The micro-finance industry has experienced explosive growth across the world since Dr Muhammad Yunus established the Grameen Fund in 1976. However, today more than 400 million people are still in need of essential financial services. This means that there is still a dire requirement for micro-finance across the world especially in developing countries.

Dave Van Niekerk, chief executive officer of Blue Financial Services recently presented a case study on Blue at a micro-finance conference held in South Africa. The conference acknowledged the diversity of micro-finance in Africa, and highlighted the recent growth in the industry and its ability to be used as a strategy for the eradication of poverty. It also highlighted the fact that new concepts and applications of micro-finance resulted in significant technical and financial developments internationally.

“Micro-finance empowers people by providing them with the confidence and the financial assistance they need to play a larger function in their own development. It’s a significant player in the financial world and has the ability to reduce poverty levels from the ground up,” said Van Niekerk.

The case studies presented, highlighted some of the numerous success stories received through Blue’s aftercare support provided to clients, which underscores the company’s ethos of providing real developmental finance.  Examples of these case studies are Mercy Mabangu of Livingstone, Zambia and Mr Khanyile of Ndalengeni, Swaziland.

The hen that lays the golden egg

Mercy Mabangu used a Blue loan to help her start a business that has not only improved her standard of living, but also contributed to the greater good by providing a source of food for her community while creating employment for others.

Before Mabangu’s loan from Blue, she earned a small sum as a part-time typist and often dreamed of a better life for her offspring. She approached Blue for help and soon she started selling broiler chickens to the market. Mabangu now employs a relative and has extended her chicken run twice. We trust that this expansion is just the beginning, and that her business will continue to grow from strength to strength. “I can now support my big family and feel like my problems are solved," says Mabangu.

Mercy Mabangu-A loan from Blue changed her life

Khanyile had a dream

Khanyile, a government employee for 28 years read about Blue in the local newspaper and applied for a loan at the Mbabane branch as he wanted to start a second income to pay for his family's education costs.

He used the loan to purchase maize seeds and three goats for milk production. Khanyile’s maize fields are flourishing and his goats have made his investment a great success.

Working on ethics

The micro-finance conference also placed great emphasis on the importance of principled and morally sound financial solutions for lower income earners, and the need for a code of ethics that formalises the practice. The general consensus is that micro-financiers should start playing a more significant role in eliminating unethical money lending practices usually seen by unscrupulous players in the field.

Christo Klopper, chief operating officer for Blue says, “Owing to the fact that Blue operates in 14 countries, a lessened risk and dependency on solitary sources of funding is observed.  Support we receive in the form of investment from global private equity firms, international development funders and frontier market funds; as well as from banks – both international and African based – allows us to streamline operations and offer clients competitive interest rates.”

Credit risk is significantly reduced by the fact that Blue engages in micro-financing supported by payroll deductions as governed by regulations set out by respective countries of operation. Traditional micro-financiers often grant group loans, but Blue has a sound model based on individual affordability. Blue uses advanced technology to ascertain an affordability rating – offering accessible finance used for developmental purposes, such as SMME and housing funding, to those who would traditionally not have been able to obtain finance.

“Through the promotion of ethical and responsible financing practices, Blue has managed to add significant value to the lives of our clients and their communities in Africa,” says van Niekerk. “Furthermore, the potential of micro-finance is unlimited as it addresses the problems of poverty eradication effectively. By focusing on increasing our distribution channels, product range, brand and recruiting highly qualified and professional employees, we have established a sound foundation in the micro-finance industry in the last three years. We have also placed great importance on educating consumers on the dangers of irresponsible lenders,” he adds.

Another important factor discussed at the conference, was the ability of African micro-financiers to adapt their product offering in order to remain relevant in the market and bolster growth prospects.

Van Niekerk is confident that Blue will not only continue to experience significant growth, but will continue to expand its product offerings and use technological advances to maintain its leadership in the industry. “Maintaining a firm hold on risk management, increasing Blue’s social impact and empowerment credentials while maintaining our reputation for innovation and thought leadership, will ensure that we deliver essential financial services to all our clients in a responsible and empowering way,” he says.

The conference also explored how micro-finance can be used as a tool to eradicate poverty. When properly guided, the material benefits of micro-financing can extend beyond the household into the community. In this regard, Blue has made a significant impact as it offers every one of their clients who take a small business advance access to quality financial education. By doing this, Blue adds value to consumers and allows them to filter this knowledge into their business and turning it into a success.

For more information about Blue Financial Services and its new focus on insurance products, please contact the company directly:

Name: Morné Reinders
Email: morner@blue.co.za
Tel: +27 12 990 8400
www.blue.co.za