Waiting endlessly for the Microfinance Dev. Fund

By Amaka Abayomi

With year 2011 almost coming to a close, operators in the microfinance sector seem to have lost hope in the coming to life of the proposed Microfinance Development Fund (MDF) promised them by the Federal Government.

Though President Goodluck Jonathan, at the 5th Annual Microfinance Conference and Entrepreneurship Awards held in January, said the creation of a MDF wouldallow for an accelerated growth of Nigeria’s real-GDP, register increased investment, and create additional employment opportunities while reducing poverty in the country, but for the operators, each passing day dims the actualisation of the said Fund.

Prior to the falling of the CBN’s sledge hammer on microfinance sector, most microfinance banks (MfBs) were not able to provide diversified, affordable and dependable financial services to the active poor, in a timely and competitive manner. This made savings mobilisation quite an uphill task as most prospective customers were weary of the dubious activities of some operators.

Though CBN officials had earlier said the Fund would not become operational until it is through with the on-going sanitisation exercise, but sources close to the Development Financial Institution of the CBN which is saddled with the responsibility of providing special vehicle for the implementation of small-scale projects in the country, pointed out that the possibility of accessing the N54 billion Fund this year is nil as the DFI has been mandated to put a hold on the process.

According to Vanguard’s sources, “the Fund, as enshrined in the microfinance policy, is not intended for disbursement in this year as the issue has not been tabled before the management of the CBN for deliberations and approval.

“Though this means that the Fund wouldn’t be operational this year, but be rest assured that the apex bank is putting some measures in place to facilitate the growth of the microfinance sector, and the economy in general.” But MfB operators insist the continued delay of the establishment of the Fund would only lead to further crippling of the sector that is supposed accelerate economic growth.

According to the Chairman, Lagos State chapter, National Association of Microfinance Bank, Mr.Babajide Olufemi, accessing the Fund would galvanise economic growth and reduce poverty.

“Accessing the Fund is of paramount importance to us and the continued delay would mean that those MfBs that can’t source for funds would be left to their fate. We are tired of waiting in vain for the establishment of the MDF and this led us to establish the NAMBLAG Trust Fund that would provide short, medium and long term to facility to MfB operators.

“NAMBLAG Trust Fund would serve as a lender of last resort for MfBs by providing short, medium and long term funds for MfBs so as to avoid liquidity shocks and complement the efforts of the CBN to facilitate our growth and forestall the recurrence of license revocations by the apex bank.”

Pointing out that accessing the MDF would save jobs and reduce the number of banks going under by not eroding depositors and shareholders’ funds, an MfB operator, who pleaded anonymous, said MfBs experience liquidity problems not necessarily because they don’t have money, but because there is a gap that needs to be urgently filled. For another operator who refused to disclose his identity, further delaying access to the Fund would spell doom for the sector as more MfBs would become illiquid.

“I don’t see why the government and the CBN should have a problem making the MDF functional to make the banks more proactive. If the commercial banks, aviation and manufacturing sectors can be bailed out with such funds, why is the microfinance sector’s fate different? It is only fair that the government should come to our aid so as to allow for an accelerated growth of Nigeria’s real-GDP.

Agreeing with him is an official of Enugu based Umuchinemere Procredit MfB, Sir AbuchiAnueyiagu, who is optimistic that the Fund would boost the sector’s operations.

“The MDF is long overdue and we are ready to access it because it would boost our operations. Postponing the Fund is not the best thing for the sector because there are a lot of well managed MfBs that the CBN can disburse the money through, especially considering the good structure we have in place.”