The pioneer Managing Director of Kwara State University Microfinance Bank (KMFB), Alhaji Hakeem Hassan in this interview with PILOT HEAD BUSINESS DESK, MATTHEW DENIS speaks on the entrepreneurial policies of the bank among other sundry issues. Excerpts
What informed the setting up of KMFB?
KWASU Microfinance Bank is an attempt by the school management to further entrench the philosophy of entrepreneurship, which the university is known for worldwide; by fixing the missing links posing as challenges to entrepreneurs.
This effort is mainly to showcase platform for students that have graduated to become self reliant; to practice true life business through funding by our window.
Though, the idea was conceived sometimes in 2013 but we couldn’t start operation until we got licensed in August, 2015. So, ours is a licensed Microfinance Bank that engages in financial intermediation at the micro level.
We offer financial services that the regulatory authority allows us to engage in such as accepting deposits for safekeeping, creating quality risk assets in terms of soft loans to staff, residents of Malete and the neighbouring communities, thereby taking financial services closer to people at grassroots. We grant scholarship and research loans to university staff, salary advances, students loans and also traders around the university community. We have gone into electronic as our customers can pay and withdraw money into our correspondent banks in Ilorin and across the country. We have master card for Automated Teller Machine (ATM) that you can use across the country and beyond.
The only thing we can’t do is foreign exchange business and it’s because the Central Bank of Nigeria (CBN) restricted it to commercial banks.
We concern ourselves with what is happening in our immediate environment for the people to feel our impact more. We engage in thrift and cooperative loans.
How much does your bank charge as interest on loans?
The objective of Micro Finance Bank is not only to grant loan, there is what we called ‘financial inclusion policy’ that is, to provide banking service to the nearest poor society settlers. So we are driven through our vision, mission and statement to reach the poorest people; those people who never thought they could have a bank account we have made that opportunity available to them. And our charges are very moderate and convenient. The interest on loans ranges from 2.5 percent to 4 percent depending on the loan conditions.
How has your bank been handling the issue of Biometric Verification Number (BVN) for customers, which has been mandated by CBN?
Well, BVN is a CBN policy and we’re not exempted. We purchased the machine long ago despite the cost and we’re already enrolling customers. As an incentive the CBN offered to pay back some percentage of the cost the bank incurred. We have customised our accounts and customers are entitled to our ATM card. There are three machines installed within the campus, which was our initiatives. We also have POS machines to make things easier for our customers make online transfer and payment services.
What is your financial strength?
By regulation, new banks are not suppose to declare dividends until it is able to write off all operational expenses. We are in the third year of operation now. And operational expense is written off over a period of five years. So we cannot talk of declaring dividends now. However, in the last financial year we declared profit and the shareholders capital of the bank that started with N20 million has grown to N50 million. Currently the unit shareholding amount for any microfinance bank in Nigeria is just N20 million. So the profit we made last year are being put back into the share capital. In terms of the population strength of our customers we are already running close to about 5,000 customers both students, lecturers and community people.
What are the challenges of operating in a rural environment?
The challenges in the area of operation include lack of consistent internet services. Another factor is the distance from here to Ilorin, the state capital, which limits the kind of businesses we can do, as well as adding to our operations/services expenses. Also you know customers in Nigeria have bad attitudes when it comes to loan repayment.
What is your advice to your customers and potential account holders?
My advice especially to students is that the university mean well for them in terms of trying to groom and prepare them for the real life entrepreneurship. So they should take the advantage because in doing so they would benefit a lot of intervention policies from the CBN such as the Agric Credit scheme among others.