The pioneer Managing Director/Chief Executive Officer, EDFIN Microfinance Bank Limited, Ms. Bunmi Lawson in this interview with Kayode Tokede and Kehinde Akinyemi disclosed that the Lagos-based firm aims to serve 1 million students with access to tuition loans. According to her, the Central Bank of Nigeria (CBN) should intervene in the Microfinance bank sector in a move to boost capital and improve lending to the SME sector. Excerpts:
How has the COVID-19 transformed education sector funding in Nigeria?
Last year was challenging for the sector at large. The lockdown, coupled with the #EndSARS protest in Lagos made access to loan in the education sector difficult and repayment was also hard for parents.
Parents were unable to pay school fees and students were unable to go back to schools. Schools had to quickly learn how to use digital options to sustained learning.
As you know in Nigeria, access to data is expensive and a lot of people are not used to online learning as fast as they can.
Lagos state government tried as they did television and radio learning for the pupils.
Now that schools have resumed, we have started seeing improvement in activities as more schools are asking for loan to build technology laboratory, school structures and other amenities to offer learning.
Things are still tough due to the economy situation in the country. Parents are still struggling to pay school fees. As regards N5billion loans to the education sector, how much has EdFin disbursed?
We have disbursed almost about N100million as we partner with Lagos State Employment Trust Fund (LSETF). They created education-specific trust fund for the sector. School, vocational among others can apply for the loan. They can apply for a maximum of N5million and the interest rate is a single digit which is nine per cent. It was set up to relieve schools of the impact of COVID-19.
The impact is to enable school weather the storms. Salary, rents among others can be paid. It is meant to reduce the number of schools that may have to shut down as a result of economy challenges. The loan is meant for private schools as the government is responsible for the public.
We offer loan to affordable private schools. These are schools that charge N25,000 and below per term.
Granting loans to private schools, what are the challenges?
For schools, it is infrastructure. With the COVID-19, schools have to invest in technology, internet, computer and consistent electricity. Also, teachers are to be trained more. Nigeria is a country where parents drive the education of their children. Providing quality education is actually a major problem in this country.
The collaboration between LSETF and your firm, kindly highlight the impacts?
The impact has been very huge. Lagos state is the very first state to setup a dedicated fund for education. It was a matching form as the government put down 50 per cent and the banks that partnered with them put down another 50 per cent. It means that the two of us are in a relationship to grow the education sector. The collaboration has increased the amount of money available to finance the sector and make the scheme better.
What is EdFin’s selling point in the education sector?
We started operating before the COVID-19 which means technically, we have operated for one year.
We have given loans to 500 schools, serving over 70,000 students. We had a target of 70,000 who are now having access to better education. We want to expand and lend more to schools. We are the only specialized education finance company in the country.
Once any school needs loans, they talk with EdFin. It gives us indepth understanding of what schools need and structure finance to match their cash flow. We also have other products that help collection of school fees and paying teachers’ salaries. Since we understand in-depth the needs of schools we give customer service that is second to none.
Is EdFin planning to expand operations across the country?
We were planning to extend to other states but with COVID-19 pandemic, we had to slow down. We had thought by 2022, we should become national. We are currently reviewing our plans.
Does the MfB need intervention from regulating bodies amid this pandemic?
Our sector needs serious long-term capital. Some interventions, CBN has done generally. As you likely know, we had the Micro, Small and Medium Enterprises Development Fund (MSMEDF). The CBN had given 2 years moratorium for MSMEDF.
It gives some level of succour to MfB who have already accessed the loan before the pandemic happened.
Other than that, stakeholders thought CBN should have other palliatives for the sector as we focus on low-income households and micro & small businesses. We thought rather than giving just a moratorium, more funds should be disbursed so that more MfB can access it to lend to SMEs.
Don’t forget the CBN did NISRAL’s N50billion loan to SME. We felt CBN should have given it to more MfB rather than giving it to only NISRAL MfB.
In terms of recapitalisation, how prepared are you?
We are lucky we have met the capital base even before the 2022 deadline. Because of the losses reported due to COVID-19, we have to raise more funds. We have met April 2020 requirement of the CBN but not all MfBs have been that lucky as COVID-19 lockdown makes funding difficult. Some MfBs are struggling to meet the capital. We need the capital and I urged the CBN to support it.
We need the capital to do more businesses but who is giving now. Is either the CBN extends the date or directly provide the window for funds so that MfB can meet their capital requirement.
How much of the CBN N220bn MfBs funds have you accessed?
We have accessed very little of it. We have asked for more money and we were told to settle the first one we collected. We have given the first one as loan. We wanted to apply for more as we got N25million as the first tranche. We wanted N150-500million so that it can touch the education sector.
Why is access to the loan difficult?
It is tough and I will explain. By the time it was set up, the entire capitalisation of MfB was not up to N250billion. It is tough to give all the money to only MfB. What they did was to encourage state government to also apply. Most of the state governments that accessed it, then give it to MfB in their states to manage it.
The state government was acting as a grantor. Also, they gave some banks and it reacted that the funds were for Mf why Banks? I think most of the requirement for MfB could be realized a bit.
What are the future targets of EdFin MfB?
In the next three years, we should be able to serve 1 million students in various ways. It could be giving them tuition loans directly so that they can pay for their schools. Improve on technology so that our children can better assimilate learning and become better citizens of Nigeria.