GUARDIAN

Sunday, January 27, 2008              

Lessons Nigeria Must Learn On Microfinance, By Veteran Banker, Crothers

The last time, Roy Crothers, Manager of Barclays Bank, Nigeria and Head of Barclays Bank East Africa, in the sixties and early seventies, worked in the country was in year 2000, when he was on the United Nations and National Finance Corporation-funded project with the Fountain Trust Bank. After he left Barclays Bank in 1974, he had a stinct with some banks in Europe and America before returning to Nigeria for the Fountain Trust deal. On the expiration of the contract, Crothers went back to the United Kingdom, where he ended up as a consultant to ShoreCap Exchange in the United States of America. Last week, the veteran banker from Northern Ireland was in Nigeria, on secondment to MIC Microfinance Bank, where he spoke to MARCEL MBAMALU on the prospects and challenges of the new microfinance policy. Excerpts:

What have you been doing with your time since you left Barclays Bank?

When I left Nigeria in 1974, I went to a lot of places - Africa, Europe and the United States. Then, I came back to Malawi, Africa in 1981, after which I gradually moved to Kenya, Ghana, Egypt and then back to Nigeria in 2000, when I was on the United Nations and the National Finance Corporation project with Fountain Trust. When that contract finished, I went back to the UK and ended up as a consultant for ShoreCap Exchange in Chicago. This is what I'm doing now. I came here from Bangladesh.

So, now that you are back, what is your impression of the Nigerian banking terrain, especially, the microfinance system?

I think I'm very dissapointed, with what I'm seing, especially seeing the Tejuosho Market the way it was. The banks should intervene. I came here with the managing Director of MIC Microfinance Bank, Mr. Temitope Ola, and I think that the market was an absoute disaster area; something is going to be done to help the market traders. The microfinance banks can come in. They should target the market traders and the working people. And let's face it: With a population of 140 million, you cannot really get to the people without enough banks. This is a market that has got great potential for the microfinance banks.

Talking about the Microfinance policy, what competitive edge does Nigeria have (or seem to have) globally?

The market in Bangladesh is very similar to what is here in Nigeria. The potential is great. From what I see in MIC, there is an enthusiasm among staff, and I get caught up in that enthusiasm as well; I think it is infectious; I think the potential is good, not only for the bank itself, but for the lower class - the working man, the man on the street - and it is very important that these people are served.

I think, microfinance in Nigeria is in its infancy, when compared to other places like Bangladesh or Kenya; even Ghana is quite far advanced in comparison to Nigeria. Nigeria has got a lot to learn, and the potential is definitely here. I mean, the unbanked market is huge compared to other countries. I think, the only comparison I can make between Nigeria would be the Bangladesh, which has similar level of population, not as large a country in size, but similar problems.

What problems do both countries share?

They both have the problem of under-banking to the masses, and to the working classes.

Even when I was here in my previous contract, we didn't really look at the mass market. All the major banks now concentrate on the upper class market, the corporate market, and not much attention, in the past, was being paid to the working man.

Apart from the issue of grassroots banking, what other challenges do you observe?

The challenges are great: getting into the area at the right time, having knowledgeable and ethical staff as well. I think this is one of the big things that we've got to get the confidence of the people and show how the staff are ethical and honest and that any deposit they put in the bank are safe. Of course, we are protected under the NDIC as well.

Are there any lessons Nigeria could learn from other African countries in the area of microfinance?

I think there is a lot to be learned, and it is a learning curve that the staff themselves are going to have to get used to. I know that the general management of MIC, like the Managing Director and the head of marketing are probably going to go to Bangladesh, to some extent, and see how it is operated there. My opinion on Bangladesh is that it has absolutely fantastic operations, highly organised in 363 districts of the country. A microfinance bank in Bangladesh has got about 360 offices. And this is what, I think, MIC has got to emulate.

What kind of business relationship do you have with MIC?

Technically, I consult for them on banking matters and on strategic planning for the bank. I'm hired by ShoreCap Exchange in the USA. They are partners to MIC, and they are Equity Investors as well. So, I came as part of the package; they have invested in the company because they see the potential here as well.

I was here in December for about 10 days. Basically, I was working for the MD of MIC; I was looking at weaknesses in the system from the banking point of view; how to speed up things, trying to find out what the bottlenecks were etcetera. That's what I did. I'm back this time and some of those bottlenecks have been cleared; they are getting a new Banking System Temenos-T24, which means that all the branches will be online real time; information will be processed here. They can key into their account data and get the answer back within seconds. This is what we didn't have before. So, this is what I'm doing with the MD now.

One of the big things is that it's got to be integrity-conscious and ethical, without deviating from laid down rules and regulations, otherwise, the public will just lose confidence in it straight away; they will go somewhere else, where they will get the services they want.

On conversion of community banks to microfinance status

Judging by the banking sector of the past, I think it's on the high side. I think, there will have to be a rationalisation of all that. There are ones that are going to fall by the way side, ones that are going to the market, ones that are going to be taken over (just what it was with the major banks). I can't see that there will be a path in the economy for all these banks nowadays. With globalisation, everything is getting smaller.