Dr (Mrs.) Lizzy Okereke, is the Managing Director/CEO, AZSA Microfinance Bank Ltd. She graduated from Texas Southern University, Houston, Texas, USAÂ served on return to Nigeria with Nigerian Industrial Development Bank (NIDB),Â joiningÂ same after youth service till 2002 when she disengaged to set up a consultancy firm to package small businesses.
She channeledÂ the experience acquired over the yearsÂ into microfinance banking. In this interview Saturday Vanguard Business, she explained reasonsÂ why some microfinance banksÂ areÂ facingÂ challenges. Excerpts:
Tell us about AZSA Micofinance Bank?
AZSA Micofinance Bank is one of the leading microfinance banks in the country. It was licensed in 2007 and commenced operation in January 2008. Ever since, we have been operating microfinance banking, taking care of the very active poor,Â Small & Medium Enterprises.
How do you see microfinance banks in Nigeria?
Microfinance Banking is a welcome development especially in an economy that is greatly challenged by lack of access to micro credit. Itâ€™s perhaps only in Nigeria, that bright ideas, good knowledge and good business concepts cannot be translated into thriving business concerns for lack of access to credit. And this syndrome has affected the pace of our economic growth.
Many microfinance banks have liquidated, what do you think is responsible for this?
Well, itâ€™s a problem, in the sense that a lot of these microfinance banks are challenged by factors outside their control. however, the obvious lack of access to funds for on-lending to micro credit clients contributed immensely to their premature death. Microfinance banks need dedicated windows just like the universal banks where they can fall back on in times ofÂ trouble.
There should be a place where they can borrow money and continue with business until they recover. Also, our people have poor savings culture, we hardly save and ultimately, we cannot invest. And because we donâ€™t save, loan customers always get into trouble repaying loans collected from Microfinance Banks.
It is a challenge not only to microfinance banks but to the society as a whole. Donâ€™t forget that these microfinance banks donâ€™t mint money, they borrow from the universal banks like other credit clients and lend to the active poor. Therefore, if clients fail to repay on time,
it makes it difficult for the MFBanks to remain in business. Microfinance banking is a two-way affair. It requires a lot of responsibility on the part of customers and management of MFBanks. They all need each other to survive.
Microfinance banks without customers are not in business. And MFBank customers without good relationship with microfinance banks where they can borrow money to grow businesses cannot beÂ in business.
It has been discovered that some of these microfinance banks shortly after obtaining license of incorporation will just disappear with depositorsâ€™ money and that leaves questions for the regulators on criteria for issuing licenses. What is your take?
Let me respond thus, Iâ€™m not a regulator and I wouldnâ€™t want to speak for them. On the other hand, itâ€™s not only microfinance banks that are failing, some commercial banks that existed far long before the MFBanks came into existence are equally challenged ,not because they are not doing their best but because of certain economic factors which are outside their control.
TheÂ external factors arising from the global financial meltdown has impacted adversely on banks generally. Microfinance banks are not immune to these financial crises.They operate in the same environment and thus,Â they experience financial crises just like their counter parts the world over. The capacity to have a turn around is the key. Itâ€™s just that the wind blew so early, the MFBanks were just trying to find their feet, and therefore it took some of them, unawares and some are still trying to work their way back into the industry.
The MFBank industry needs the understanding of Nigerians. I am confident that most of them will bounce bank soon.
Do you think the decision of CBN to set exams for operators of microfinance banks to ensure standards in operation will reduce the challenges of failure among the operators?
As a trainer, I will say there is nothing wrong with training. Itâ€™s always good to update oneâ€™s skills so as to be able to deliver value to customers. Therefore, the idea is good. The certification is alright, but like the President once stated, it should not be based onÂ long grammer alone. Operators should be allowed to evolve and learnÂ in order to make progress, improve on what they are doing, rememberÂ the industry is new andÂ therefore should be handled gently. The MFBank sector has imposed a lot of responsibility on the regulatory agencies, operators as well as the general public. A lot of people say Oh! Microfinance banks are having problems, donâ€™t put your money there, that is not the best.
Aircrafts do crash ,yet people still line up to board aircrafts everyday. There is risk in everything we do in life, but I think putting money in a microfinance bank is a calculatedÂ risk in the sense that the same way the universal banks ensure their depositorsâ€™ fund with the NDIC, the microfinance banks ensure their depositorâ€™s funds. I donâ€™t see anything worrisome about it and you know some of the universal banksâ€™ customers who put money in the failed banks have all been paid either through NDIC or by the new Banks that acquired them, and for others, they are still being processed, but by and large, they will be paid, and that also will apply to microfinance banks customers.
What aspect of the operation in the microfinance banks would you want government assistance so that they will remain in business?
Government can assist the industry by setting up a Microfinance Trust Fund where microfinance banks could borrow at moderate rate of interest and lend to the active poor at nothing more than two percent. The government can also establish credit Guarantee Scheme in support ofÂ access to credit. This will not only assist the microfinance industry but will fast track Nigeriaâ€™s economic development.
Do you face challenges in this business?
In microfinance banking, loan repayment is a challenge. The attitude ofÂ loan clients regarding loan repayment is not encouraging. If we all understand that if you and I save, Mr. B. can come and borrow that money, use it wisely and return it, when you need it you can have access to it as well, life will be so simple. But because some of us donâ€™t tell the truth, they borrow the money knowing from day one that they will not repay. We must all work together to ensure the survival and sustainability of the MFBanks in this country and the sustainability of access to micro credits if we must develop.