Sudanese French Bank, the sixth largest of Sudan’s 37 commercial banks, is active throughout the country in financing projects in electricity, roads, infrastructure and other strategic areas. Mahgoub Hassan Shabo, (MH) the bank’s General Manager, talks about its role in microfinance, where small loans can bring large benefits to local communities — and in particular, to women
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LE: What are the bank’s strategies for developing investments and project finance, in order to build the strategic position of Sudan?
MH: We are active in microfinance. In 2015, we opened several branches in remote areas, which were identified as small business units specialising in microfinance for the local community. Two examples of branches in remote areas are Al Genaid, 130km south of Khartoum, and Al Kadaru, 50km north of the capital. By the end of this year, these two branches will lead the bank’s very small industry portfolio. A total of 12% of the bank’s portfolio should be dedicated to microfinance and microloans; this is the standard applied by the Central Bank. Currently, we are at 4.5% and we are trying to raise it to 12%; this is very difficult, but not impossible. Our portfolio is around 1.5 billion (Sudanese) pounds, so 12% would be 180 million pounds.
This is something we have to work very hard to achieve. It will be to the benefit of the poor and even more to the benefit of women. Some 60 to 70% of our microfinance goes to women. Single mothers are vulnerable and need extra help. For example, when their husband dies and they have a family to care for, we help them to find their talent and make a small business out of it. We give more than just money; we also give guidance. In the end, when one woman in a community starts a good business, others will benefit from it by being hired or by paying less for a service that is now offered locally.
Some 60 to 70% of our microfinance goes to women. Single mothers are vulnerable and need extra help
LE: How does this benefit small and medium-sized enterprises (SMEs)?
MH: We make a large injection of money and we follow it up very carefully. Our employees support the projects with visits and idea creation, to help move the microbusiness in the right direction. They also support the book-keeping and the optimisation of the business. Mentoring these women is key. The effect is that in 12 months’ time, a businesswoman will move from very small-scale to small-scale finance. The financing will also increase as the business grows, from 30,000 pounds to 50,000 pounds, for example. In the end, the business will grow and these businesses, which started on a very small scale, will become medium-sized or large businesses that contribute to several villages in the area.
This means that by granting a small credit, we have now created a big change in two or three communities by establishing this business unit for one woman. Instead of two ladies only, there might be six or seven people working together. Everyone will be productive; everyone will earn their living instead of coming to the bank to ask for money from the fund we have created for the poor. Someone can come to the bank and explain in a letter that she is a widow and doesn’t have money. We will then give her some money out of the fund to survive. Instead of having them depend on this fund, we want to work with the talent of these people. We believe every person has talents and can do something with them.
So, instead of having 30 or 40 women coming to us asking for 300 or 500 pounds per month, in three years there will be no one doing this, and everybody will know that the bank has given opportunities and finance to many of the businesses. We have examples of women who had an income of 500 pounds per month, who are now highly professional, earning more than 5,000 pounds.
LE: How can foreign parent companies or investors help you in your mission to create this entrepreneurial spirit in the country?
MH: We need help in the area of secured loans with reduced interest rates in foreign currency. If we secure these loans, we can pass on the lower interest rate to the poor. In Europe and America, the interest rates are very low, around 1 to 1.5%, while here the interest rate is 14%. If they give us money at a 3% interest rate, which is very good for them, I can assure them the money will go to financing the low-income and poor segment of the population, and I can give those people an interest rate of 6 to 7%, which is a reduction of 50%. We will keep lending to first-class companies at 14%, so it is half the interest rate that I am charging others.
In 1997 the American sanctions against Sudan began. After 19 years, we are still surviving and trying to do a good job. Just imagine, if in those 19 years the world had put some money in Sudan and had helped us, we could have been like another country in Europe. But despite the sanctions, Sudan is still strong and we have dedication; we still want to create something good for the country. It is affecting us, nobody will tell you it is not, but we still want to work hard for the poor and for the country.
LE: What makes you so proud to be Sudanese?
MH: If I were not Sudanese, I would have wished to be Sudanese. The people are nice, the country has a lot of potential. The president has spent all his time looking for other options and other ideas to deal with the situation. He has recognised that all the Sudanese people must work together to build Sudan. The national dialogue that is taking place now will lead to greater unity of all the Sudanese people.
Key Takeaways Sudanese French Bank
- SFB’s portfolio is around 1.5 billion Sudanese pounds
- Interest rates in Sudan are around 14%, compared with 1-1.5% in Europe and the US
- If loans are given by foreign investors at a 3% interest rate, the SFB can give the poorer population an interest rate of 6-7%
- WEB: www.sfbank.net