Joda: We Need to Bring More Persons into the Tax Net

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The Chief Executive Officer, Accion Microfinance Bank, Mr. Taiwo Joda, in this interview speaks about efforts by the federal government to raise non-oil revebnue as well as on the intermediation role of the financial institution. Ugo Aliogo provides the excerpts:

How is the Accion MfB leveraging digitalisation opportunities in banking processes?

We have been able to make available digital technologies and interactions. We were the first microfinance bank to partner and introduce ATMs in our various locations. We have also partnered with some of our corresponding banks to allow our customers conduct transactions on their teller booths using our Accion MfB ATM Cards, at a negotiated zero charge.  We also have the USSD and a mobile app where customers can open accounts using their phones and thus allowing customers to perform cashless transactions very seamlessly. We also have a good storage of the bank’s customer’s data. Its common knowledge that the Central Bank of Nigeria (CBN) has requested that a customer’s data should be stored for a minimum of 10 years and you know that this information is difficult to be stored on files and paper and takes up a lot of space.  In this line we have introduced the electronic document management system (EDMS) that has helped us store customer data electronically. We have also worked on our backend processes to reduce manual collection of customer documents, by scanning all KYC required documents, and application forms, and process them electronically using the EDMS. The information is adequately backed up, and records are easily accessed.

We are also automating our system to allow automatic loan top-ups, for instance, if you are an existing customer of Accion MfB and you have a loan running it shall become easier to make get a top up, as per terms and conditions we shall establish and build into the system. Also, if you want a renewal of the loan, it shall become easier for you to get your loan renewed just by a simple click on your phone.  At the moment, we are also improving on our digital field application tablets, being used by our account officers to onboard customers. This shall be embedded with Bluetooth printers, so when we collect money from customers for safe keeping or the repayment of their loans, they get a transaction alert or receipt immediately. This shall make reconciliation much easier and builds trust that we can be able to give them prompt services as well as validation for the money given to us. This shall still save our customers the costs and time of travel to the bank to make deposits while it strengthens our door to door service delivery.


What is the success story behind agency banking?

We came up with this to take our physical touch points closer to where our customers live and work. This is in addition to our locations which are 83 in number across 12 states, where each of them could be quite a distance from some of our customers. But as you know, Nigeria is bigger than that and we apart from Lagos; it’s a struggle to have branches in every local government in the locations in all other States. Banking agents therefore accelerate expansion in new states, with necessary incurring additional costs for setting up brick and mortar branches.   At our agent locations, customers can open up accounts, make cash deposits and withdrawals, make account to account transfers, and pay bills. That is customers can do their bank transactions closer just in their backyards, through a registered banking agent of Accion who is a community member or neighbor that they know, and possibly meet on a daily basis. Because our focus has always been on uplifting the social and financial wellbeing of entrepreneurs and SMEs we know that they are always busy at their business locations on a daily basis, and thus we want to make it easier for them to access our products and services by establishing banking agents to deliver financial solutions on our behalf.  We also have an agent banking loan meant for these agents to enable them balance the management of their businesses and liquidity challenges that arises from the conduct of agent banking.

What is the impact of digitalisation on the bank’s customer base?

The impact has been in the area of huge scalability as we have been able to attract more customers.  We have seen exponential growth of our customers over the years. In the first 7-8 years we had about 150,000 customers and by the end of 2018 this number had doubled. In the next three years, we plan to triple that figure and hope to move from the current amount of customers we have now to over 600,000 and that is what digitalization shall enable us do.  It allows you to scale up very rapidly, and it allows customers to identify with an organisation that is focused on them.


What is the progress level in your financial inclusion drive?

Financial inclusion is a global agenda and from the bank’s point of view, we have tried to play our part in that space. Apart from driving our businesses to the grassroots, we have made deliberate strategic objectives to take our businesses to the Northern part of Nigeria.  The EFinA report shows that the financial inclusion agenda narrowing down to Nigeria has not gained the required mileage in the North and so in reaction to that, we opened branches in Abuja and we have gone ahead to open a branch in Kano State and we intend to open more in Kano State.  We have also evolved products that will serve the northern market more. At the moment, we are in 11 States including the Federal Capital Territory (FCT) and driving our financial inclusion programme and we will continue in that trajectory to open up more locations in Nigeria.


What is your view on the CBN’s directive on lending?

I think it is a positive development. Typically, 65 percent of funds or savings to be given out as loans speaks more to the Deposit Money Banks (DMBs) because the MFBs are doing much higher than that figure. This is because MFBs are credit led organisations.  In Accion, you do not need to maintain your account for a specified period of time to be given a loan, instead once you open an account, you can get your loan, so to complement what the MFBs are doing, I think that is a wonderful gesture from the CBN. This would create a significant catalyst for economic growth, by making funds available for the active economic sector to be able to do more businesses. I think this directive is in the right direction and i would want to implore that some of those funds can also be channeled to the MFBs so that it is not about concentrating lending to a few high profile individuals but also redistributing funds to the economically active sectors at the bottom of the pyramid and I know that most MFBs are well oiled to serve that market.

When is Accion going to be listed on Nigeria Stock Exchange (NSE)

Accion MFB listing on the floor of the Nigerian Stock Exchange (NSE) is a board and shareholders’ decision, but that is not to take away the huge opportunity that the capital market provides. So it is a good direction to take and we have previously had engagements with the NSE, the Securities and Exchange Commission (SEC) as well as the FMDQ Exchange and who have encouraged us to join the market. I can assure you that at the appropriate time, the board will take a right decision as to what direction we are going to take.  Nonetheless, by the end of this year, Accion should have met the minimum requirements stated by the CBN, that is the N5 billion and so we are not under any pressure to raise funds to be able to meet the minimum requirement, but that is not to throw away the opportunities the capital market will offer us but at the appropriate time, we will make the right decision.


What is your contribution to SMEs? 

We have done quite a number of SME lending and at the moment, the total SME funding is about 15 percent of our total loan portfolio. Apart from giving loans to SMEs, we have also been able to advise them on how to go about their businesses. We have several testimonials of people who have been transformed over the years and we will continue to do that and also train and develop businesses. This year, we were able to host our SME customers who are widows by giving them health insurance coverage for the whole of 2018 and part of 2019. Furthermore, SME financing constitutes a significant part of our portfolio.


What is your view on Value Added Tax increase?

I think what we need as a country is a more effective tax system and what I would advise is a situation whereby the willing horse is not killed. What I mean is that our tax drive is concentrated on the crop of people who are already paying taxes. What we need is a diversified taxable base to bring in people who are not paying taxes into the tax bracket. There is need to also see taxes paid, applied to improved infrastructure, to address the yearning gaps in government expenditure especially where we think we are borrowing too much. So I think the issue of having one person pays several taxes to the Federal and state government needs to be streamlined and more efficient. The focus should be more on increasing the tax base rather than punishing people paying taxes at the moment.



There will be the third financial inclusion seminar hosted by Accion MfB, what is the focus of organising this event annually?

One of the major thrusts and objectives of the bank is to provide opportunity for other microfinance institutions and banks to be able to learn from the best faculty on how to improve what we do and to also see how we can collaborate in driving the industry to a desirable level that we all want, not just to be a shining star in the industry. So in the last two years, we have been bringing together over 250 participants in the industry.  We are looking at creating a platform for policy makers, fintech startups, donors, international development partners to come together and discuss the latest trends and challenges and solutions that is driving the financial inclusion space in Nigeria. So far these platforms have been held successfully for the last two years.  The first time we had it, we told ourselves with the level of attendance and participation, it is something we must do, yearly. Last year, was indeed a significant one.  Industry players come together to create a very robust platform to discuss agendas that affect financial inclusion and to see how it can be taken to the next stage.