Jislah Financial Services is Stepping into Ghana’s Micro Lending Sphere

Interview with Emmanuel T. Obeng, CEO of Jislah Financial Services

What is the state of the financial services sector in Ghana in 2017? How competitive is it? What kind of potential does it have for further growth? What is your position within the sector?

Jislah Financial Services Limited is a registered and regulated Bank of Ghana institution and finance house. We have been in business for over 20 years. We commenced business in March 1995. We give both corporate and individuals loans and advances to address specific needs. We also give high returns on investments and placement from clients. Our rates are higher than one gets from the Central Bank. We are basically in the business of buying loans, buying money, and making sure that we sell the money at a margin. Jislah is a member of the Ghana Club 100 and we have been since the year 2011. In 2011, we were the third fastest growing company in Ghana. Ever since then, we have won several awards from the Ministry of Trade and Industries, from other institutions, and even I was given the Entrepreneur of the Year Award for the Banking and Finance Sector for 2016 in Ghana. In the finance sector, there are the savings and loan companies, the mortgage companies, the finance houses, which we are, and the lower tier is the microfinance companies. When you look at our sector, we are one of the leaders, which really confirms our vision. We want to be a very good financial institution that is among the best at addressing the financial needs of people. We are doing that quite well and we give value to our stakeholders. We are in business to make profit, so we have to make sure our stakeholders are happy with our products and our results. We pay enough taxes in the communities we live in, our people, our investors, etc. Regarding the financial sector and its status, there are many more players in the sector, now, and also, many termers. The finance sector in this country is going through many challenges. For example, a number of microfinances were regulated, and there has been a lack of experience, inadequate capital, and more. They had challenges with customers by not being able to address and pay the investment back. That affected inflows in the sector because in our business, we do not take small deposits. We are not like savings and loan that have a banking hall. The sources of capital for our business and customer deposits come from institutions and high net worth people. These are intellectual people, people who know value for money. They want higher returns for their money, so they are likely to save and invest with us. When there is uncertainty and the situation is volatile and everybody holds onto their money, there is less inflow to address your loans and advances. Recently, there was an issue where two banks’ licenses were withdrawn and taken over by GCB. This affects our sector. If even banks can have challenges, how much more do the financial houses have? But, you can show your strength in how you address those challenges. That is where Jislah stands tall. We are addressing that challenge by looking at other sources of funding to raise inflows and to address this volatile situation that may occur, caused by influences which we cannot control. It means we need stable funding for the medium to long term, five to ten years. We must strategize. We are asked, “Why don’t you become a public company?” and told to leverage on our sources as a private company into a public company. By so doing, people will invest because they have their own interests at stake.

We have just introduced and brought on board a new division which we call the microlending division.

You mentioned the listing going IPO in the Ghana Stock Exchange in 2013 and that it should be realized in 36 months.

Now, we are going to do a private listing. We obtained approval from the Central Bank and the funds arrangers are working on it. We hope that by the end of the year, we should be able to raise about 100 million Ghana Cedi, nearly 20 million dollars, from the market and that will put us on the alternate stock exchange. Basically, we are on track. Where there are challenges, you need to strategize. Between last year and now, the situation became much more urgent. We realized that the safest route is to be a public company and be listed so we can raise the necessary funding and not depend on short term of one or two days, or long term of five to ten years. It is within our strategic plan, but because we did not have that challenge earlier on, we did not feel the need to go public quickly. But now, there is the need and we have the necessary approval.

What are the different services you provide?

We provide bridge financing, construction and project management financing, SME financing, small loans, assets financing, and more.

Do you see more demand in any service in particular that you are trying to focus on?

Now, we have put a hold on the project and construction financing. That is big money and it takes a longer period of time to recoup the investment. Since last year, we have not done any project financing. The area we address now is asset acquisition. We are focusing on executive auto financing. It is in the same auto industry, but we are focusing more on financing for the corporate leaders and corporate bosses. The default rate is very low. The SME happens to be our key area so we cannot leave it. Every year, over 50% of our income comes from loans to businesses. Corporate loans – loans to institutions, loans to companies – are the largest part of our portfolio. Now, we have just introduced and brought on board a new division which we call the microlending division. We live in an economy where over 60% of customers are “non-banked,” meaning they do not use banks. They have little money to do their trading. The concept of microfinance is good, but those who are leading it may not have the right experience. If that market is addressed in a different way, we could be able to meet the needs of the vulnerable. To go public, we must also offer a social intervention. Our new microlending division serves the social intervention and addresses the need. It will be a win-win. It is not for free, we are going to make profit. We have assembled people with a lot of experience in that sector who are going to lead in that area. We intend to put some good resources into that. We will start with about 2 million Cedis and then see their returns. This will be totally new to the portfolio. I am excited about it because we will be able to get a lot of joy out of changing a vulnerable person’s life. I am really looking forward to that. We started about six months ago and we had to suspend it for a month or two to tweak it. We are now going to start from October 1st and we have the right team onboard to take it to the next level.

How will you raise awareness?

The awareness is there already in that we are coming onboard with people who are very successful in this area. This is a personal issue. The vulnerable do not need advertisement. They do not read newspapers. We have tried this for a couple of months, and we were successful, but we were quiet. We have now done the review and we are satisfied with it. We are now launching the program. The core client does not need advertisement. That core client trusts the loan officer, because he is not doing them a favour. That is how they tend to create relationships.

What kind of legacy are you trying to build for Jislah?

We are trying to have an organization that will outlive us. Many times, when one person stops working, you no longer hear their name or the institution dies with the entrepreneur, the originator, or the founder. We do not want that. We want an institution that will live on and become a legacy. That is why we are trying to go public and re-examine our processes. One can see something that began 20 years ago and that we have been able to carry it on. We want the company to live on for many years to come and to be able to be a household name to people. They will know that we have been partners as a company and then, they are partners.

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