Microfinance Bank Proposal Ajiboye

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MICROFINANCE BANK INVESTMENT PROPOSAL

Feniran Consult 2012

Training, Management and Legal Consulting.

Content:1. 2. 3. 4. 5. 6. 7. Executive summary Overview of the OFIS & the National Policy On Microfinance Benefits of Microfinance Bank Product focus Acquisition Process Basic Organisation Structure About Us

1. Executive Summary In line with the new National Policy on Microfinance and the reforms on the Other Financial Institutions Sub-sector by Central Bank of Nigeria, Feniran Consult wish to submit hereby the proposal (the feasibility and business plan) for your consideration of the need to invest in a Microfinance Bank, the main objective being the provision of needed financial services to the micro customers in particular and to Nigerians in general. Microfinance bank; unless otherwise stated means a person or company licensed to carry on the business of providing financial services such as savings, loans, domestic fund transfer, business development and financial services. Capital Base For a Nationwide MFB, N2b is required. To operate in a state N100million is needed while a unit/local government MFB is N 20m. 2. Overview of the OFIS Subsector & the National Policy on Microfinance The attainment of the new millennium development goals has put on the front burner to give focused emphasis on poverty reduction through the empowerment of people, provision of needed infrastructural facilities and the promotion of small enterprises (SMEs). The provision of microfinance services is therefore key to activating the latent capacity of the economically active poor for entrepreneurship, self reliance, and the enhancement of household income with its concomitant implication for national wealth creation. This is the background of the new national policy on Microfinance launched by the President in 2005.

#P.16, Suite 3, Oko-Oba IV Estate, Abule Egba, #N0.47, Mojisola Street, Ogba, Lagos. +234 (01) 8755 830, +234(0) 803 217 5065 feniran@gmail.com www.feniran-consult@blogspot.com

The prolonged sub-optimal performance of existing community banks in Nigeria is common knowledge. The factors responsible for this include weak institutional capacity, weak capital base, perversion of business model and other governance issues. In the end, the community banks became another level of universal banks with smaller capital. Studies show that in Nigeria, the formal financial system provides services to about 35% of the economically active population while the remaining 65% are still excluded from access to financial services. Theses 65% are often served by the informal sector through NGO-MFIs, moneylenders, relatives and credit unions. The non-regulation of the activities of these institutions has serious implication for the Central Bank of Nigerias ability to exercise one aspect of its mandate of promoting monetary stability and a sound financial system. Under the new National Policy, existing community banks, NGO-MFIs and all such other microfinance institutions hitherto in the informal sector, who desire to practice microfinance business in Nigeria, were expected to migrate/transform to Microfinance banks to be licensed by the Central Bank of Nigeria. All these led to establishment of Microfinance Bank in 2007. 3. Benefits of Microfinance Bank to the general public Provide accessible consumer / retail banking services such as savings and demand deposit accounts, funds management, salary accounts, local money transfer and soft loans Provide diversified, affordable and dependable financial services to the economically active poor, in timely and competitive manner, that would encourage long-term, sustainable entrepreneurial activities; Mobilize savings for intermediation; Create employment opportunities and increase the productivity of the poor particularly within its catchment area, thereby increasing their individual household income and uplifting their standard of living; Enhance organized, systematic and focused participation of the poor in the socio-economic development and resource allocation process; through specialized customer education and enlightenment; Provide veritable avenues for the administration of the micro credit programmes of government. Typical Cash flow Projections Break Even Point The breakeven point is contingent upon the interest rate charged on transaction, the amount invested and quality of management.

#P.16, Suite 3, Oko-Oba IV Estate, Abule Egba, #N0.47, Mojisola Street, Ogba, Lagos. +234 (01) 8755 830, +234(0) 803 217 5065 feniran@gmail.com www.feniran-consult@blogspot.com

Since they offer mainly microcredit they cover their cost of transaction quickly as returns on micro businesses are generally higher with faster turnaround time. However, breakeven point is usually between 6 to 12 months.

a. Microfinance Bank-3years Post Breakeven with N 20m paid up capital Year Year Year st Year ended 31 Dec. 2012 2013 2014 Profit before Taxations 6,000,000 8,500,000 12,000,000 Profit after Taxation 5,000,000 7,500,000 10,000,000 Dividend (proposed) 30% 1,500,000 2,225,000 3,000,000 Forecast Derived per share 7.5 11.25 15.5

Average: 34.25

b. Commercial Bank-3years Post Breakeven with N 25bn paid up capital Year Year Year st Year ended 31 Dec. 2012 2013 2014 Profit before tax 3.125b 4.427 6.560b Profit after tax 2.187b 2.877b 4.062b Dividend (proposed) 30% 656m 863m 1218m Forecast Dividend per share 2.63 3.45 4.87

Average: 3.65

Microfinance bank has far more dividend per share as compared to commercial bank even with a capital investment that is 0.08% of the commercial bank the microfinance returns is on the average 938% higher. Apart from Dividend payable to shareholders individual customers with their various deposits or placement cannot get less than 15%P.A. returns on their deposit. 4. Product Focus To achieve the above objectives, the MFB shall develop product offerings along the following service lines unless otherwise restructured by the owners/stakeholders. 1. Agriculture 2. Commerce 3. Medium- enterprises (entrepreneurial support, business advisory and life after service business planning etc.) 4. Consumer / Corporate Finance The product offerings are as follows: 1. Financial Advisory Services: - Business development services#P.16, Suite 3, Oko-Oba IV Estate, Abule Egba, #N0.47, Mojisola Street, Ogba, Lagos. +234 (01) 8755 830, +234(0) 803 217 5065 feniran@gmail.com www.feniran-consult@blogspot.com

2. 3.

4.

- Feasibility Analysis - Project Finance Consultancy - Debenture Service as Approved Lending: Group / Solidarity based lending model (not necessarily Asset - Collaterised Financing) for micro-credits Equipment Leasing Project Finance Hire Purchase Treasury / Deposit Liability Management: -Guarantees -Money Market and Funds Management E-Banking: -Electronic transfer -Mobile money

The product offering listed above is not exhaustive and products shall be developed to address the specific requirements of particular customer or group. In addition, as market opportunities permit, the MFBs product focus can be reviewed from time and expanded in line with changes in the financial service industry. This shall be in line with CBN approved guidelines. Acquisition/Investment Process: 2) This can be done via Memorandum of Understanding (MOU) between the old and new investors after carrying out due-diligence exercise on the banks financials. 9. Basic Organization Structure The bank will operate 3 Group levels, and other team for effective management. The structure is designed to permit proper segregation of duties. The staff of the bank along the mentioned functional business units for the first year of operation is given below. (a) COO (b) 3 H. O. D.s Opps/Branch, Fin & Admin, Credit & Marketing (c) 1 Cash officer (d) 1 Cashier (e) 1 Customer service Based on the proposed staffing, the bank will require for the first year of operation 7 officers categorized as follows:

#P.16, Suite 3, Oko-Oba IV Estate, Abule Egba, #N0.47, Mojisola Street, Ogba, Lagos. +234 (01) 8755 830, +234(0) 803 217 5065 feniran@gmail.com www.feniran-consult@blogspot.com

Level Position Number Executive Management CEO & Group Heads 4 Officers Management 3 Total 7 This staffing plan excludes support staff such as driver and security officers. 12. About Us. FENIRAN CONSULT is a Nigeria registered consulting firm with special focus on Training, Business Support, Management and Legal Consulting. Vision: To be a leading Multidisciplinary African Consulting Firm providing innovative bespoke solutions and services. Mission: To be a service provider of choice, delivering Training, Consulting and related services solutions, adding value to our clients and other stakeholders in an efficient, cost effective and reliable manner. Core Values Customer Focus, Integrity, Innovation and Service Excellence.

Our OfferingsLegal Consulting:

Our legal services include Advisory Services, Relationship Structuring, Corporate Affairs Issues (Incorporation, Searches, and Trade Marks and Patents etc.), Litigation Advisory Services, Property and General Legal Documentation. We have experience in International Franchise Arrangements, Technology Transfer and Guarantee Procurement.Business Support and Advisory Services:

We are proficient in Product Development, Scenario Planning, Relationship Structuring, Business/Marketing Strategy advisory services. Our services also include; a. Recruitment and management of outsourced staff c. Management/administration of clients existing support staff d. Business take-off planning and implementation

#P.16, Suite 3, Oko-Oba IV Estate, Abule Egba, #N0.47, Mojisola Street, Ogba, Lagos. +234 (01) 8755 830, +234(0) 803 217 5065 feniran@gmail.com www.feniran-consult@blogspot.com

Management Consulting and Training: We undertake HR Planning, Recruitment service, Background Checks and related advisory services. We have experience in Leadership, Strategy, Team Building, Public Speaking, Sales, Marketing, Personal Effectiveness, Communication and Customer Service training amongst others. We support the management of significant Organizational Change. Our associates have their background in Financial Services, Insurance, Medical, Pharmaceutical, Engineering, Sales, Marketing, Operations Management, Human Resources Administration and Legal environment of many top-class organizations in addition to management education at major centres of excellence within and outside Nigeria. See the brief profile of some of our associates. Our Clients: Our clients include, MTNN Employees Multipurpose Cooperative Society (MEMCOS), Leadway -Pensure PFA, Unilever Nigeria Plc., Mother and Child Hospitals Limited, Frontier Logistics and Cargo Handlers Limited , Blooms Soft Furnishings, Delsan Engineering Services, Complete Designs and Engineering Services, Bible Society of Nigeria, Naija Auto Trader And Investment Limited, Olutech Aluminium Limited etc. Our Value Proposition: We offer a unique one stop portfolio of Management Consulting, Training and Legal Advisory Services. We harness the benefits of our varied industry/professional exposure and training to deliver holistic and practical solutions to meet the needs of our esteemed clientele. Relationship is ongoing and engaging thereby affording us the opportunity to design and deliver services tailored towards enhancing the attainment of our clients strategic goals. Specific Services Offered with Respect to this Proposal: 1. To assist you in midwifing the establishment of microfinance bank suitable for the attainment of your set objectives. 2. Provide the required secretariat and process follow-up and represent your interest from the beginning till completion of the process. 3. Structure/conceptualise initial start-up/take off structure and operational model for successful realization of your set objective. 4. Prepare and finalise with regulators on your behalf all documentations, business and operational plans#P.16, Suite 3, Oko-Oba IV Estate, Abule Egba, #N0.47, Mojisola Street, Ogba, Lagos. +234 (01) 8755 830, +234(0) 803 217 5065 feniran@gmail.com www.feniran-consult@blogspot.com

5. Produce business plan 6. Release to your control subject to agreement an experienced top rated professionally active Microfinance banker to lead the initial take off 7. Undertake recruitment and training off all staff 8. Undertake (subject to cost defrayment) all related administrative and legal services Our Approach: It is our belief that no two clients are the same even if in the same industry and facing the same challenges. Each client is unique to us and we do not pretend to have prepackaged strategies or solutions. We do not vend or amplify buzzwords and management fads and our plans/solutions are developed with the client in view in order to make them executable. We shall be grateful if granted the opportunity to be of service to you.

O.M. OLOJO Esq. Senior Consultant/CEO.

BRIEF PROFILE OF KEY ASSOCIATES: OLOJO, OLUYOMI MICHAEL. A 1989 graduate of Law from Obafemi Awolowo University, Calledto-Bar on 12th December 1990, Yomi Olojo has had a varied work experience from brief stints in Citizens Rights protection as a Youth Corper, Legal Practitioner, Civil Servant, Business Manager and Academia. He was the pioneer Legal Secretary to Irrua Federal Medical Centre in Edo State of Nigeria. A career rich in Human Resources Management as a business, he joined Servtrust Limited a major Outsourcing and Security Service Company where he spent more than five years becoming actively involved in project management, product development, pensions, insurance procurement and claims administration. Before rising to the position of Company Secretary and Legal Adviser he had been saddled with managing major multinational, multi-location contracts including Nigeria Breweries and Diageo (Guinness) Nigeria to name a few. It was from Servtrust Limited that he joined Leventis Snacks Industries Limited as pioneer Admin and Human Resources manager. During his brief stay at Leventis he set up the Medical Insurance, Pensions, Canteen, Security,#P.16, Suite 3, Oko-Oba IV Estate, Abule Egba, #N0.47, Mojisola Street, Ogba, Lagos. +234 (01) 8755 830, +234(0) 803 217 5065 feniran@gmail.com www.feniran-consult@blogspot.com

Community and Police Relations system. He was also involved in NAFDAC approval process for the products of the company. In his thirst to acquire world class management training, Yomi Olojo secured admission at the prestigious Lagos Business School for Executive Masters of Business Administration (EMBA). The rigorous case study programme revealed his passion for and brilliance in Strategy, Marketing, Ethics, Human Resource Management and Business Law. Nicknamed Brownie for his ability to earn valuable points in-class before the end of each course he was also the Elected Secretary General of EMBA 12. He joined his class in attending the special one week training on Entrepreneurship and Competitive Strategy at IESE Business School, in Barcelona, Spain. As his post EMBA Internship, he joined Maevis Limited (Africas leading Airport Automation and Management Company) as Executive Assistant to the Chief Executive Officer. Maevis was a finishing school for Yomi in deals structuring, project proposal drafting, marketing, reputation management, presentations, negotiation and training. In his early fourties, married to Bolaji a former banker and business associate, this father of three lovely girls is the CEO/Senior Consultant at FENIRAN CONSULT a Training, Management and Legal Consulting Firm.

LUCKY O. OLOGBO Lucky Ologbo is a Banker, Administrator, Teacher and Management Consultant. Ologbo holds a Masters of Science (M.Sc) Degree in Business Administration with specialization in General Management from University of Lagos and also an MBA Degree in Banking and Finance from University of Nigeria Nsukka. A student member of the Chartered Institute of Bankers of Nigeria; Institute of Personnel Management of Nigeria and chartered Institute of Stockbrokers of Nigeria. He also holds a full membership status (MNIM) of Nigerian Institute of Management. Lucky has just passed the final stage of the professional examination (Microfinance Certification Programme) conducted by the Chartered Institute of Bankers and Central Bank of Nigeria for microfinance practitioner. A banker to the core, his banking career which cut across Mortgage Finance Institution (Safetrust Savings & Loans Ltd.) and Commercial bank (Access Bank Plc, Chartered Bank Plc now Stambic/IBTC and Magnum Trust Bank Plc now Sterling Bank) spans over 16 years. At Safetrust (now owned by Sterling Bank), Lucky developed the Head Office branch of the institution as pioneer branch manager and rose to the position of the Group Head, Business Development and Mortgages.#P.16, Suite 3, Oko-Oba IV Estate, Abule Egba, #N0.47, Mojisola Street, Ogba, Lagos. +234 (01) 8755 830, +234(0) 803 217 5065 feniran@gmail.com www.feniran-consult@blogspot.com

In Chartered Bank, he participated in setting up of four branches located on Allen Avenue Ikeja, Awolowo Road - Ikoyi, Oke-Arin and Nnamdi Azikwe - on Lagos Island. He was at various points in times, the Head of Credit & Marketing managing other financial institutions, (Community Banks & Mortgage Institutions) and Medium Corporates. At the head office of the same bank (Chartered Bank) he was given the opportunity of been a member of the Concessionary Finance Unit (World Bank Assisted Projects SME, IDF etc.) He had a brief stay at Access Bank where he functioned very well at their Commercial Department before joining Magnum Trust Bank Plc.He was the Manager in charge of Magnum Trust Bank Plc Marina (Head Office) branch and Lewis Street branch, Lafiaji Lagos before joining Royal Trust Community Bank Ltd. as the pioneer Managing Director. Lucky has just been recently inducted by the Chartered Institute of Bankers of Nigeria as a Certified Microfinance Bank Practitioner of the Institute and now wears the title MCIB. Mr. Lucky Ologbo is a member of Ikoyi Club Lagos and happily married with children. MR. AFOLABI OBILADE. Mr. Afolabi Obilade attended the Prestigious Government College, Ibadan and studied Political Science at the University of Ibadan for a First Degree. He also obtained a Masters Degree in Political Science at the same University (International Relations bias) He is an M.B.A Graduate of top rated Durham Business School, United Kingdom where he majored in HR Strategy. Mr. Obilade is a graduate member of Chartered Institute of Personal Management Nigeria and Licentiate Chartered Institute of Personal Development, UK. Mr. Obilade started his career as an Administrative Officer with the Former Directorate for Social Mobilization Bendel State; He worked with the defunct Center for Democratic Studies BWARI Abuja (The Presidency) as a Research Officer/ Assistant. He later worked with the Institute Of Chartered Accountants Of Nigeria and rose to the Senior Manager Administration A Senior Human Resources Manager with over 12yrs experience in Human Resources field, he has acquired experience over the years in Organizational Development and Office Management with extensive knowledge in Training, Development and Talent Management.#P.16, Suite 3, Oko-Oba IV Estate, Abule Egba, #N0.47, Mojisola Street, Ogba, Lagos. +234 (01) 8755 830, +234(0) 803 217 5065 feniran@gmail.com www.feniran-consult@blogspot.com

Mr. Obilade is passionate about driving efficiency and aligning HR to business strategy. He is currently on a PHD research on Organisational Development at Bradford University UK and a Consultant with the World Bank in Nigeria.

ADEDOTUN IFEBOGUN Dotun is a banker of 19 years post qualification experience spanning commercial, international and retail banking functions in professional banking environments in Nigeria. He has extensive practical experience in Branch Management, Trade Finance, Credit and Risk Management, Product Development and Sales in Financial Services environment. He has been involved in successful start up and turn-around of branches, units and department at various locations in the country. His core competences include credit analysis, sales planning and execution and people management. A graduate of Agricultural Economics from University of Ibadan, Associate Chartered Accountant and Executive MBA holder from Lagos Business School, Dotun is a Senior Management staff of a major Nigerian Bank.

BOLAJI MARIAM OLOJO Bolaji started her primary education at the prestigious ADRAO International, Victoria Island, Lagos before proceeding to Shepherdhill Girls High School. She completed her Higher National Diploma in Mass Communication at Ogun State Polytechnic, (Moshood Abiola Polytechnic) Abeokuta. Bolaji worked at Waterstone Communications Limited as a Media Executive before joining Chevron Nigeria Limited in 2000 as a Community Relations Officer. In addition to host community activities she was a regular contributor to Chevron Texaco News. She later moved to Punch Nigeria Limited on completion of her National Service as an advert executive. In 2002 she joined the Corporate Affairs department of Oceanic Bank International Plc where she was for 5 years.

#P.16, Suite 3, Oko-Oba IV Estate, Abule Egba, #N0.47, Mojisola Street, Ogba, Lagos. +234 (01) 8755 830, +234(0) 803 217 5065 feniran@gmail.com www.feniran-consult@blogspot.com

Bolaji was an active member of the highly successful Initial Public Offer campaign team of the bank in addition to coordinating many Public Relations campaigns and events management responsibilities. She attended several courses including Communications, Branding, CSR, International Trade, Writing, Winning Attitude and Poise before moving to Retail Banking department as Pionner Head of Marketing at Iju Business Office of the bank before her exit from the banking sector in 2009. BJ as she was fondly called led many initiatives including Abattoir and Fishfeed Market Associations, Private School Account programmes and Small/Medium Size Manufacturing Industry Account. Bolaji is currently the head of Marketing and Corporate Services at FENIRAN CONSULT.

#P.16, Suite 3, Oko-Oba IV Estate, Abule Egba, #N0.47, Mojisola Street, Ogba, Lagos. +234 (01) 8755 830, +234(0) 803 217 5065 feniran@gmail.com www.feniran-consult@blogspot.com

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