NEWS WIRE: Nigeria: AIG, Blue Financial Services, Intercontinental Bank (ICB) to Invest $20m in New Microfinance Institution

Souce: Business Day.

Original article available here.

LAGOS, March 7 – Blue Financial Services will launch a microfinance bank in Nigeria with the country’s biggest bank by assets, Intercontinental Bank (ICB), in a deal worth nearly ZAR 160 million (USD 20 million).

The JSE-listed microlender will own 55 percent of the new entity, while ICB and US firm AIG Capital Partners will take up 35 percent and 10 percent respectively, Blue Financial Services CEO Dave van Niekerk said yesterday.

“The decision to launch in Nigeria involved two years of in-depth research and seeking the right partners. ICB has built up its brand equity over 18 years and is ranked as the second fastest growing bank in the world. AIG is already a partner, and it has an established presence in Nigeria.”

The venture would tap into the “hugely underbanked” retail market of Africa’s most populous country and expand the number of countries on the continent where Blue operates, he said.

“The Nigerian market is significantly underserved. Although there are more than 25 banks in Nigeria, less than 10% of their lending is to individuals.

“The average bank density is one outlet for 32,700 people in urban areas and one outlet for 57,000 people in rural areas.

“The Nigerian banking industry concentrates mainly on deposit taking and savings accounts and consumers are constrained by requirements to have existing products with a bank before qualifying for further offerings.

“These limitations have led to around 60 percent of the economically active population having to be serviced by informal financial sector players,” he said.

In 2005 the Central Bank of Nigeria launched its National Microfinance Policy and Regulatory Framework to provide for consumers not adequately served by the formal financial system.

Van Niekerk said the venture “will be able to use Blue’s proven collection and credit scoring methodologies as well as its processes and procedures refined for the African market.”

ICB will provide local partner expertise and in excess of 200 branches.

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