In Conversation with Ljiljana Spasojevic – CEO, AzerCredit on the Growth of Micro finance Industry in Azerbaijan and how AzerCredit is having a positive impact on the lives of the underprivileged. (Inset members of the Management Board)
4th April 2014
IFM: VF AzerCredit has, for a long time already, been known as a double bottom line institution. Could you please explain, in detail? What has this given to your organization and your customers?
Ljiljana: Most institutions operating in the microfinance market strive to pursue both financial and social goals, managing a double bottom line. In fact, it has already been proved that strong financial performance reinforces the organization’s ability to pursue its social objectives, and on the other hand, achieving social goals improves financial performance.
From the outset, VF AzerCredit has been following its social mission, to provide financial services which have a positive impact on the lives of the poor, as it sounds today. Our organization targets those who are eager to grow their micro businesses but are not able to access facilities through the conventional banking system. Thus, through continuously improving products and services, VF AzerCredit serves micro and small rural entrepreneurs and self-employed poor, covering primarily remote areas which are not bankable. Today we operate 39 outlets in 31 districts, 22 of which are comparatively underserved rural areas. The number of outreached customers is more than 75,000.
Both social and financial objectives are set in the strategic plan of the organization and the respective performance is monitored, along with internal reporting, through various reporting to MIX, Microfinance Transparency, and other international organizations and every 2 years both financial and social ratings are obtained from internationally recognized rating companies.
Such two-dimensional approach to business allows both to keep the staff on board for all the undertaken activities and gain customers’ trust in your operations. The end result is happy employees, loyal customers and solid foundation for continuous growth.
IFM: Your company slogan says: “It is easier with us” – elucidate?
Ljiljana: It is easier with us because we are open for incorporating people’s needs and wishes into our business operations. Constant product/process refinements and product developments introduced by VF AzerCredit bring innovations to Azerbaijan market, which means more opportunities for customers, and necessary conditions are ensured so that the target customers access available products and services as easily as possible.
VF AzerCredit has therefore opened outlets firstly in very remote districts and is heavily investing in the expansion of the network of service outlets. Both human and financial resources and invested in the product and service improvements. Hence, VF AzerCredit joined national paypoints network which allows customers to make repayments through around 2000 machines in addition to the cash offices in the own outlets; a brand-new credit life insurance product has been introduced into the market to further stimulate the wider use of micro-insurance products; mobile banking options are being explored; first time in Azerbaijani market we are longing for to offer Islamic microfinance products to reach out to more religiously sensitive people who today remain out of the market because of the absence of relevant products and so on.
It should also be mentioned that VF AzerCredit makes significant efforts to support female micro-entrepreneurs providing loans to them and arranging certain promotion campaigns or women empowerment activities. This way, we strive to ensure gender-balance and encourage active participation of women in all spheres of society, not just business.
IFM: What does it mean for you to win Best Microfinance Company Azerbaijan 2013 with IFM?
Ljiljana: This award by International Finance Magazine is the very pleasant recognition of our long-time dedication to our work and recent development efforts. The Award is a significantly inspiring motivation for all VF AzerCredit team to work even harder to keep the leading position in the market by offering nicer opportunities to its customers. Such recognitions by prominent international institutions result in higher achievements each time! Thank you your team for this kind consideration!
IFM: What was the remarkable event in the history of VF AzerCredit for the year 2013? And what can be expected in the coming 3 years?
Ljiljana: The year 2013 was really quite productive and promising for us like the previous 2 years. First of all, we started the year with the new shareholders on board: Incofin IM’s Rural Impulse Fund II and Triple Jump’s ASN-Novib Microkredietfonds have acquired an equity stake in VF AzerCredit, VisionFund International – the founder still keeping the controlling interest. Such investment in VF AzerCredit has already started to support the growth plans of the organization both in terms of improving its financial and social performance.
Here is already a plan to improve to a nationwide strong institution with professional staff, who will provide variety of financial services to about 100,000 clients by the end of 2016.
IFM: Could also please share some details about your performance in 2013?
Ljiljana: The personnel of VF AzerCredit grew up to 588 staff members in 2013. Opening 7 more outlets, we confirmed our presence in 30 districts of Azerbaijan with 38 service offices. The total number of our active borrowers exceeded 70,000 and the portfolio beat $70 million. Total current assets equaled to $ 88,558,360. The year ended with the net income of $5,861,864.
The share of women representation is 35% in the portfolio of active borrowers. Rural borrowers predominate over the share of urban ones by 77%, comprising 57,527 customers in total. More importantly, VF AzercCedit impacted the lives of 165,725 children through its various micro-finance programmes in 2013.
Thus, in the year 2013 again we observed around 25% increase in the number of active customers and size of loan portfolio. Approximately the same increase was obvious in the number of personnel and service offices.
IFM: In terms of expansion, what are your plans for 2014?
Ljiljana: The expansion strategy will continue: 8 new offices are planned to open, 150 new staff members to be hired. New product development and service refinement are key strategic goals in 2014: sophisticated lending products, such as more robust home improvement and education loans; Islamic microfinance products; new micro-insurance products; online repayment options, etc. All the new improvements should bring about again 25% increase in the number of customers and size of loan portfolio.
Another goal of VF AzerCredit is to reach full compliance with the Universal Standards for Social Performance Management, which by defining and promoting strong SPM, contribute to refocusing on the client.
IFM: How would you characterize your own role in VF AzerCredit’s history?
Ljiljana: VF AzerCredit has been operating in the market since 1996, I joined the team five years ago. I would say that the key contribution from me has been helping VF AzerCredit with staying unique in its culture during the transition from a small to a large microfinance institution. From practice, I could state that it is not correct to speak about the contribution of any team member separately, the formula for success comes from team interaction and good mix of people in staff and management. Having such a team at the management of VF AzerCredit has always been a special blessing for me. The commitment and hard work of the staff and management make it easy to deal with all challenges.
IFM: What is your message to our readers in the microfinance sector?
Ljiljana: Microfinance sector has, in recent years, been through many challenges suffering from consequences of the global financial crisis. The criticism on the sector has raised. In nowadays we have to admit that microfinance is not magical and the only tool for fighting poverty, but still we play an important role in supporting poor people. We are providing access to finance to poor people, nevertheless, in addition to this, many other conditions need to be ensured to get people out of poverty. This does not undermine the relevance of our sector because without access to finance there is no sustainable income and without sustainable income there is no way out of poverty. In my opinion, the second big challenge for the sector will be applying new innovative technologies to make our services easily accessible and cheaper for the poor. We are already witnessing this tremendous development in mobile banking, movable offices, branchless banking, and so on, which MFIs should robustly make use of to make a move to a more promising future.