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TITLE PAGE FOR PRESENTATIONS

TITLE PAGE FOR PRESENTATIONS. Challenges and success stories of expanding financial services to the underserved in Africa September 2009. Never underestimate your customer…. Blue in a nutshell.

kaden-landry
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TITLE PAGE FOR PRESENTATIONS

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  1. TITLE PAGE FOR PRESENTATIONS Challenges and success storiesof expanding financial services to the underserved in Africa September 2009

  2. Never underestimate your customer…

  3. Blue in a nutshell • Pan-African micro-financier employing 3 000 staff through more than 300 branches across 14 countries • One of the JSE’s “big three” listed micro-financiers • South African Reserve Bank approval to invest significantly outside of South Africa • Double-bottom line approach through a defined social mission

  4. East Africa (12%) 65 ZARm 16 165 83 ZARm 10 224 34 ZARm 6 228 6 ZARm 1 7 a pan-African financial services group… West Africa (1%) 8 NA ZARm ZARm 21 1 45 4 Southern Africa (87%) 709 157 74 ZARm ZARm ZARm 178 12 4 518 258 28 199 138 95 20 ZARm ZARm ZARm ZARm 12 5 15 2 226 172 44 36 Book • We have operations in 13 African countries and a holding company in Mauritius • Our strategy remains to expand in selected African markets subject to economics • We are targeting Angola, Mozambique, Ghana and Egypt for expansion ZARm Branch Staff

  5. …supported by international equity holders and funders

  6. Operational niche and target audience

  7. Operational challenges • Cultural differences • Infrastructure • Lack of road infrastructure • Airline routes limited, time consuming & expensive • Branch footprint allows access to finance in remote areas • Information and Communication Technology • Property • Cost of doing business • Banking infrastructure

  8. Unpacking demand side constraints – priority of monthly repayments Research study initiated by Blue Financial Services on perceptions around the NCA

  9. Demand side constraints Current economic crises Inflationary pressures (food, transport, rent) Retrenchment Supply side decline (higher hurdle rate to qualify for credit) Reduction in longer term credit facilities Current economic crises larger than benefits of interest rate cuts; placing continual pressure on individuals to stay ahead. Regulatory impact Total credit exposure needs to be taken into consideration Structured around affordability and minimum discretionary income (take-home pay) In a declining economic environment supply side becomes more conservative as result of regulation around reckless lending activities.

  10. Addressing the issues • Branch location • Diversified financial services offering as opposed to salary advances only • Loan approval in less than an hour • Premium retail bank branch look and feel – staffed by citizens of operating country • Superior service and delivery standards • Upfront consultation • No hidden fees

  11. Branch layout and location are key value drivers...

  12. ...and products are tailored to suit client needs

  13. Success story: Isaac Kanguya, part time tourism officer, full time oxcart builder

  14. Importance of a robust IT infrastructure • Centralised business model • Virtual Private Network ensures real-time access to management accounts in all regions • Comprehensive contingencies in place and audited on a regular basis • Offline capability • Debtor management through combination of off-the-shelve as well as custom developed software • Insurance

  15. Centralised control allows cost effective risk management

  16. Impact of the global credit crises – MFI’s perspective Africa Biggest risks Fastest risers 1 Management quality 1 Too little funding 2 Staffing 2 Refinancing 3 Corporate governance 3 Competition 4 Credit risk 4 Liquidity 5 Macro-economic trends 5 Macro-economic trends 6 Liquidity 6 Credit risk 7 Interest rates 7 Staffing 8 Too little funding 8 Ownership 9 Competition 9 Interest rates 10 Fraud 10 Foreign currency 2009 Microfinance Banana Skins Survey

  17. Different concerns on the African continent The African response was very different from the rest, focusing strongly on institutional issues, particularly weaknesses in management, governance and staffing. Economic crisis issues took second place, though they were seen as fast-rising, particularly liquidity and credit risk. A rising worry was the threat to funding and refinancing. There was much concern that the crisis would cause weaker MFIs to fail and damage confidence in the sector as a whole. 2009 Microfinance Banana Skins Survey

  18. Success story – Mercy Mubanga, part time typist, full time chicken farmer

  19. Responsible finance Importance of minimum discretionary income thresholds All loans based on affordability – taking total credit exposure into account Importance of first language interaction Matching loan term to usage Enforcing usage – through disbursement to supplier or service provider Education through mass media: good vs bad credit decisions Continuous access to industry experts on SMME products Hands-on approach, especially with SMME products

  20. Financial education Taking out a loan safely Education on customer rights - copy of contract - disclosure of total debt amount (interest; insurance, fee structure)

  21. Government involvement Lobbying for credit bureaus Potential of Africa as early adopters because of lack of any current systems and regulation: - Doing it right first time, e.g other countries learning from South African example

  22. Conclusion In times of chaos – excellence prevails, opportunity is rife and entrepreneurship is born. Anon.

  23. www.blue.co.za

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