By Amaka Agwuegbo
The increasing rate ofÂ Â Â default in the microÂ finance sector has been attributed to the bad borrowing nature of Nigerians.
Speaking to Vanguard, the Managing Director, Havilah Microfinance Bank, Mr. Rufus Oloye, said lack of sound credit products by microfinance banks, MFBs, is not the bane of the sector, but the bad borrowing habits of Nigerians who are always perfecting their skills on not repaying loans. Â
â€œMost MFBs have sound credit products, but the major problem is that most Nigerians are bad borrowers because most customers donâ€™t live up to expectation.
Also, due to our peculiar culture and society, some of them take the money and donâ€™t use it for the purpose it was intended, no matter how good you perfect your monitoring techniques.
â€œThe increasing rate of default is still manageable, but there is the need for debt recovery.
One thing is that loan default would always be on the increase as long as lending is on the increase. Loan seekers need proper monitoring and supervision, because if you donâ€™t pursue them, they wonâ€™t bother to pay back.
Commenting on the harsh operating environment that MFBs are made to operate in, Oloye pointed out that a number of factors are responsible for the crisis in the sector.
â€œThe truth is that most people donâ€™t know that managing an MFB is not too difficult, as long as the rules guiding the sector are followed.
â€œManpower alone is not the issue, though it is important when we talk of training. But we need to realize that we work under a very hostile environment and the infrastructures are not easily available.
The cost of running the industry is very high, especially for those in the urban areas.â€
He listed illiquidity, crisis of confidence, cost of marketing and running after customers as other problems bedeviling the sector.
Oloye further said all MFBs should have equal access to funds from government and donor agencies so as to impact on a larger number of people.
â€œI am an advocate of government-private partnership because some MFBs get some money in forms of grants from state governments or foreign and local donors agencies.
If these funds are allowed to go round all MFBs, it would impact more on the customers than when in possession of a few people. This is because those in possession of the funds always do better than others.â€