point office is located.
I do not know where the offices of Monie point, Palm-pay and Opay are located to make complaints.
The world is a global village now. Some of those gigantic building, claiming they are old school are deceptive. My staff strength in FIT Micro Finance bank will not be more than 12 in number. All of them are computer literate. We work seamlessly, digitally and do everything humanly possible to keep the bank going. Then, your idea of innovation should be where to invest and when not to invest your money. Recently, the Federal Government just released the sub-treasury bill for the month of November which is very sound, as a seasoned banker you look at it. Instead of leaving idle fund of about N150 million in an account that will not generate anything, why not buy a treasury bill of N90 million, that is three months of about N60 million; and at the end, one would be getting about N2,3 or N5 million at the end of the day, which will add up to the years profitability. Most MFBs that are going under did not play by the rule. CBN rules are clearly stated that they should not give more than N2 million to an individual or even a corporate account in MFB. If you want above that, then approach a commercial bank. You will see some MFB giving between N8 -10 million loan to an individual. Have they not breached the policy even from inception? Then, you cannot even cry to CBN because it is sanctionable in the event that you broke their rule. Know it that in the banking sector, you are either a small fish in a big pond or a big fish in a small pond and that is the way it is. That is why bankers talk about the Jim Ovia, Tony Elumelus of this world as the juggernauts in the banking sector. Note that they did not start as big fishes. Though they have their merits and de-merits. Then, if one wants to be a big fish, one should learn to swim with the sharks. Now, who are the sharks? Customers are the sharks because they will be here when we launch, they will deploy all their money to impress us, but by the time they take the loan, we chase after them to recover. With my experience over the years, as customers are coming when we open, my loan to them will not be in excess of 18 months. After three months, if you are not paying immediately, I will come after you. Loan monitoring is the key because most of these microfinance banks do not monitor their loans until it gets bad. If I take a loan from you, the first one month of my repayment, I do not meet up, second month you didn’t see me; in fact, after the first month, I should tell you that your account is in debit, please kindly call me. If I did not see you within one week, I will ask what the problem is. The artisans and businessmen who come to take loan from us, there is this secret we learnt from the commercial bank called ‘Stop I-falsification,’ which means the business must be visited for evaluation of what you have and the amount you are requesting for. I will take stock of what you have to know what to give to you. For example, if you are in a building material business and belong to an association, I want to see your membership and how current you are with them. If you are the owner of the shop, I will get a document as collateral. It does not end there, I will legalize the document and change it to the name of my bank. So, if you fail to pay, you will be the one chasing me because I will not incur legal team to be chasing you. What I will do is already on perfection. I will put a notice for 30 days, if you do not pay, we will sell off your shop and credit your account. We will bring an estate valuer to value your shop and everything will be documented, legally we go to court and get our judgment. When we sell the shop, if the value of the shop is in excess of what you are owing us, we credit the account, then you withdraw the balance. This is not to scare away our customers, but just that we are technologically driven and an eco-friendly bank.