By Ahuraka Isah, Leadership

Ahmadu Bello University (ABU), Zaria established a microfinance bank in 2009 to address the welfare needs of the university staff and increase revenue for the running of the institution. AHURAKA ISAH spoke with the bank’s Managing Director, Gyallesu Yusuf Ahmed.

 What challenges did you meet on assumption of office, and how well have you been able to tackle them?
Actually, coming with a vast experience in banking and suddenly narrowing it to the field of microfinance posed some challenges. There was need for me to adjust in line with the professional ethics to conform with the microfinance banking policy framework.

I came with the few managers I had to start the job to meet the criteria for running a microfinance business by the Central Bank of Nigeria. The CBN is of the policy that microfinance banking is a very good business and should be run by professionals. So, certainly, when we came on board, we were faced with a lot of challenges. We had to put our heads together to tackle and correct them.

To achieve that, first of all, we had to do a total reorganisation of the system of the bank as a whole. We had to re-orientate both the staff and the customers; we had to embark on staff training and development. We also introduced the staff appraisal and promotion system where we had to reward deserving staff. This served as an incentive and motivation to make them put their best in the job.

You mentioned incentives. Are we talking about what is obtained in conventional commercial banking systems where marketers are given targets and receive reward in return?
Actually, from the beginning when you are hired, you are given some responsibilities and informed about what the bank expects of you. You will be given a milestone – that is – from this time to this time, this is what you are expected to achieve. And we have an appraisal system which closely monitors your progress and achievements on your assigned responsibilities.

And if you meet the set targets or even exceed it, certainly you will be patted on the back. And this motivation is not tied to financial incentives. We promote you and once you are promoted, that is an assurance of an improvement on your professional career as a banker and sometimes, we need to do redeployments across departments.

Of course, you know there are certain departments where some people could naturally realise their potentials. It is in so doing that makes a good manager bring the best out of his staff.

When you came in as the Managing Director in 2009, what were your targets and to what extent have you realised them within the last three years?
My idea was to reposition this microfinance bank and make it an object of emulation in the banking sub-sector. In other words, I had in mind to ensure that this outfit becomes the leading microfinance bank in Northern Nigeria. For now, we are a unit microfinance bank, which means we are operating only within a particular local government. I am still of the opinion that we can expand beyond a unit banking system.

For now, we cannot be shoved aside in good position if the 24 microfinance banks in Kaduna state are or placed on a scale for ranking.  My vision was to make my bank, ABU Microfinance Bank, the leading bank among them. That is to lead others in terms of customer base, deposit volume, service delivery and ultimately, profitability. We have ensured steady growth within the last three years and certainly, there is still room for improvement and this is what we are working very hard to achieve.

Do you think this microfinance bank has contributed in any way to the welfare of the university staff and the neighbouring communities?
ABU Microfinance Bank was established by the university, principally to generate internal revenue for the institution. So it is one of the business units of the university. And as a financial sector, our main task is to provide financial and banking services to the university and its immediate environment. And to a larger extent, we have made serious in-roads in these respect. We are even providing such services to faculties, departments and other units and affiliates of the university.

Of course, we give loans and advances to university staff and those who have a relationship with the bank, i.e. those who have their salary accounts with the bank. We also finance projects and do LPO financing for the university contractors. As you are aware, the university is a very big organisation so they need a lot of contractors to carry out so many projects.

When projects are given to these contractors to execute, they require some financial assistance so they come to us. We have been assisting these contractors and also ensuring proper monitoring and execution of the projects in good time. We also assist the university in the collection of school fees and registration fees from students. So, with all these, I believe we are adding value to the university community.

What are your plans for the bank? What legacy do you want to leave behind?
Certainly, like I told you, when I came in 2009, the bank was a unit microfinance bank. There is need to further explain what I mean. In microfinance banking, there are three classes of banks. We have the unit microfinance bank, meaning your minimum share capital as a unit microfinance bank must not be less than N20 million and you are allowed to operate only from one location.

That means your operation is limited to one local government area. Then, we have the state microfinance bank whose minimum share capital is N100m and with that, you can operate in all the local governments in your state. You are not allowed to operate outside the state. Then, the third class is the national microfinance bank. This means you must have a minimum share capital of N2 billion. Right now we have only the Nigeria Police Microfinance Bank that has attained that class in Nigeria.

As you can see, we are currently within the unit class of microfinance bank, so we are restricted to one location and we cannot have any other branchs. We have already gotten approval from the CBN to upgrade to the state class of microfinance banking because we have attained the required share capital.

Presently, we have a paid-up share capital of N110 million and we have moved our authorised share capital from N100 million to N250 million. So, with all these facts and figures, we applied to the CBN and they graciously approved our request.  We are now at the verge of meeting the state microfinance bank status so that we can expand the branch network.

Though our head office is on the main campus, we have a branch on the Congo campus and by the time we obtain the CBN approval, we will open branches across the state so that we can be closer to our customers to ensure financial inclusion to the banked and under-banked populace.

Also, we have concluded arrangements to open a non-interest banking window. We have realised that there are a lot of these faith-based customers – people that are really interested in having a serious relationship with the bank, but because of their religious faith they don’t want to be associated with things like interest.

So we are going to give them opportunities in order to integrate them into the system and we are opening a specialised non-interest banking window to cater for such faith-based customers.