INTERVIEW: NADEEM HUSSAIN, PRESIDENT & CEO TAMEER MICROFINANCE BANK LTD.

THERE IS A TREMENDOUS SCOPE FOR MICROFINANCE IN PAKISTAN. MICROFINANCE NETWORK WILL HOLD NEXT MEETING IN BANGLADESH WITH A VIEW TO ENLARGE INDUSTRY EXPOSURE.

AMANULLAH BASHAR
(feedback@pgeconomist.com)

Mar 5 - 11, 20
12

PAGE: WOULD YOU PLEASE LET US KNOW ABOUT TAMEER BANK, ITS STRENGTH IN TERMS OF WORKFORCE, BRANCH NETWORK, AND FINANCIAL HEALTH?

NADEEM: Tameer Bank started operations six years ago. The bank has emerged as the largest microfinance bank in terms of loan portfolio in a short span of time. It also has more customer touch points than the entire commercial banking and micro finance industry combined. The staff strength of Tameer Microfinance Bank is 1200 and a couple of its unique attributes are its average age (under 25 years) and the fact that Tameer has no third party contract staff. In 2011, TMFB had a pretax profit of Rs226 million

PAGE: KINDLY SHARE YOUR EXPERIENCE ABOUT THE MARKET RESPONSE AND THE RATE OF RETURN IN PAKISTAN.

NADEEM: TMFB has had tremendous market response in all aspects of its business. In 2012, we expect to disburse loans with a value of Rs9 billion, issue a retail TFC with a credit enhancement of Rs1 billion, and conduct over seven million transactions a month through its easypaisa platform. We also hope to book 10,000 standalone health insurance customers per month. On the deposit side, Tameer offers one of the highest rates on its deposit through its senior citizen product.

PAGE: IN YOUR OPINION, WHICH AREAS DESERVE MORE ATTENTION OF THE MICRO FINANCE TO PRODUCE RESULTS ESPECIALLY IN TERMS OF POVERTY ALLEVIATION, JOB CREATION, AND BUILDING UP ECONOMY AT THE GRASS ROOT LEVEL?

NADEEM: On the back of today's economic scenario, the industry is facing three major challenges, which include funding, financial viability and human resources. Funding is a challenge as firstly, non-bank's institutions are not allowed to raise deposits and secondly, except for two micro finance banks, the rest of the industry has yet to show meaningful growth in deposits. Without funding, loans cannot be extended and thus the associated impact on reducing poverty is limited. The second challenge is financial viability. Most of the MFB 's and MFI's have yet to achieve financial viability. This limits their ability to access capital markets or the commercial bank market despite credit enhancements. The last challenge is human resources. As the industry grows more focus needs to be on human resources especially for functions like operations, cash management, risk, audit and compliance and financial control.

PAGE: WOULD YOU LIKE TO SHARE YOUR VIEWS REGARDING SCOPE OF MICRO FINANCE IN PAKISTAN?

NADEEM: Microfinance has tremendous scope in Pakistan. The potential market for just only is 30 million customers while other services like deposits, life health and general insurance, domestic remittance has a potential in excess of 50 million customers each.

PAGE: WOULD YOU LIKE TO ELABORATE THE ROLE THE TAMEER MICROFINANCE IS PLAYING IN THE FIELD OF MICROFINANCE AND WHAT ARE THE PARTICULAR AREAS WHERE YOUR BANK IS MORE ACTIVE?

NADEEM: In a short period, Tameer through its sheer scale and innovative product and services has emerged as the dominant bank in the industry. Through its joint venture product easypaisa, it has made a major impact in financial exclusion. Just through its over the counter domestic remittance service, it services a million customers with a value of Rs3 billion a month. These are customers who were not using the formal financial industry previously. In just two years, easypaisa has emerged as the model of the future and ranked at number nine in the world. It is our ambition that within three years easypaisa become number one in the world. This is a financial revolution in the happening and the biggest beneficiaries are the average Pakistanis who were previously excluded from the formal financial industry. According to the World Gold Council, Pakistan imports circa 114 tons of gold a year. This translates into $8.5 billion an year. This is a very common form of saving for the common person, but is illiquid. Tameer through its gold equity releases product for small farmers in the rural areas and working capital for micro customers provides a gold ornament backed loan within two hours. Unlike other microfinance banks, Tameer is a direct member of the clearing system and provides cash management services to SME customers.

PAGE: THE SUCCESS STORIES ARE ALWAYS CONSIDERED AS A GOOD EXAMPLE TO INSPIRE. PLEASE SHARE SOME SUCCESS STORIES IN BUILDING UP ENTREPRENEURSHIP AND CAREER BUILDING WITH THE SUPPORT OF TAMEER BANK.

NADEEM: One of our objectives was to bring in international players and large local players to better leverage the microfinance industry. Tameer through its profitable operations has demonstrated that a financially feasible model exists without the benefit of either subsidized funding and or large scale grants. We are pleased to see that in the recent sale of a large microfinance bank, both international as well as large local financial institutions made a bid. Given the size of the market for traditional microfinance products as well as branchless banking, international players as well as large well capitalized domestic institutions will view this market with a different prism.

PAGE: CAN MICRO FINANCE SECTOR REPEAT THE SUCCESS STORY OF GRAMEEN BANK OF BANGLADESH? WHAT IS YOUR VISION AND FUTURE PLANS?

NADEEM: The Bangladesh microfinance industry took over thirty years to develop. So, it is not an apples to apples comparison with what we have in eight years. However, on the regulatory environment I can proudly say that Pakistan is far ahead of both Bangladesh or India. In the recent EIU report, the Pakistani regulations were rated at the top. Similarly, as far as branchless banking is concerned we are light years ahead of Bangladesh. Tameer Bank has a very different model than that of Grameen bank. However, having said that there is a lot that Tameer in specific and the industry in general can learn from the Grameen Bank and the Bangladesh microfinance industry. In fact the Pakistan Microfinance Network will be holding its next board meeting in Dhaka so that it's board can conduct an exposure visit.

PROFILE NADEEM HUSSAIN

Nadeem Hussain is the founder, CEO and President of Tameer Bank, Pakistan's first private sector microfinance bank and world leader in branchless banking. Hussain's model bank has impacted over a million people by extending credit and mobile banking to the poor and the unbanked Pakistan, and has introduced the first health insurance program in rural areas to protect poor households from falling below the poverty line.

Hussain has been on the advisory board of the Institute of Business Administration, is currently on the board of the Pakistan Microfinance Network, Trustee of Indus Foundation, Trustee of the Jinnah Institute and an active member of the State Bank's micro finance consultation group.

He has been in international banking for 27 years in Citibank/Citigroup in seven different countries and all major financial centers of the world. Mr. Hussain has, during his Citibank career worked in Corporate Banking, Consumer Banking, Risk Management, Insurance, Transaction Banking and Treasury and member board of the Honk Kong Commodities Exchange.

Hussain has been chair of the United Nation's MDG Session on Financial Inclusion in New York in September 2010, and is a frequent speaker at international forums on branchless banking and microfinance. He writes and broadcasts frequently in Pakistan's mainstream media on micro finance, financial exclusion, alternative energy, low cost housing, and health insurance. He was awarded the Global leader award in 2011 by C5 in Geneva.