Sun | Jan 20, 2019

COK going big on microcredit

Published:Friday | April 13, 2018 | 12:00 AMHuntley Medley/ Senior Business Writer
COK Sodality CEO Aloun N'Dombet Assamba stands next to a display board in her office on April 5, 2018. Assamba is on a clean up mission to wipe out $700m of losses at the credit union, and she is looking to the micro market for growth.

As 50-year-old COK Sodality Credit Union pushes to wipe out $700 million in losses accumulated over the past five years, CEO Aloun N’Dombet Assamba is pumping new life into the organisation’s fledgling small and micro business loan financing portfolio with plans to spin off that part of the business as a stand-alone company, for which COK is now hunting a partner.

Assamba, who returned as head of COK in late 2016, told the Financial Gleaner that that part of the overall business is small but growing, and represents a fairly new area of undertaking by the member-owned financial institution.

She did not indicate if there are any firm possibilities in the search for a financial partner, but said a team has been set up to pursue that objective.

“We are doing a study now to look at moving micro to being a subsidiary on its own, and considering a partner so that we can really extend our offerings,” she added.

The microloan portfolio now stands at $746 million and is seeing growth of 47 per cent per annum, the COK Sodality CEO pointed out. That side of the business is small compared to its much larger retail lending, with general loans to members now at $6.35 billion and growing at about eight per cent per year.

In her return to COK Sodality since November 2016, Assamba ­ an attorney-at-law who left the organisation in 2001 to become member of parliament for South East St Ann, minister of tourism, and later served as Jamaica’s high commissioner to the United Kingdom ­ is seeking to build on the $59.6-million surplus the credit union made last year.

She is taking the microcredit business beyond Kingston with an eye on getting more of the business in central Jamaica, noting that the potential partner must be aligned with the COK philosophy that she said is member-focused.

Beyond Kingston’s borders

Assamba confirmed that in the push for greater market share and presence in the nooks and crannies especially of rural Jamaica, there is at least one other financial entity that her board of directors has been considered for some form of possible collaboration.

She said she could not divulge more on the precise nature of the collaboration being contemplated as discussions at the board level were ongoing and if there is a decision to proceed, the necessary steps would involve many legal and other considerations. In recent years, the credit union movement has seen many mergers and in 2010, COK merged with Sodality Credit Union.

As the next steps are deliberated, COK Sodality’s microloans business, including financing motor vehicle purchases for business purposes, is being handled through COK Sodality outlets in Kingston, Portmore, Spanish Town, Ocho Rios, and Montego Bay. Current COK promotions indicate that those monies are being lent at interest rates of between 20 per cent for secured loans and 27.5 per cent for unsecured loans. Car loans at COK Sodality are as low at 8.2 per cent.

Credit union beefing up mortgage

The credit union has also upped the ante in the mortgage market with a promotion offering a low 6.99 per cent rate on mortgages that migrate from other financial institutions.

Assamba maintained that loan portfolio growth, like membership growth at COK Sodality has been organic without the big mergers and amalgamation of assets of many other credit unions. Loan financing windows open to the credit union through agreements with the Development Bank of Jamaica and EXIM Bank Jamaica have so far not been taken up by the institution, but remain available should the growth in the business make it necessary to access them, she pointed out.

COK Sodality is readying itself for a change of regulatory relationships with those institutions to report to the Bank of Jamaica, through the promulgation of the new Co-operatives Act rather than by amendments to the Bank of Jamaica Act as was previously contemplated.

In the changing landscape, COK Sodality, like other credit unions, is shoring up its service, business and balance sheet, and will be looking to be in a position to report significant organisational and financial success to its 260,000-plus members at its May 9 annual general meeting.

Big on the cards now is the upgrade of COK Sodality's banking platform, including e-banking, with an investment of US$1.5 million. The credit union is also on the hunt for appropriate investments as it looks to grow its $2-billion investment portfolio.

"We want to ensure that even when we go high-tech, which is where we expect our new banking platform to take us, we have to maintain the 'high touch'," said Assamba, using her own unique turn of phrase. "A lot of people still want the personal touch," she said.

Assamba said her open-door policy, with her office located on the ground floor just down the corridor of the banking hall at it Slipe Road location, is appreciated by members and other clients. So, too, is the fact that she answers telephone calls directly, which she noted, often takes members and prospective members by surprise.

The COK Sodality CEO is big on outreach to members, which includes a 'Breakfast with the CEO' series in which she meets members all across Jamaica.