Access Interview: Klaus Mueller, CEO of AB Microfinance Bank Nigeria
Klaus Mueller is the CEO of AB Microfinance Bank Nigeria since January 2018. He has spent many years as a CRO and CEO of microfinance and commercial banks in Eastern Europe, in particular in Serbia (ProCredit Bank) and the Ukraine (Prominvestbank). Before going abroad, Klaus worked in the Treasury of KfW.
We really make a contribution to each business owner, the economy and the country as a whole.
AB Microfinance Bank Nigeria operates for over 10 years in the Nigerian market. How would you describe your current market position and further, your impact on the Nigerian community?
We are one of the biggest and most respected microfinance banks in the country. Our market share among microfinance banks in Nigeria is 3% in both business lending and deposit taking. We operate mostly in the Lagos region and have recently opened our first branch in South-East Nigeria.
We have created over 1,000 jobs in our bank and are developing our staff with a comprehensive development and training program. We are serving over 300,000 customers, out of which 41,500 are active borrowers with an outstanding loan portfolio of EUR 28.4 million. ABN disburses more than 6,000 business loans on a monthly basis, applying a responsible individual lending technology and customer protection principles. The bank also supports local community projects such as schools as a part of its corporate social responsibility.
COVID-19 is putting a lot of pressure on the global community and changed the way we all operate. How is the crisis impacting AB Microfinance Bank Nigeria, considering the fact that government measures came suddenly and were stricter than in the other countries in the region?
The Nigerian government tried to avoid drastic measures initially, because the low oil price already had a strong negative impact on the economy. Suddenly, government strategy changed and Lagos was fully locked-down, leaving us exactly one workday to prepare. The lockdown eventually lasted five weeks and is still not fully lifted to date.
We had to close all offices, but kept our electronic payment systems open all the time. Thanks to this, 40% of borrowers paid their instalments voluntarily, even though their loans were restructured. Loan officers were instructed to regularly contact their clients by phone.
We had feared a big outflow of deposits, but the opposite happened: as commercial banks reduced their deposit rates to almost zero, our deposit base has now grown to the highest level ever. Currently, we have 13 Mio EUR in deposits, and only 6 Mio EUR in international loans.
As a social responsible lender and customer-oriented Bank, which measures did you take in order to support your clients, who were, and still are, strongly affected by the crisis?
We restructured all performing loans in April and May. The lockdown has once more shown the resilience of the microfinance sector. In June, already 85% of clients paid their full monthly instalment, which is impressive given the radical lockdown measures. For July, we expect loan disbursements at 95% of the pre-lockdown level.
We resumed business lending immediately after the lockdown ended in May. We focused on our existing borrowers and approached them individually. Most of them are currently very careful about borrowing and don’t ask for more money than they can handle.
About 15% of our borrowers cannot yet pay their monthly instalments, because their industries are still closed (e.g. schools, restaurants) or they need more time to recover. We take individual decisions for those clients. Most of them do not want another restructuring because of the additional interest expense.
AB Microfinance Bank Nigeria constantly improves its services. What are the projects you are currently working on and how will the outcomes create values for your customers and the Bank?
Our central innovation project is the Loan Officer App. The project is managed by AccessHolding and ABN is the first test ground. After successful implementation in Nigeria, the App will be rolled out to other network banks. With the App, which works off-line in the field, we will collect client financial data electronically (on a tablet pc), instead of paper. Without the need to re-enter existing information the loan proposal preparation and back office data collection will be accelerated. We expect a big productivity gain in the lending process, while customers will benefit from improved service and faster turnaround times. The initial version of the App should work by the fourth quarter of this year.
Recently there was a change in AB Microfinance Bank Nigeria’s Board of Directors. Can you tell us about the reasons and expectations this change triggered?
Central Bank regulations limit the time of a Board member to 12 years. Dr. Zattler has reached that limit and stepped down. Mikhail Velichko is our new Director, Johannes Mainhardt is the new Chairman of the Board.
Our Board of Directors has always been very supportive and professional. In 2019, Ms. Ladipo, who is one of the leading microfinance experts in Nigeria, joined us as an independent Director. With Johannes and Mikhail in their new functions, I expect that the fruitful cooperation between Management and Board will continue.
Towards the end of our interview, would you be willing to share your personal, most important learnings from this period?
After many years in Eastern Europe, Nigeria is my first location in Africa. My main lesson is that microfinance works even under very difficult circumstances, such as the recent lock-down and oil price shock to the economy of Nigeria. It works, because small company owners are hardworking, honest and grateful for fair treatment. We really make a contribution to each business owner, the economy and the country as a whole.