The acting Chief Executive Officer of Baobab Microfinance Bank, Eric Ntumba, speaks on how Nigeria can leverage technology to drive savings and financial inclusion, among other industry issues, in this interview with ANOZIE EGOLE
Can we increase aggregate savings in Nigeria by liberalising banking?
Yes, I believe so. Technology has always been a catalyst for accelerating the processes. A digital savings product can enhance the speed and efficiency of saving, leading to an increase in the overall savings of the country if widely adopted.
Do you see fintechs replacing microfinance banking in Nigeria?
It depends on what you define as fintech. Many fintech companies eventually acquire a microfinance banking licence to gain more options. Most fintechs present themselves primarily as payment platforms. However, once they obtain a microfinance banking licence, they can also lend. Thus, they become relevant competition as they are equipped to perform the same regulatory activities we do. Whether we are a fintech depends on the definition, but fundamentally, we are a financial institution that uses technology.
Can microfinance banks reduce the cost of savings to encourage?
Yes, by digitising the savings process, we remove the cost of physical transactions, making saving more convenient and cost-effective. Although some costs like Internet access remain, we plan to introduce a USSD format for people without smartphones or Internet access, extending our product reach to people using feature phones.
With the current economic hardship, do you think people can still save?
Yes, one way to combat inflation is to ensure that money earns interest between receipt and expenditure. Jollof+ allows for this, making savings relevant even in tough economic times. While some people might struggle to save, earning interest could help alleviate inflation’s effects.
What prompted Baobab to launch the Jollof+ app?
The app was designed to provide more convenience to our customers, allowing them to save from the comfort of their homes, businesses, or offices. The initiative was part of Baobab’s transformative efforts, as we believe banking should no longer be a place you go to whenever you need to. The goal is to empower our customers to become their bankers, managing their savings and investments independently. Additionally, digitisation enables us to extend our outreach far beyond the structural limits of physical branches, helping us reach more people, tap into new segments, and serve our existing customers better. This is the key rationale behind the launch of Jollof+.
Can you elaborate more on this?
Yes, the main driver of the application is to push for convenient savings. Saving is inherently an effort; you choose to defer an expense. So, adding further effort, like traveling to a branch, can complicate this process. By removing these peripheral barriers like transportation to branch location during the opening hours we make saving simpler. Customers can fund their Jollof+ wallet and choose the best investment or savings option that fits their needs. This convenience increases the likelihood of higher savings volumes.
Can you explain the options available on the app?
Each option on the app has specific features and benefits. Like the JollofLock was designed primarily for long-term savings, this time deposit product offers interest upfront for a predefined period. You can top up the initial amount during the term. The baby box was designed to save for children’s future needs. You can start saving even before the baby is born and save for as many children as desired. The Ajo could be used for individual or collective savings, suitable for individuals or groups with specific saving targets while the Jollof flex ensures that even the balance in your Jollof wallet earns interest, providing flexibility before deciding on a specific investment or savings option.
Are microfinance banks ready for a $1tn economy?
It depends on how readiness is defined. Microfinance banks play their legitimate parts at different levels. At Baobab, we are financially sound and supported by a strong shareholder structure making us able to make the required investments to bring relevant contributions to the national effort.
Do users need a Baobab account to use Jollof+?
No, even non-Baobab customers can use Jollof+. The account can be funded using a debit card from any bank.
Is there a need for recapitalisation in the microfinance sector?
The regulator sets capitalisation thresholds. Only the regulator can assess and issue guidelines. For now, we comply with current requirements and are prepared to meet any future changes if and as they arise.
Has the increase in MPR and interest rates affected loan repayment capacity?
Our portfolio quality has not deteriorated with the portfolio at risk below three per cent, better than the industry average. We aim to ensure our customers continue to manage their debts effectively.
The main challenge is pushing the limit of financial inclusion. Many people remain unserved or underserved. We must be relevant to them through our product offerings and outreach. Digital solutions, including USSD, can help overcome barriers and boost sector outreach.
How competitive is your interest rate?
We believe we transparently offer the best interest rate – up to 21.60 per cent net on the Jollof+ app.
What message do you have for your customers?
We look forward to people enjoying Jollof+. It offers convenience, options for targeted savings, and good savings habits, especially for the tech-savvy youth. The interest earned can help combat inflation, making Jollof+ a valuable tool for financial management for all.
