In line with the directive of the Central Bank of Nigeria (CBN) that all Microfinance banks operating in the country should shore up their capital to N3.5 billion by April this year, Baobab Microfinance Bank has announced that it has met and surpassed the threshold.
The Managing Director and Chief Executive Officer of the bank, Dr. Olanrewaju Kazeem, who disclosed this in a chat with newsmen in Lagos, said the capital came via retained earnings as against its initial plans to raise the money via rights issue.
Specifically, he said, “The central bank expects that by April this year, our shareholders’ funds should be hitting N3.5 billion, and a minimum of N5 Billion by 2021. I am happy to say that at this point, our shareholders fund is over N3. 9 billion, coming from retained earnings.
“The initial plan was for our shareholders to contribute by rights issue, but giving the level of profitability and growth that we have had in the last few months, it’s looking like we may be able to just have enough from our retained earnings.
“So, if we have major capital projects, then the shareholders would still have to join the equity. Other than that, it would not be for the purpose of meeting recapitalisation. In a nutshell, we are fully capitalized to the level that CBN wants us to be by April 2020.
“We reached that level as far back as October last year, so it’s not an issue today. And then we expect that by the end of this year, we should be at about N5.5 billion or at most, N6 billion which is above what the CBN is asking.”
Olanrewaju, stated that the bank was well prepared to support SMEs and the economy with several products and its digital transformation.
“Today, what you can simply see is that, we are becoming a financial supermarket. For mini-micro businesses, we have products for them. We talking of loans as little as N10,000 and N20,000. “And then, you have the micros; maybe above N50,000 to like N500, 000.
“And then we have the micro-plus, which is a little above that but less than a million. And then we have the SMEs proper, which is anything above N1 million. So all of them, we have products to address their needs. And it may interest you to know that in 2009, we disbursed loans to well over 62,000 different customers. We also did about N20 billion disbursements in 2019.
“This we expect that we are going to grow this year. Our outstanding loan book is more than N10 billion; these are monies we know we have in people’s hand as we speak today. For 2020, we are targeting to disburse nothing less than, N30 Billion to N35 billion.
“That’s the target that we have set. Last year we could not achieve the N25 billion target as we planned, we did N20 billion. This year, we have planned that we are going to do between N30 billion to N35 billion, and if things work well, we may even hit N40 billion disbursements, “he said.
Also of note, he added, was that, till date, the bank has been able to support businesses.
Speaking on the competition in the Industry, he said, “We believe that we have very loyal customers and don’t think we have any issues with the existing customers, and what we are proposing to the market, giving our skills, competence and our history, plus technology that we are bringing in now, we believe that it’s going to be the market shaker for 2020. We are not afraid of going into the market if competition because we think at this moment, we would be able to deliver what we have planned.”