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Umuchinemere Procredit

Microfinance Bank Nigeria Limited

... making money work for you!

"We're fighting poverty"

The Umuchinemere Pro-Credit Microfinance Bank Limited, owned by the Catholic Diocese of Enugu, with a capitalization of N1billion is giving out soft loans to all, including those who want to marry, and students of higher institutions who cannot pay their fees.

In a recent interview with reporters shortly before the launch of CCC scheme on March 13,2009, Chairman of the bank, Rev. Msgr. (Prof.) Obiora Ike, said it is part of the Church's contribution to make life meaningful to the less privileged. Excepts of the interview: How has your bank fared in living up to its objective of empowering the low income group to go into small scale business?
The bank, Umuchinemere Pro-credit Micro Finance Bank, is one of the successful banks in the South East of Nigeria. It was transformed from a community bank in 2007 to a micro finance bank. It is one of the banks that started with a humble beginning in 1995, which primary objective is to support community developments and be part of the national development drive, all geared towards poverty eradication.

Things changed recently, since 2007, with the conversion of community banks to micro finance banks with the national policy of government to make sure that micro finance banks are rolled out all over the federation.

There are about 770 of such micro finance banks all over Nigeria but the good news is that Umuchinemere Pro-credit Micro-Finance Bank capitalized for N1bn.Micro-Finance banks are expected to have N20m paid up capital, Umuchinemere asked for N1bn and it was approved, positioning it as a state microfinance bank. Besides, Enugu State Government recently under his Excellency Governor Sullivan Chime has been trying to make sure that the issue of poverty eradication is tackled in the state, in terms of adding value to people's lives.

We have so many young people driving Okada on the street, which we think is not the best. And this may be the reason why government is funding the deployment of taxis actually. The government is floating 200 coal city cabs for prospective applicants, for qualified drivers for ex-Okada drivers, for unemployed people.

As a bank, we are bringing in another 250 taxicabs so that in Enugu city and probably Nsukka we have 450 taxis on the road. All these cars are fully air-conditioned.They help to move people from one end of the city to another, so that with the new roads, our new city will be new Enugu State.

The taxis will mean job creation for people. Wealth will be generated and this entire problem of using Okada to transport people from one area to another will be stopped.

We know the hazards, a lot of accidents, we know the criminal dimensions, sometimes, some fraudulent things happen to people using Okada.We know also the health needs, we know what it means to the environment in terms of the carbon dioxide that is emitted in the environment.

Besides that we look at the difference between people driving an Okada or entering a reasonable car. Besides, also with this arrangement, you can call up a taxi from your house and it comes to pick you from your house, taking you to your destination. So that the era of standing looking for a car or taxi is gone. You can call a coal city cab centre, they will send a taxi to your address, which will take you to your destination, it will wait for you as long as you want and the taxi will bring you back.

This is something new and the dimension that brings the bank to it, is that there is a partnership between Enugu State Government and Umuchinemere Pro-credit Micro Finance Bank. The taxi cabs are not free, they are to be repaid but people will have the opportunity within three years having used the taxi to pay back the basic cost of the taxi through the bank for government to float more taxis or to replace those that are old into the market and thereby elevate the quality of life of our people.

This is part of what the bank is doing. This is just one product. We have many other products. The bank tries to make sure that young people who want to wed have an opportunity to borrow and repay overtime. The students in higher institutions of learning who cannot pay their school fees can also be assisted with some loans. The bank is also in the rural areas, banking in rural areas is now key.

We know that many of our people who live in rural areas don't have access to banks where they can put their money but Umuchinemere has gone to rural areas. we can say with presence of what we call customer Relations Offices (CROs) where people interface with the bank, they can make deposit, they can claim loans. We are partnering with government to make sure that ideas of poverty eradication, wealth creation, generation of employment are realized.

We are empowering micro-entrepreneurs that can have some skills through training, which is very important to survival of any business. These are part of the things that the bank is doing. It is employing a large number of people in one-way or the other. Overall the bank is emerging as the best in class within the entire Eastern region for which we are grateful to God.

Could you be more elaborate as to the kind of partnership you have with the state government in the provision of taxis in the state?
The state government is paying for each taxi-N2.2m. This is the cost of the taxi for Nissan Sony vehicle brand. The bank itself is acquiring 250 extra taxis of the Suzuki brand which are cheaper at N1.5m each from the representatives of Suzuki in Nigeria. So these two cars-Suzuki brand and NISSAN Sunny brand are coming to the market. In both cars, the bank is making sure that deserving applicants get the cars through screening.

There is application process. Government can be involved with the returning of the money. Government does not have that kind of capacity that is what the bank is doing, so the partnership is: you provide the money, now you manage the drivers, you manage the repayment, you bring back the money for the purchase of more cars.

We have also gotten in contact and also MOU with insurance companies to make sure that if a car is lost or if it is damaged, then it can be replaced. They are all going for the comprehensive insurance for the first three years. This is the kind of partnership we are talking about.

Government is recommending names of beneficiaries, but we screen them to know if they do have driving license, do they have vehicle inspection ability, do they have eye-sight, is their mind correct, are they within age range and do they understand that they are taking a loan they can repay. These are the things we are doing on the level of the banking.

What is the age bracket for beneficiaries? The age range is the working range of people up to 65 years. Seventy (70) years old do not need to apply.

When the Okada culture is stopped in the state, what will happen to the riders?
It is the Okada riders that are taking these cars because the Okada drivers we talked to said they do not want to ride Okada if they could get cars. So many Okada riders are already applying. They want to have the cars to drive but they could never buy a car. A car costs N1m to N2m. they must have licence to drive a car. They must be healthy, they should not be drunk and have an address and with that we elevate their lives and when we have 450 Okada riders driving 450 cars, and there is the next set coming because as they are repaying, we are acquiring more cars.

What it means is that Okada will leave the township and they will go to villages and as the old cars are leaving the township, they will be going to villages and something is happening within Enugu State. We are proud to be associated with microfinance bank with this initiative because we are really trying to revolve wealth and make sure that living standards are improved.

part from this programme that is for poverty alleviation, are there other programmes where the people can come and source funds? The bank came out with some products and one can mention them. One is family enhancement programme whereby families who have account with the bank can overdraw their account when there is need. We also have such products for those who want to buy houses, refurbish or build a new house. I have already told you about people who want to wed, and students in schools who can be given loans.

We don't want anything to be on the way of students or those who want to wed. A lot of people are not wedding easily because they don't have money to wed, they are waiting for 2,3,4, years. The bank solves that problem for you and you settle with the bank over 1-2 years. There are other products for those into agriculture, and micro finance loans to groups i.e group lending. The bank is present in major markets in Enugu State. And this is because we want to assist small traders who buy tomatoes in bags not to say I don't have money to buy tomatoes in bag. No more there is no money for you and as you sell you repay the bank. It is a grass root-oriented bank.

What about repayments, are beneficiaries repaying as expected?
What the bank does is that for all those who want loans, we organize several training programmes and during those training programmes, people are helped to know what lending and debt servicing means and also on the ethics of how overall it is to your own advantage. That you have a good name, that you can always stand up and say I am poor, but I can walk into a bank and take money go home, use it and improve my life. There are people who have taken loans 2,3,4,5 times. On the matter of repayment, it is very difficult to get people to repay money. If they don't have a will, if they don't have a training and they don't have a macro environment that enables businesses to survive.

This is why the bank tries as much as possible to try to be part of the business. We want to help those who get loans to succeed so that we are not like capitalist organization that say what can I get from you. No we want to empower you because we are Christian Organization. We believe that God created human beings equal and we think that people should have access to loans because they are brilliant, they have knowledge, they are vulcanisers on the road, they are mechanics, they are traders, small water traders and they don't have cash to start a trade. This bank has been able to share people into various businesses to start them up, to maintain them in training to even access women in the villages, especially women and youths. I do think that the product the bank has is useful. There are of course defaulters but the percentage is very low. The bank has over 85 percent repayment rate which is not standard. We want to reach 95 so that next thing now is to move to 100 percent.

Let us talk about the global economic recessions how has this impacted on the microfinance banks, particularly your bank?
The bank is not insulated from what is happening within Nigeria and the global economy. Fortunately, the financial crunch and crisis did not start in Africa. It started in US, then went over to Europe. It was in industrial economy. Nigeria is not industrial economy. Nigeria is an agricultural economy, which means that the impact of the global financial meltdown will be as much as if one was part of global financial system. So for those who were fully entrenched in it, automobile products, pharmacology, banking, large investment, stock exchange, they are full in it, so they bear the brunt fully.

For those tomato sellers and banana sellers, it will only touch them in so far as civil servants who will earn their salary did not earn and did not buy banana. But that has not reached us yet. Civil Servants are being paid their salaries and we must also say because we are not in the foreign exchange business that does not concern the microfinance bank.I must say that we take the global financial system very seriously because we think it is going to affect everybody in one way or the other. Fortunately still, we have an environment that was too exposed. Our loans are not toxic. We do not have high loans and high deficit. We balance out budget, we pay dividends every year.

Every year the bank pays between 20-25 percent dividends, which even big banks do not do and shareholders are happy. This is a bank that tries to respond to the challenges of our time. What is the involvement of the big banks in the survival of microfinance banks? What is surprising in Nigeria is that there are universal banks, there are merchant banks, there is the capital market, they have their clientele and government looked and said, can we now look down on the unbanked and set up a financial institution that touches on the lives of the ordinary people.

This was how microfinance banks came up and these microfinance banks, formerly know as community banks have their clientele. But surprisingly many universal banks want now to go and set up microfinance banks in rural areas where they don't have qualification, they have capital quite alright but do they have the expertise and what we expect as microfinance bank. What could be ideal is that big banks/universal banks should interface with their own chosen microfinance banks based on performance.

Let us partner because partnership means come with my quality, you come with yours and we grow together. But for some big banks/universal banks who set up microfinance banks, we wish them well but let us see what happens. Definitely microfinance banks as I understand are better equipped to do the work than universal banks are trying to duplicate, they will do universal banking, international banking, capital market and they want also to do microfinance banking instead of partnering in such a way that the microfinance banks are enhanced, shareholders funds increase and they become good shareholders and these microfinance banks give them deposit and their talent, their expertise, their cutting edge in technology to perhaps service the society because what is at stake is that our beings, Nigerian people live in a better environment, economic, social, political environment.

This is where we must decode. I wish and I plead to universal banks to partner with qualified microfinance banks for your sake of addressing the needs of the society. For the growth of the microfinance banks, government must set aside some funds for this. The CBN has already floated that project. There must be a way of local government setting aside extra amount of money, state governments are setting aside extra amount of money for this. There is also the corporate social responsibility dimension where company sets aside some amount of money.

These go to microfinance banks that reach those who ordinarily do not know what a bank is talkless of entering the four walls of a bank. This is the way to the future, partnership with the universal bank and microfinance bank but not parallel what is already existing.

How is the Enugu State Government supporting the bank?
Enugu State Government under his Excellency Governor Sullivan Chime is very open to dialogue and very open to increasing the spacing for governance. You know there are two ways of running of government, you can close the space or you can expand the space. What Enugu State Government is doing, they can do it much more is to enhance and improve the space for which we congratulate government.

That is why government has made sure that there is partnership with local government to bring in road graders and bulldozers so that what is happening in the center is happening in the villages. On the other side to roll out taxis so that Okada drivers graduate to car drivers and pedestrians now graduate to Okada drivers and after sometime, Okada drivers who are presently car drivers will graduate to private ownership of their cars.

You know Enugu State Government is doing a lot in this state. We are looking at the entire macro economic situation within the state, we are looking at employment situation whereby some people are being given employment, we are looking at infrastructure whether road or bridges or so many other things. There is an enormous challenge as any government in Nigeria to get things. Look at the power sector but what we find living in Enugu or working with Enugu State is that we have an open space government, open spaced agenda government that tries to agree to a collaboration while we are partnering with them and we think that as civil society engaging government, as private entrepreneurs engaging government and government listening, we can do much more.


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