By Amaka Agwuegbo
The Managing DirectorÂ Â of Citigate Microfinance Bank, Mr. Phillip Okuabor, has tasked operators of microfinance banks (MFB) to institute good management staff to run the affairs of the banks.
Okuabor said one of the ways to prevent the crisis in the commercial bank sub-sector from happening in the microfinance sub-sector is by the Central Bank of Nigeria (CBN) vetting the curriculum vitae, CV, of the four most important officers in the banks, which are the Managing Director, Head of Credit and Marketing, Head of Internal Control and Head of Operations.
â€œThe four most important people in the management committee are the Managing Director, Head of Credit and Marketing, Head of Internal Control and Head of Operations, and their CVs must be vetted by the CBN to ensure that they have the needed experience.
â€œThe MD must be experienced enough in commercial and retail banking, while the Head of Credit must have enough experience in credit process. Also, the Head of Internal Control must have worked in an audit firm where he must have audited banks. The Head of Operations must have enough experience in banking operations.
Speaking further, Okuabor stressed the need for MFB operators not to commit their demand deposits in long term investments as the customers may come to make withdrawals at any time.
â€œThis makes it compulsory for the management of any MFB who knows its onions to regularly hold an Assets and Liability Committee meeting which aimed is to enable them discuss what they have, what decisions need to be taken for their customersâ€™ withdrawals and what they can lend to people.â€
Okuabor further said that the crisis in the commercial banks could happen in the MFB sector if serious attention is not paid to the management of these banks.
â€œThe CBN has always complained about the management of MFBs. If this crisis can happen to commercial banks, it can equally happen to microfinance banks. Because one has worked in a bank doesnâ€™t qualify him to run a bank. Management is key and soon, the men would be separated from the boys because there is no way the over 800 MFBs would survive and move on.
In a related development, the Lagos State Chapter of the National Association of Microfinance Banks of Nigeria has set up an Intervention Fund that would be used in addressing the problems of short term liquidity that is becoming a common feature in the microfinance sector.
The Chairman of the chapter, Mr. Adenekan, said the aim of the Fund is to forestall the occurrence of the crisis in the commercial banking sector in microfinance sector.
â€œThe Intervention Fund, which would act as a form of bailout, is going to be contributory and would be used to assist members when the need arises. We are already talking to three commercial banks with the intention of appointing one to manage the Fund.â€
â€œIf there is any sign of liquidity problems in any member-microfinance bank, a Technical Committee, which has been set up and saddled with the responsibility of closely working with our members, would look into the matter and determine how much would be given to the distressed bank as bailoutâ€ the chairman said.