Victor BURUNSUS: Any business is good when it makes money today, tomorrow and in for the years to come, and financial intermediation is no exception.
Interview of the InfoMarket News Agency
ADIFIDA is a new business membership organization (BMO) set up in Moldova. In fact, it is not totally new. In this respect the journalist of InfoMarket interviewed Victor Burunsus, the President of ADIFIDA. He is known in Moldova as a management consultant having expertise in development strategies including at national level and a ten years experience World Bank's Private and Finance Sector Unit.
InfoMarket: Why ADIFIDA?
Victor BURUNSUS: It's simple, we merged the Romanian Asociația de Dezvoltare a Intermedierii Financiare with its English correspondent Financial Intermediation Development Association.
InfoMarket: Our understanding is that we are talking about the successor of the Association of Leasing Companies (ACLM).
Victor BURUNSUS: Exactly! The founding members of ACLM following my proposal went out of the 'comfort zone', deciding to transform the Association into an NGO aiming at developing financial intermediation as a whole, thus becoming an inclusive organization that is open for all financial intermediaries.
InfoMarket: What is 'financial intermediation'?
Victor BURUNSUS: Any activity that makes the demand find a shorter path to the supply is intermediation. In this particular case we talk about demand and supply of financial services. In English one uses the term brokerage, in French courtage, in Romanian curtaj. These are all intermediation activities making the demand find the supply. Banks are financial intermediaries as well for they write loans demanded by borrowers with the funds supplied by depositors and shareholders.
InfoMarket: Who are the members of ADIFIDA?
Victor BURUNSUS: As of today these are four companies: Express Leasing & Microcredit, MAIB-Leasing, Raiffeisen Leasing, Total Leasing and Finance. In other words, these are top companies, the majority of whom are owned by foreign investors. Currently they offer more often microfinance which is indicative of financial intermediation being in full transformation and development.
InfoMarket: What are the goals of ADIFIDA?
Victor BURUNSUS: Creating an enabling environment for for sustainable financial intermediation. Any business is good when it makes money today, tomorrow and in for the years to come, and financial intermediation is no exception. The financial market in our country, unfortunately, is making the same mistakes make somewhere else in the past. We witness certain intermediaries calling themselves microcredit firms that are charging 2000% p.a. - pure loansharking! Why is it so? One cause is the market has substantial information asymmetry. Another is the insufficient education of consumers in financial services while the regulators do not mandate the necessary disclosures. For these specific reasons ADIFIDA's statutory goals include instilling business ethics underpinning sustainable development of financial intermediation.
InfoMarket: What do you plan to do to achieve these goals?
Victor BURUNSUS: First of all we envision putting in place a platform for dialogue based shared values such as mutual trust, creditworthiness, transparency, inclusiveness. We will aim at including in this dialogue not only members of the Association but also unrelated parties such as consumer groups and regulators. First and foremost regulators which would actually benefit of identifying market mechanisms and solutions to problems they oftentimes believe are either market failures but lack holistic understanding and proper assessment by all stakeholders. This should enable regulators to avoid overregulation that most of the time stifles nascent markets thereby precluding growth, development and shared prosperity.
InfoMarket: Why a financial firm would join ADIFIDA?
Victor BURUNSUS: Any company that shares the sustainable growth principles broadly defined and which aims at offering financial intermediation services in particular, in a sustainable manner, be it brokerage, insurance, microfinancing, leasing, crowdfunding, and other emerging fintech services is welcome to ADIFIDA that in turn, offers the platform for hearing views, listening and conducting an informed dialogue.
InfoMarket: Insurance companies and Banks do have their associations.
Victor BURUNSUS: We know that. And, one of the reason why the things are happening as they do in Moldova is because of fragmentation into ours, theirs, and nobody's. ADIFIDA identifies itself with the cause we stand for which is development of financial intermediation. The sole fact that banks have their association did not preclude Moldova from going through the sad problems related to poor corporate governance. The root causes of what you journalists call 'the billion dollar theft' inevitably goes down to the corporate governance in the banking sector. While the majority claim the deficiencies in regulation and supervision, we cannot be oblivious of or turn a blind eye to the responsibility of the banks themselves that failed to put in place adequate procedures of corporate governance.
Let me underscore, we aim at supporting development. The sole purpose of Banks' Association, in my view, is to safeguard the monopoly of banks in financial intermediation. Keeping any monopoly brings neither service diversification nor meeting evolving consumer needs in terms of financial services. In a small market, such as Moldova, any BMO representing one market segment or one class of players is by default seen or perceived as a body of lobbying and consequently will have a level of trust corresponding to its constituency.
InfoMarket: What about you, aren't you going to do lobbying?
Victor BURUNSUS: We will do it for the sake of market development. We will do it differently from what is commonplace today. The consensus of the members of the Association, the transparency, the openness and all these stemming from the sustainable development needs of the members and markets, of all who are to stay in this market for in the long run.
InfoMarket: How many members is to have ADIFIDA to be viable?
Victor BURUNSUS: In order to have a critical mass enabling to work and be heard, we would need to have 20 members at the end of this year and about 100 members later on. Moldova has many financial intermediaries to draw on. We intend to to bring them on board to become a cohesive force capable of conducting a meaningful dialogue with regulators, bodies of the Government, the Parliament in the pursuit of making an enabling business environment.
InfoMarket: Financing the Association would entail membership dues?
Victor BURUNSUS: Sure. We understand these have to be both competitive with other BMOs and reflect the activity of each member. A formula is being devised to enable different levels of involvement and financial participation. It would reflect the both the possibilities of members but also their commitments. // 24.07.2018 – InfoMarket.