The corona virus pandemic has come but definitely not for long. As we brace up for return to commercial activities in the coming days. Let’s be prepared to face some of the below likely occurrence.
High loan default rate
The number of non performing /outstanding loans in arrears is already out of proportion. Customer would definitely find it difficult to make double installment payments. One installment is already a problem not to talk of catering for two or more. It would take special grace for customers to take care of the already outstanding arrears not to even talk of when the lock down expire. In one of my articles i wrote about LOAN IS WAR. After lock down would witness the time for the real war.
Increase in loan application request
As soon as the lock down is over, microfinance banks should expect tones of application flying around. The customer you are expecting to make payment has already almost exhausted what they have. They need extra fund to stock up. Don’t be surprised when they turn Oliver Twist instead of repaying what they owe.
Increase in PAR
Inadequate monitoring on its own leads to Portfolio At Risk. Imagine staying at home for more than a month. Most financial institution would result to rescheduling to make the books appealing.
High sales turnover for customers
Customers would experience high level of sales. Depending on the kinds of services engaged in. Expect that recovery would only favor those with aggressive recovery strategy. Customers would focus on the First Come, First Serve receivers if they have different institution to serve. Stay ahead and monitor your customer activities.
For the MFBs, targets are already behind schedule. Focus would likely to be on achieving targets rather than sharpening the officers that would deliver the targets. This is a very good time to keep tabs on prospective loan application that would help meet proposed target while not forgetting that recovery is also important.
High request for restructuring and refinancing
The possibility of the bank restructuring or refinancing customer’s loan is certain. Some customers are already full of thoughts on how they would manage the after effect of the pandemic. So don’t be surprise if request also flow in high demand. Whatever option you choose, your customer loans must be adequately managed.
Death of some businesses.
You as an institution should be ready to help the customer resurrect their businesses or prepare to face the consequences if the customer is unable to upscale or resurrect the business. Customers staying out of business for a considerable number of period could spell doom for the business. If you refuse to refinance, trust me they will end of falling back on another MFB willing to do so.
Don’t rule out staff turnover by the end of this trying period. Welfare and remuneration issue has always been an issue in the industry hence the search for greener pasture. I’ve had discussion with more than 40 individuals who are looking to change jobs as soon as everything goes back to normal. Like Richard Branson said
“train your staff well so they can leave. Threat them well, so they won’t want to”.
The exiting staff portfolio suffers most when MFBs loose good hand. This is the time to show how much you care for your workforce. Do the unthinkable.
I pray the proposed or likely pay cut from salaries and the insufficient funds as a result of the lock down don’t make staff start look for ways to help themselves. Connivance with customer is what I fear most as I’ve had a bitter experience as a supervisor. For staff, it is not intended to harm the MFB, but it invariable damages the reputations of the organization.
Increase in desire to Learning
Learning and development can wait i hear you say. This is totally wrong. It’s good to sharpen your axe before cutting down the tree. You need to be equipped before embarking on recovery drive. The sit at home order has really helped people who ordinary have little or no time to study the chance to do so. Take responsibility for your growth or remain small. Just take the advice
While it seems there isn’t much that can be done. You can be one step above these likely occurrences. There are vaccine/antidote to the above issue. The most important is to say a step ahead.
Critics and contributions are highly welcomed.