Blue International Micro Finance Bank Limited (BIMFB), a newly created Nigerian micro finance bank, has begun operations in Nigeria, which will be using its capital base of N3 billion (USD 25 million) to provide micro loans to Nigerians. Blue Intercontinental Micro Finance Bank Limited is a partnership between International Bank Plc and Blue Financial Services of South Africa. This N3 billion (USD 25 million) is N2 billion (USD 17 million) over what is required by the Central Bank of Nigeria for starting up a microfinance bank in the country, and is reportedly the first to begin operations throughout different states in Nigeria, according to Business Day.
There are over 700 micro finance banks currently registered in Nigeria, according to the Central Bank of Nigeria, however Mr. Olayinka Adebiyi, Executive Director of International Bank Plc stated that the informal sector remains highly untapped, and BIMFB intends to reach out to this sector. Erastus Akingbola, the Intercontinental Bank CEO has said that at the onset the bank’s structures will be used as its branches nationwide, having over 207 branches in Nigeria. Their partner, Blue Financial Services of South Africa, will use their experience in micro financing in order to increase access to people in rural areas where there are not bank branches. Blue Financial Services has seven years of experience in the micro finance industry, however they state that they have “identified (their) market as being the millions of modest-earning, but salaried Africans who are the continents teachers, soldiers, nurses, policemen, civil servants and miners” and their experience in the informal sector is not identified or quantified.
Nigeria has the largest informal sector in sub Saharan Africa, and estimates suggest that the urban informal sector makes up approximately 45 to 60 percent of the urban labour force, a statistic which has actually increased since the 1960s. A new study showed that 90 percent of all new jobs created in Nigeria are in the informal sector, according to the Ministry of Labour and Productivity. The informal sector accounts for 80 percent of non-agricultural jobs and 60 percent of urban employment.
The partnership between the Nigerian Intercontinental Bank Plc and the South African Blue Financial Services was brought together by an investment from a mutual shareholder, AIG Investments. The shareholder breakdown will include a 35% ownership by Intercontinental Bank, while AIG Capital Partners will hold 10 percent of the company, and Blue Financial Services holding a 55% majority share. Please read past Micro Capital stories to learn about the role of AIG in this partnership.
Blue Financial Services is an African financial services company, founded in 2001. For the fiscal year ending February 29, 2008, company assets (p. 136) totaled R 820.2 million (USD 109.6 million). On page 74, Blue states that its loan book increased by 133 percent to R 481.9 million (USD 64.4 million) from R 207 million (USD 27.7 million) in 2007. As of September 27, its return on assets was 7.34 percent, and its return on equity was 11.71 percent. Total debt-equity ratio was 0.0365.
Intercontinental Bank Plc was founded in 1989 as a merchant bank and is the largest asset-holding bank in Nigeria, with assets totalling N 1.3 trillion (USD 11.5 billion) as of February 2008, of which N 441.4 billion (USD 3.8 billion) were listed as loans and advances to customers. As of September 27, the return on equity was 16.96 percent and the return on assets was 3.24 percent. Total debt-equity ratio was 5.90.
Additional Sources
Global Urban Development Magazine
MicroCapital Story, September 29 2008, “AIG Investments Provides Equity for Nigeria’s Blue Intercontinental Micro Finance Bank“
UN Research Institute for Social Development
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