Kahtarina Schachtner, General Manager of Access Bank Tajikistan, discusses the role of the bank in supporting micro enterprises and SME growth.
Where do the activities of AccessBank fit into the microfinance sector of Tajikistan?
AccessBank Tajikistan is a Microfinance Bank set up by four financial institutions, the biggest being Access Microfinance Holding, and the others being the International Finance Corporation (IFC), the European Bank for Reconstruction and Development (EBRD), and to a smaller extent the Kreditanstalt für Wiederaufbau (KfW). In 2015, the Asian Development Bank (ADB) will join the group of shareholders with its first ever equity investments into a Tajik Financial Institution. AccessBank will celebrate its five-year anniversary in April, 2015.
Our focus is to provide banking services to micro, small, and medium enterprises and to offer access to good quality services for the lower income strata of the population. We pay special attention to the speed of our service delivery, the fair and equal treatment of our costumers, the long-lasting partnerships with our clients, and the provision of financial services adjusted to their needs.
Our approach is to be very close to the client. That is why, for instance, our headquarters are located here in the outskirts of Dushanbe, just opposite of Korvon, Tajikistan’s biggest market. We started our operations in Dushanbe, then we branched out over the years, and now we have four branches in the capital, two locations in Khujand (one branch, one outlet), one branch in Tursunzoda, one in the Khatlon region, and our new branch in Istaravshan was opened just recently.
In most positions we employ university graduates or young staff with limited work experience to whom we provide extensive in-house training. We show them a new banking approach that is focused on the client and we offer them fair opportunities for career development. Our management positions are now held by foreigners who will eventually leave the country, allowing for local staff to take their places.
The average age of our staff is twenty-seven years old, and seven of our nine branch managers are ‘home-grown’ experts, who progressed through the bank after beginning as trainees in the loan or banking services departments. Of all banks in Tajikistan, we spend the most amount of time and money on internal and external training which is also recognized by the National Bank. We also distinguish ourselves by showing transparency and openness to everyone and our branches are designed to express these values to our clients. For instance, where possible we use glass walls so that clients can literally see how we work.
What have been AccessBank’s most achievements since its creation?
We have a portfolio of about $55 million of loans to micro, small and medium enterprises. One thing we have experienced is that it can be challenging to lend to clients who have unclear financial situations. We have designed a very strong approach on how to assess these clients in order to give them loans in amounts that they are capable of handling. We are subscribers of the SMART campaign and keep a strict focus on our client protection principles.
We have achieved a significant role in the market during a very short time. If we compare ourselves to other microfinance banks in the country we are rather fast when it comes to growth. We have accomplished in four years what most have done in ten to twenty years, and at the same time we have maintained a high standard of quality.
We play an innovative role when it comes to providing financial products for our target group. For example, we were the first bank to introduce micro loans without collateral and other banks have now started to follow. We stand out as innovators regarding product design and training, and also when it comes to motivation and staff development. We also proudly distinguish ourselves with our internal governance and communication standards.
We have seen a significant number of clients who were able to increase their business as a result of our support. This includes improvements in their efficiency, workspaces, sales, and other elements of their businesses.
Tajikistan is a difficult environment to work in; we have problems attracting funding to the country, the currency is volatile, the legal system can be challenging to work with, and the level of deposits is low. But the country is working to catch up and has made many reforms recently. The problem now is the willingness to effectively implement those reforms. Our approach allows us to still be as close as possible to an international standard financial institution with good service delivery, good governance, and strong strategic development. AccessBank is a good example of what a bank can achieve under these circumstances.
How would you describe a typical AccessBank costumer?
Compared to other players in the market we serve the medium size costumer, somebody in the range of a $3,000 loan. A typical costumer is a private entrepreneur who has a business that is already up and running and who knows what he or she is doing. Often their business is not their profession. They are teachers or doctors who decided that with their work they could not earn enough to support their families and took a chance on starting their own business. Mostly they have established an operation in trade and sometimes in the production sector. They might take a loan to pay for a wedding, which can be very expensive in this part of the world, but in most cases it is for investment purposes.
This could be investment into working capital, to import cloth from Turkey for instance or for contracts with international suppliers. Several clients also use the money to open a new business line. In general our clients return for another loan after repaying their initial one. So they learn how to work with loans to continuously finance their investments and grow their businesses.
What factors do you take into account to decide whether there will be a return on capital when a client comes in to secure a loan?
Usually it is very hard to find any reliable documentation because our clients often only have small notebooks wherein they write their daily sales. So it is not very easy to determine their ability and willingness to pay back the loan. Our staff are trained to perform a full-scale analysis of the client by checking whatever is visible; his stock, his daily purchases, sales and repayments. They go out to the bazar and count everything and make crosschecks with business partners and neighbors.
Of course we also have benchmarks of other clients with similar businesses to refer to. To find out more about the willingness to pay back a loan we use some existing techniques based on information provided by the client, crossed checked with other sources. We also perform a home visit in order to see whether everything matches with his regular income. For every loan, regardless of its amount, data about the client from the Credit Information Bureau Tajikistan is obtained, also as a measure to prevent client over-indebtedness. If our loan officers have been with us only for a shorter time we have extra control procedures in order to make sure the right decision is made. And after a loan is given we also have procedures undertaken by our internal audit and risk departments who recheck the work of our loan officers.
AccessBank is almost 5 years old now. Where do you how to see the bank five years from now in terms of staff, branches, portfolio size, and clients?
I hope to see around twenty to twenty-five branches, covering broadly the most economic active places in all parts of Tajikistan. We would be aiming for a portfolio of $200 to $250 million, depending on the general economic situation. Also, we would be much more sophisticated regarding our complete product range. At the moment we are very geared towards basic microfinance products with a focus on the lending side and mostly deposits on the operational side. So far we do not have cards, ATMs, internet banking, or retail loans. I believe that our product line would be completed by the introduction of these services, which are not our core focus but developments that our clients want to see.
Our client field is developing and we want to attract more, including family members of existing clients and other representatives of the local community. Regarding our staff, we have eight foreign faces in the management team at the moment. Five years from now I would like to see a maximum two to three foreigners still working here. We will further increase the expertise of our local staff by constant training.
Naturally, we also want to gain a higher position in the market. At the moment we see ourselves as number four within the microfinance banking sector. We are completely confident to be at least number three in five year’s maximum.