Crownrise Finance boss reveals why over 1,000 finance houses collapsed in the 90s
The managing director of Crownrise Finance Limited, Mr. Babatunde Rufai-Lariba has revealed the factors that crashed over 1,000 finance houses during the 1990s in Nigeria.
In an interview, he said during the period under review, “We had over 1,000 Finance Houses and everybody was just trying to outplay each other. In the course of that, they started offering interest rates and items that were not possible at that time”.
However, he noted that the collapse of the finance houses stemmed too, from the fact that the sub sector has no window of ‘too big to fall’ like the commercial banks.
Rufai-Lariba argued that “Of course, you know banks have windows and because of the special position they hold in the economy, government must always create window for them to ensure that such commercial remains afloat. But that wasn’t given to us. Also, at that time, some operators didn’t even know that Finance Houses were set up to bridge the gap of those that didn’t have access to the larger banks”.
“We were set up to assist the Small and Medium Enterprises (SMEs). The first 50 Finance Houses were licenced in 1992 and everybody was happy then. So, seeing that the Central Bank of Nigeria (CBN) had started licencing the sub-sector, all manner of operators started springing up all over the country and we had over 3,000 firms then. And some of those firms went under because unlike what we have now, there was no corporate governance, no risk management framework and the firms then didn’t have strategic plans.
On what has been driving the survival of existing finance houses till today, Crownrise Finance Limited boss averred that as a banker, “I had rigorous training on financial discipline and I had mentors I was always looking up to. These included the likes of Otunba Subomi Balogun, Jimi Lawal and people that were young and had made it in the financial sector. So, we made financial discipline our principle”.
Continuing, he disclosed that “We made sure we selected shareholders that were also focused on doing the right things. My staff members are also committed. So, financial discipline has helped me and is still our main principle till today”.
“The financial discipline and resilience that has been with us has been inculcated in every staff. We emphasis on training and re-training of our staff. At Crowrise, we are very ethical. We don’t do anything outside the permissible areas and that has helped us a lot. So, we like to operate within the rules and regulations of the regulators. Our products and services are within the permissible areas. For instance, we have what is called the Crownrise Running Account. We have the Crownrise Retirement Scheme, which enables young entrepreneurs and chief executives to save till they retire, Rufai-Lariba averred.
Business Hilights recalls that the company recently floated a one billion bond for small businesses.