Shareholder seals Blue CEO’s fate

2010-06-26 12:26

Dave van Niekerk, the man who has been blamed for the woes at Blue

Financial Services, will still play a pivotal role in the future of the

microlender despite agreeing to step down as its chief executive.

This week, the pan-African ­microlender told the markets that it

had made a R1.03 billion annual loss after massive loan write-offs in its South

African operations, including Credit U, which it acquired last year.

The axe was destined to fall on Van Niekerk after private equity

firm Mayibuye agreed to inject a R463 million rescue package in return for a 65%

controlling stake in the ailing low-end ­lender.

Mayibuye, headed by Johan Meiring, has made it clear that it will

implement a turnaround strategy that will see Van Niekerk relinquishing his

chief executive post. The Blue founder will remain on the board as a

non-executive director.

Meiring said the transaction was not cast in stone as it still had

to be sanctioned by Blue shareholders and the country’s competition


“The best thing to do now is to look at the cost structure of the

company. We will have to implement a cost-cutting exercise. Secondly, we need to

start new lending, and review Blue’s credit policies because its default rate is

just too high,” said Meiring.

He confirmed Van Niekerk would step down. However, the outgoing

chief executive’s right-hand man and financial ­director, Shaun Strydom, would

keep his job.

There are rumours that Meiring may take over the reins from Van


“We want to retain Van Niekerk’s African experience so that we

don’t have to relearn the lessons he has learnt,” Meiring explained.

Van Niekerk said the wheels came off for Blue when the global

economic recession dried up funds that it badly needed to roll out new loans

over its vast ­African footprint. Making things worse, the acquisition of Credit

U proved to be costly because many people who took out loans with the

microlender started to default on their repayments soon after the paperwork was


The company’s financial results for the year to February showed

that bad debts increased to 25% this year from 10% of the overall loan book last

year. The South African loan book was the worst hit, with bad debts jumping to

34% from 16% last year.

If South African operations are excluded, bad debts stood at 20% of

the book this year compared with 5% last year. In the period under review, the

overall loan book fell from R1.49 billion to R1.12 billion. Last year, the

lender made an after-tax profit of R111 million.

“We experienced a notable ­decline in the quantum, quality and

performance of the loan portfolio,” said Van Niekerk, who owns 20% of


Pakie Mphahlele, managing director of Mafori Finance, Blue’s

Pretoria-based competitor, said: “Continuous exponential growth of a lender

always hides the rot that resides in the management of the loan book. It is only

when such growth stops that the rot gets exposed.

“Many of the microlenders, ­including African Bank, Capitec Bank

and my company, are ­growing and profitable, yet we are operating in the same

conditions as Blue.

“When Blue bought Credit U, it was a profitable business, so what

happened?” asked Mphahlele.

Join the conversation! encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions. publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24

Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.