Myanmar has changed a lot since my first introduction to the country in 2015. I started a new relationship with this country again 9 months ago and this week’s blog will be my record of this journey so far.
Before that, a bit of the background building up to this new role of mine is needed. In one of my previous job, we were working on joint ventures to start or take over financial institutions in emerging markets around Asia. Subsequently, I had developed my in-depth work experiences with countries like China, Vietnam and Cambodia. Being linked to a sovereign fund, the for-profit company had to also ensure that it has value-add to the developing countries from a social and economic angle.
Over the years, we focused on the microfinance sector as it was a relatively unbanked niche which could greatly benefit the bottom to low middle-class segments of the society. Most had no access to any lending facilities and it was a poverty trap which they cannot get out of. If only they could have a loan to tide over their tight cashflows or to buy inventory, it could mean a life-changing experience for small-time vendors in the wet markets or rural farmers. We also worked with many SME (Small and Medium Enterprise) companies which could be mom-and-pop provision shops to egg/chicken farmers to retailers in a large resale/resellers centre.
The loan amounts need not necessarily be big and they can range from an equivalent of a few hundred US dollars into as high as half a million. Most of them were previously seeking funds from loan sharks who could charge anywhere from 50% per annum to north of a few times the notional amount for interest. Most microfinance institutions in the world charge anywhere from 20 to 30+ percent. This relatively high rate is still necessary as it is a very labour intensive process to disburse the loans and collect repayments and we need to make a case that the business is viable.
I had chanced upon this financial consultant role late last year as my ex-colleague from the previous company became the CEO of this Myanmar microfinance firm in Jul 2017. We had worked together on starting similar businesses in Cambodia and Myanmar during 2014-2016. The company has been having 4 years of losses since they started in 2013 and was unable to break even. As a result, the owner had decided to do a management change and appointed my friend. He identified multiple gaps in the current business and set about to strengthen the infrastructure with robust policies and beef up the framework for future growth.
With my experience in Treasury and Capital Markets, I was tasked to lead the asset and liability committee (ALCO) and assist the senior management team. We hope to become a more professionally run company with proper processes in place and a better ability to forecast the near future rather than do last minute firefighting all the time.
The first meeting started in Jan this year and I have been flying into Yangon every month for 2 to 3 days at a time to chair this 2 to 3 hours long meeting. In between, I also did monthly one on one sessions with the Risk, Finance and Operation head to listen to what issues they might have and help flag any potential problems that may occur.
The first 6 months were tougher than expected as we had to start from ground zero to formulate a more organized framework to monitor. Slowly, we were able to identify and pinpoint specific issues to tackle directly. Strategic directions were also fine-tuned to suit our management style.
The following 3 months from Jul to Sep was when we went into the next gear and challenged the team to perform at higher levels as the new strategies kicked into high gear. I am glad to know that at our last meeting this week, we were able to report a slight profit for the quarter, on route to a breakeven year for fiscal year up to Mar 2019. We are also nearing the completion of getting an equity injection from a new partner (IFC – owned by World Bank). This is a positive move.
It is a rewarding process for me to be able to see potential and then cultivate the team for success. Along the way, we had fun and got to know each other better. The young country is growing at a fantastic rate and the middle class is rising rapidly. there is still so much potential in this country which had closed itself to the world for almost 50 years. Its time will come eventually as it takes baby steps to connect with the rest of the world.
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