MICROCAPITAL STORY: South African Microfinance Institution Blue Financial Services (BFS) Begins Operations in Swaziland

Blue Financial Services (BFS), a South African microfinance institution (MFI), has opened its first branch office in Mbabane, Swaziland as part of a plan to expand across the African continent. According to CEO Dave van Niekerk, the for-profit corporation “is committed to servicing the unbanked and underserved employed citizens of the kingdom who presently do not qualify for financial offerings from the traditional banks” (press release 15.07.2008)

While the new branch will not be licensed to accept deposits, it will offer term loans, salary advances, educational loans and debt consolidation. BFS believes that the new office will provide further support to the local economy because seven out of every eight employees hired in Swaziland will be locals. The MFI also plans to focus on financial education, explaining that, amongst other things, “not all credit is bad credit.”

Niekerk said that the consolidation of outstanding debt will provide a “big opportunity” for BFS because “a lot of Swazi people are overexposed to debt.” He also explained that the consolidated debt services will create one larger outstanding loan with monthly repayments that will be “less onerous” to the borrower.

On its first day of operation, the Mbabane office was quite busy with over 300 potential customers. BFS plans to have four operating branches in Swaziland within three months and 200 in all of Africa. As previously reported by MicroCapital, the BFS expansion across Africa was aided by a USD 15m investment from private equity firm Emerging Capital Partners (ECP) based in Washinton, DC. MicroCapital has also reported on BFS opening a branch in Nigeria, please follow this link to learn more.

BFS, founded in 2001, currently has over 173 branches and 1532 employees in 12 African countries. As of February 29, 2008, the MFI had, totals assets of R1.1b (USD 147m), a loan book of R482m (USD 64.4m), a debt to equity ratio of .77 and a return on equity of 1% (see financial results). BFS is listed on the South African JSE securities exchange and recently cross-listed on Botswana Stock Exchange. The company will consider cross-listing on the SSX (Swaziland Stock Exchange) in two to three years. It is not currently listed on MIX Market, the Microfinance Information eXchange.

By Greg Casey, Research Assistant

Additional Resources:

Calibre: “Blue Enjoys Busy Start in Swaziland” by Renee Bonorchris.

Microcapital.org article, June 12, 2008: “Private Equity Group Emerging Capital Partners (ECP) Invests $15m in Microfinance Institution (MFI) Blue Financial Services (BFS)”

Microcapital.org article, March 13, 2008: “South African Microfinance Institution (MFI) Blue Financial Services and Nigeria’s Intercontinental Bank to Launch $25.9m Microfinance Bank”

Blue Financial Services: Home

BFS: Profile

BFS: “Reviewed Results for the year ended 29 February 2008” (see investor relations page)

BFS Press Release: “Twelve and still counting – Blue Financial Services launches Swaziland operations” (see news page)

Mixmarket.org: Home

Oanda.com: FX Converter