How new product makes savings relevant in tough economic times

Eric Ntumba, acting CEO of Baobab Microfinance Bank in this interview with Hope Moses-Ashike, discusses the bank’s digital savings offering, the Jollof+ app, how Nigeria can leverage technology to drive savings and financial inclusion, and other industry issues. Excerpts.

With the current economic hardship, do you think people can still save?

Yes, one way to combat inflation is to ensure that money earns interest between receipt and expenditure. Jollof+ allows for this, making savings relevant even in tough economic times. While some people may struggle to save, earning interest can help alleviate inflation’s effects.

What prompted Baobab to launch the Jollof+ savinngs products?

It is a best-in-class digital savings app designed to provide more convenience to our customers, allowing them to save from the comfort of their own homes, businesses, or offices. This initiative is part of Baobab’s transformative efforts, as we believe banking should no longer be a place you go to whenever you need to. The goal is to empower our customers to become their bankers, managing their savings and investments independently. Additionally, digitization enables us to extend our outreach far beyond the structural limits of physical branches, helping us reach more people, tap into new segments, and serve our existing customers better. This is the key rationale behind the launch of Jollof+.

You mentioned the interest as the icing on the cake for the app. Can you elaborate on that?

Yes. The main driver of the application is to push for convenient savings. Saving is inherently an effort; you choose to defer an expense. Adding further effort, like traveling to a branch, can complicate this process. By removing these peripheral barriers—transport, branch location, and opening hours—we make saving simpler. Customers can fund their Jollof+ wallet and choose the best investment or savings option that fits their needs. This convenience increases the likelihood of higher savings volumes.

Has the increase in MPR and interest rates affected loan repayment capacity?

Our portfolio quality has not deteriorated with the portfolio at risk below 3%, better than the industry average. We aim to ensure our customers continue to manage their debts effectively.

What are the challenges of microfinance banking in Nigeria?

The main challenge is pushing the limit of financial inclusion. Many people remain unserved or underserved. We must be relevant to them through our product offerings and outreach. Digital solutions, including USSD, can help overcome barriers and boost sector outreach.

How competitive is your interest rate?

We believe we transparently offer the best interest rate – up to 21.60% net on the Jollof+ app.

Can we increase aggregate savings by liberalising banking?

Yes, I believe so. Technology has always been a catalyst, accelerating processes. A digital savings product can enhance the speed and efficiency of saving, leading to an increase in the overall savings of the country if widely adopted.

Do you see fintechs replacing microfinance banking in Nigeria?

It depends on what you define as fintech. Many fintech companies eventually acquire a microfinance banking license to gain more options. Most fintechs present themselves primarily as payment platforms. However, once they obtain a microfinance license, they can also lend. Thus, they become relevant competition as they are equipped to perform the same regulatory activities we do. Whether we are a fintech depends on the definition, but fundamentally, we are a financial institution that uses technology.

Can microfinance like yours reduce the cost of savings to encourage more people to join?

Yes, by digitizing the savings process, we remove the cost of physical transactions, making saving more convenient and cost-effective. Although some costs like internet access remain, we plan to introduce a USSD format for people without smartphones or internet access, extending our product reach to people using feature phones.

Are microfinance banks ready for a $1 trillion economy?

It depends on how readiness is defined. Microfinance banks play their legitimate parts at different levels. At Baobab, we are financially sound and supported by a strong shareholder structure making us able to make the required investments to bring relevant contributions to the national effort.

Can you explain the options available on the Jollof+ app?

Each option on the app has specific features and benefits:

JollofLock: Primarily for long-term savings, this time deposit product offers interest upfront for a predefined period. You can top up the initial amount during the term.

Baby Box: Designed for saving for children’s future needs. You can start saving even before the baby is born and save for as many children as desired.

Ajo+: Can be used for individual or collective savings, suitable for individuals or groups with specific saving targets.

Jollof Flex: Ensures that even the balance in your Jollof wallet earns interest, providing flexibility before deciding on a specific investment or savings option.

What message do you have for your customers?

We look forward to people enjoying Jollof+. It offers convenience, options for targeted savings, and good savings habits, especially for the tech-savvy youth. The interest earned can help combat inflation, making Jollof+ a valuable tool for financial management for al

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