REACHING OUT

Zambia 2014 | FINANCE | B2B

TBY talks to Andréanne Ratté, Chief Executive Officer, and Moses Serenje, Chief Credit Officer, of the Entrepreneurs Financial Centre (EFC), on expansion strategy, the client share ownership program, and microfinance and financial inclusion.

Andréanne Ratté
ANDRÉANNE RATTÉ
Chief Executive Officer
Entrepreneurs Financial Centre (EFC)
Moses Serenje
MOSES SERENJE
Chief Credit Officer
Entrepreneurs Financial Centre (EFC)

What factors are driving your growth?

MOSES SERENJE The Entrepreneurs Financial Centre (EFC) has grown through constant innovation. When the current major shareholder took over five years ago, the institution was struggling due to a lack of skills and technical capabilities. We started off by introducing new software that allowed us to know the status of our loans on demand. We retrained our staff, and made sure they understood their new roles. We moved away from salary loans, and began working with micro- and small-sized entrepreneurs. We entered the untapped market between the banks and microfinance institutions with our SME business loans and quickly realized that there was also a need for housing loans. This became clear from the number of building societies providing mortgages. Next, we introduced housing completion loans for entrepreneurs who needed additional financing. Housing completion loans are now 40% of our total loan portfolio.

What is your strategy in terms of branch expansion?

ANDRÉANNE RATTÉ We have seven branches: five in Lusaka, one in Kitwe, and one in Chipata. Over the next five years, we would like to expand by opening a new branch every year. We hope to reach new clients in Lusaka and outside Lusaka. By January 2015, there will be a new branch in Ndola, in Copperbelt province. We will continue to survey the market in search of new opportunities.

Do you have to do much education and outreach?

MS We start our branches out as business loan centers, which provide information to clients about EFC and its activities. As clients come in, we study the market and determine if each center should be turned into a branch. When there are enough people interested in our products, we move in and create a full branch. Our business center in Ndola is about to be turned into a branch because our surveys showed us that the market there was strong. We also opened a branch in Kalingalinga because we observed that many interested clients were visiting. The Kalingalinga branch is already self-sustaining. Setting up a business center is not expensive, but building a branch requires considerably more financial commitment and effort.

Can you talk about the client share ownership program?

MS The client share ownership program was set up as a way to give back to our clients. Clients who make timely payments are entitled to 10% of the total interest paid. The program has different levels of incentives. The first stage, Gold, entitles the client to a 10% share of total interest paid, which is broken down into 75% cash, and 25% shares, or 50/50, or 25/75 for the more basic plans. This product has been popular with our clients, allowing many of them to become shareholders.

AR Our clients become shareholders in a cooperative that, in turn, holds shares in EFC, and our clients are members of the cooperative. This may well be the first such program in Zambia. We offer the same program to employees who are working with us for more than one year and have earned a satisfactory performance.

What roles do microfinance and EFC play in the national objective of financial inclusion?

MS The Zambian economy has a high rate of involuntary non-users, who are unable to gain access to regular banking services. Banks reject these people, even though they own businesses and other forms of collateral. By serving this population, we have grown our portfolio from ZMW2 million to the current ZMW98 million. We founded the first EFC here in Zambia, and this model is now emerging in Tanzania, Uganda, and even Panama.

What is the ultimate vision for EFC in Zambia?

AR We want to develop our business plans jointly with our board members. By taking advantage of opportunities in insurance, mobile banking, and savings, we expect to continue building our portfolio. Our current portfolio should reach more than $55 million by 2019. Our business plans continue to evolve, based on input from our board members. For 2014, we want to grow by 20%, and increase that rate to 30%, 35%, and 40% during each successive year. These goals are achievable by opening more branches, while also appealing to large-scale entrepreneurs.

What do your shareholders' ambitions say about the outlook for the Zambian economy?

MS Zambia is a great economy in which to invest. Businesses have flourished over the past few years in large part due to our stable political climate. The growing number of EFC shareholders is a sign of their confidence in our organization and the Zambian economy. Before Développement International Desjardins (DID) came in five years ago as a shareholder and contract manager, we were struggling to find investors. EFC has created a culture built around our clients. EFC can give you a loan within 48 hours. We are there for our clients.