Driving Financial Inclusion in Nigeria
Adegoke Adegbami, CEO of Mainstreet Microfinance Bank, discusses how digitisation and a customer-centric attitude are critical to extending financial access to all
Writer: Dani Redd | Project Manager: Sam Love
In Nigeria, financial inclusion has always been a challenge.
An estimated 60 million Nigerians (out of a 200 million population) do not have bank accounts. There are several main reasons for this. First, many Nigerians work in private and informal sector jobs and receive wages in cash. What’s more, many live in areas where financial services such as ATMs and banks aren’t provided, so have historically been denied the opportunity to open accounts.
According to The Africa Report, the sector’s strict mobile money regulations also initially hindered growth, as until 2018 only licensed banks (or fintech companies in partnership with them) were permitted to operate forms of mobile money services.
However, Mainstreet Microfinance Bank has a goal: to open up access to financial services, thereby helping develop Nigerian communities and businesses.
“Increasing access to financial services is our mission,” proclaims Adegoke Adegbami, the bank’s CEO. “It is financial inclusion that drives and guarantees economic inclusion. It is financial inclusion that drives social and political inclusion.
“And these are the factors that drive equality in our world. These are the things that make the world a better place to live. Access to finance drives access to other good things in life like quality health services, political participation and human dignity.”
Adegbami has been interested in microfinance since leaving school in 1993. A decade later, he trained as a chartered accountant. In 2005, when the Nigerian government introduced a policy directing community banks to transform into microfinance banks, Adegbami’s relevant experience allowed him to act as a consultant to help facilitate the process.
“One of the microfinance banks convinced me to take up a job with them. Thereafter in 2008, I was employed as part of the team to set up a microfinance bank for the then Afribank Group,” he explains.
“Over the last 11 years, Afribank Microfinance has grown and seen many transformations, including its change of name to Mainstreet Microfinance. I worked in different roles within the bank before becoming the CEO in 2015. My interest and passion for the sector has remained very strong over all of these years.”
Mainstreet Microfinance Bank is licensed by the Central Bank of Nigeria (CBN) to provide services including micro savings, micro lending, micro insurance, training and financial advice to individuals and SMEs. It operates within and beyond Lagos and currently has around 100,000 customers, a loan portfolio of $12 million and assets totalling approximately $15 million. It is still going strong after a decade in this challenging business environment – so, what explains its success?
Putting people first
“Among other things, the quality of people we have stands us out. By people I mean the shareholders, directors and employees,” Adegbami explains. “We have people who are very committed to the mission of the bank, and we have also invested tremendously in training and development.
“Our strength lies in the quality of our people. It also lies in the level of commitment and loyalty they demonstrate in playing their roles and discharging their duties. Right from the shareholders, board members, management and staff, we have very fantastic people.
“As an organisation, we are very committed to training and overall development. On our board, there is nobody who has not gone through specialised training on microfinance, financial inclusion, risk management and corporate governance. All of our directors have gone through foreign training.
“The fact that we were part of a commercial bank group for about eight years has also helped us. The training we received from day one was beyond what was intended only for microfinance services – we also received training concerning the banking and financial services industry.”
The CEO – an employee who rose through the ranks – is testament to the efficacy of this training programme. So, too, is the bank’s ability to retain its staff in an industry where there is normally a rapid turnover.
“We had our 10-year anniversary last year and we have many staff who received long service awards,” he says. “We have succeeded in keeping our staff because we know they are the most valuable assets that we have.”
The second key to the bank’s success is its customer-centred attitude.
“We put our customers first in all that we do,” Adegbami continues. “They are very loyal to us. Many of them have grown with us over the years. There is a story of a guy we loaned around $1,500 about seven years ago. Today, that business now accesses up to $150,000 from us at a time. We can only say we are grateful to all the people that have been parts of our success story.”
Finally, Adegbami cites the bank’s partners as integral to its accomplishments.
“We also have a lot of quality partners,” he comments. “Some of them are international while others are Nigerian based. Some of them provide us technical services while others provide funding for us. They have been the reasons for our survival and growth over the years.”
This network of individuals and organisations assist in a wide variety of ways, from funding in the form of debts and deposits, to provision of technology and technical training.
Adegbami also pays tribute to a number of legal, management and financial advisors, as well as governmental agencies and high net worth individuals whose support has been invaluable in getting the company to where it stands today.
Riding the digital revolution
The CEO is also aware that digitisation of services is the key to driving growth within the sector.
“First, you have the payment solutions,” he says. “They enable people to make payments, contributions, collections, purchases, subscriptions and so on. There are loan technologies like loan origination, scoring, enhancement or top-ups. There are technologies used to drive various internal processes like accounting, treasury, internal control, risk management and HR.
“Recently, technologies enabling you to conduct training and meetings have been developed. There are those that help you keep your documents and archive them electronically. And, of course, our traditional core banking and accounting applications now come with different capacities. All these are driven by artificial intelligence and machine learning. The internet of things and blockchain are also new technologies making inroads into our industry.”
To stay ahead of the curve, it is important for Mainstreet Microfinance Bank to keep abreast of the latest technological advances.
For example, it is 40 percent into a two-year strategy focussed on how technology can be used in a customer-centric manner. This looks at various touch points and interactions, as well as ways to enhance the company’s own internal operations.
“We have also launched our mobile application, which enables our customers to perform all their standard banking transactions on their mobile device,” Adegbami adds, detailing some key technological milestones recently achieved.
“We launched our internet banking in 2019, targeted largely at our corporate customers. We also launched USSD banking, where customers can now make loan repayments and deposits using our USSD code. They can also collect payment for their sales from their own customers and, very soon, customers will be able to apply for loan or open new accounts with us without visit our office premises.
“We also deployed debit cards to our customers. During this lockdown period, our customers can access their money at any ATM terminal. The system enables us to transact with any other bank in Nigeria without going there physically. We now have technology that enables us carry out customer references without writing to the other bank. We can also conduct account statement verification without writing to or visiting the third-party bank.
“There are many other things we are currently working on. At the end of the execution of the current transformation strategy, 85 percent of our business will be digital.”
Adegbami believes that establishing numerous physical branches is no longer a sustainable business model, and aims to reach new markets via digital services instead, a nationwide tech-driven network which will be supported by strategically located representative offices.
"Our strength lies in the quality of our people. It also lies in the level of commitment and loyalty they demonstrate in playing their roles and discharging their duties. Right from the shareholders, board members, management and staff, we have very fantastic people"
Overcoming challenging times ahead
Despite these technological advances, Adegbami admits that there are challenging times ahead for the industry, in large part due to the economic instability within Nigeria, which makes it a high-risk business environment.
“Long term planning is very difficult,” he admits. “The Nigerian economy just exited a recession about two years ago. Now there is COVID- 19 and the impact on the African economy is predicted to be profound. Government support for our business and the customers we service is very low. Microfinance businesses will be more stable and effective if there is a guaranteed intervention fund from the government.”
However, this doesn’t stop him from outlining ambitious plans for growth.
“Growth is paramount. If you stop growing you start dying,” he says. “Today we have a total asset of over $15 million and portfolio balance of about $12 million. By 2023 we want to have a total asset of about $60 million and portfolio of $45 million.
“We will deploy technology to drive the business in an efficient and customer centric manner. We also plan to diversify into other accessory or related businesses – these are businesses we believe are important to facilitate our core business of microfinance and financial inclusion.”
With its customer centric attitude, plans for technological expansion and long-serving, experienced staff, Mainstreet Microfinance Bank will continue to serve as a loyal financial partner for many more years to come.