Publications
Partners
Abil's share price dropped from R9.30 in mid-January to R5.50 on Tuesday.
"African Bank was in this industry before others saw it as an easy way to make money," he said.
"We warned new entrants that it would not be easy, and that you have to really understand this business to get it right.
"Sadly, some of those entrants ignored those warnings and lent irresponsibly.
"What we are seeing today is the result of a complete failure to understand the unique risks in this market, compounded by poor management."
Kirkinis said the market place remained strong, despite attempts by some commentators to predict the demise of the industry.
"Whatever the failings of some players in this market, there remain millions of South African consumers without access to credit to extend their homes and educate their families," said Kirkinis.
"Who is going to meet this need? This industry is indispensable to personal empowerment in the country."
African Bank, the largest and one of the oldest players in the micro finance market, has over 1 million clients, and has rapidly adjusted its business model to keep ahead of changes in the industry.
The fundamental differences between its model and those of Unifer and Saambou could be seen in its avoidance of brokers to source new business, its focus on exempt loans which allow for higher interest rates to take account of industry risks, and its automatic provisioning systems which detect non-performing loans at an early stage.
The bank also focuses on granting smaller loans over a shorter term to its clients.
"We were here before the other formal players came into the market, " said Kirkinis, "and we will continue to build a profitable specialised business based on our substantial expertise and footprint.
"The removal of other players from any market does not signal the demise of that market - rather the opportunity to build market share responsibly and profitably."
