Valentine ‘Segun Whensu is a consummate banker and financial services professional par excellence, deploying over two decades of professional experience, exposure and business intelligence garnered through an employment and business management history that spans Afribank, Peak Merchant Bank, Fortune International Bank and First City Monument Bank Plc.
Besides his varied experience in banking and finance, he also exploits vast opportunities of knowledge in oil and gas, trade and investments. Among several impressive accolades, Valentine Whensu holds an LLM from the University of Huddersfield, United Kingdom, an M.Sc in Management Science from the Winneba University of Education, Ghana and an MBA from the Delta State University, Abraka, Delta State.
He is an associate of the Chartered Institute of Bankers, associate member of the Nigerian Institute of Management, associate of the Chartered Institute of Taxation of Nigeria, associate of the Chartered Institute of Arbitrators, UK, and a fellow of the Certified Public Administrators of England & Wales. Mr. Whensu is the Managing Director-Chief Executive Officer of Global Initiative Microfinance Bank and was reelected for a second term as President, National Association of Microfinance Banks.
In this interview with ENCOMIUM Weekly on Sunday, July 31, 2016, the Lagos born astute banker spoke on many issues, including the roles of microfinance bank in the development of Nigeria’s economy and much more.
For the benefit of the less informed, in what ways is microfinance bank important to the economy of Nigeria?
The role of microfinance bank in economic development cannot be underestimated because what is important in any economic development is, one, how to improve economic activities. And the economic activity is down at the grassroots level.
There was a study conducted in this country which revealed that this country has over 19 million micro, small and medium enterprises that need about nine trillion naira for us to jumpstart the economy. And we are talking about 968 microfinance banks, having only about six million customers.
We are not even there. The study also shows that those people who are under-banked are about 40-something percent. We are coming from about 80-something percent. So, as we speak, there is a gap; there is a need in this economy and the only structure that can fill that gap is microfinance.
Number one, microfinance bank’s role is to improve the access to finance. Once you can sort out the major problem of Nigeria which is access to finance and access to market, if you can sort out the problem of access to finance at the grassroots level, you are sure you are going to have a robust economy, your GDP is going to improve, and that is what microfinance is even there for.
Again, we are having a challenge in the access to market. When farmers produce foods they have nowhere to store them, when fishermen get their fish they have nowhere to store them, so they begin to sell under duress because they have nowhere to store their harvests.
So, the moment the Federal Government can use the structure of microfinance banks to take care of these two major problems, the economy will be back on its feet and we will be out of this recession that we are in.
People still do not embrace the microfinance concept due to the high charges. What are the plans to sell the microfinance idea to more people?
The microfinance subsector is celebrating 10 years of existence now; they have been reformed, so many things have changed, and the Federal Government intervention has come in to dilute the interest rates that we have currently.
Initially, people used to charge as high as 10 percent. Now, what is important to Nigerian populace, especially the micro, small and medium? Is it the interest rate or the access to finance to do their business?
However, microfinance banks came into the space; what they were charging initially was higher but because there had been interventions; donor funds, and grants, so more people are coming in, and it is as well further reducing. It is a gradual process. We are only celebrating 10 years. Before we get to celebrating 50 years, we are going to get it right.
What are the strategies employed in that regard?
When you work on capacity building, when you work on the infrastructure of this economy, when you work on the financial infrastructure where people would not collect money and run away, you will see the interest rate coming down on its own.
What we have now is not too high; it’s still on the average, and then the CBN has also intervened with funds, 220 billion naira of which you must lend more than nine percent per annum. Even any commercial bank in the country today is lending at that rate.
Then government needs to do a lot, especially the CBN, in terms of image laundering. And that is why we are extending a hand of fellowship to the Press so that you can see what we are doing in that subsector. The moment we begin to have a good projection in that sector, we are going to have a more robust micro finance in this country.
The complaint from the small and medium scale business owners is that some microfinance banks charge higher interest rates that they find it difficult to pay back. Are there rules to check defaulting members of your association?
There is the saying that, if education is expensive try ignorance. The man that is collecting esusu(daily contribution) on the road, is giving out money at 10-15 percent flat and people are collecting it, even we hear that some of them collect people’s money and disappear.
Yet, the average rate in microfinance bank is five percent. What is the prime lending rate in a commercial bank that has 25 to 100 billion of share capital; 24 percent, which is two percent aside other charges. One thing that we need to get right is how do you determine the interest rate that you charge on loan? It’s a function of so many things. The cost of funds is a major determinant of what you will charge.
If I access money for me and you, you give me money and I’m giving you 15 percent, I must make a spread in order to take care of my infrastructure. So, that is what informs the interest rate. Interest rate is dependent on so many factors.
Factors like government’s involvement in terms of infrastructure. Do you have roads? Who is willing to go to rural area? Do you have light? So, government needs to do its own bit and operators too need to do their own bit and then we all smile at the end of the day.
You’ve been in the financial sector for over 20 years, how would you describe the present state of Nigeria’s economy?
Nigeria’s economy is a very good one; it is an economy that is blessed. The major problem of the economy are the operators, which is the leadership. Once we get the right leadership in place, every other thing will fall in line, because we have every good policy you can talk of in this world.
We need to also support a government that is sincere. The problem we are having in this country today is man-made. Once we have the leadership that can take care of man-made problems, then we are on the path to greatness. Nigeria’s economy can beat any economy in this world but corruption has eaten deep into our fabric.
The major product that aids great economies in the world today is oil, and Nigeria is rated the sixth among oil producing countries. In gas which has not been tapped into, Nigeria is rated third largest in the world. Even in my own subsector, microfinance bank, Nigeria is number one in the world. Then why are we not getting it right? You have been re-elected President of the National Association of Microfinance Banks. What informed your decision to have a second term and what is going to be your new reform policy?
The issue of second term can be explained in various ways. One, the constitution was amended; the original constitution states that you can only go once for the same position. But because of the constitution that was amended, it gives room for everybody, both the past government, the current government and whoever is interested. And there are projects. We believe that one of the major problems we have in this country today is lack of continuity in everything we do.
So, the basis of us going back is for continuity of policy, continuity of advocacy, continuity of capacity building and continuity of networking with organizations to bring the National Association of Microfinance Banks to where it is supposed to be in knowing full well that Nigeria is the only country that has 968 microfinance banks in the world. So, we need to get it right.
Our vision has been crafted to ensure that we take advantage of becoming one of the first 10 in the world in 2020. That is what informed our coming back. And, of course, it is the constitutional provision that permits every one of us to re-contest for our respective positions. As for the new reforms we are introducing in this second tenure, we have started with reengineering, restructuring and rebranding the National Association of Microfinance Banks.
We want to continue with continuity of policy. We are working on a project we call NAMB Unified IT platform (NAMBUIT), such that for us to reduce IT cost, so that we can also reduce the interest rate we are lending money to people, we need to have a shared platform. We have started; in a situation where there would be clearing house for microfinance banks so that the 968 banks can link each other and can network.
The project has started though initiated by CBN. It is going to reduce IT cost, it is going to reduce infrastructure and encourage Bank’s Verification Number within our members. It is a project we intend to complete sooner than later. Again, it is a project that will take care of proper identity management because of some challenges such as that of serial borrowers who collect money and run away. So, it is a project we are much committed and we intend to complete.
We also want to work on people’s capacity. Micro financing is a specialized banking so, we intend to provide adequate capacity for people, organize trainings and ensure that we have good grade of people who understand micro financing. Also, we will carry out advocacy to government, to the party and see how we can bring out what micro finance is doing. We also intend to network. We have signed MoU with News Agency of Nigeria (NAN) so that we can spread out what NAMB is doing.