NAMB 2014 framework to aid CBN’s supervisory roles

BY PROVIDENCE OBUH

As soon as the new policy framework for National Association of Microfinance Banks (NAMB) is in place, it would help the Central Bank of Nigeria (CBN) in its supervisory role for Microfinance Banks (MFBs) in the country.

The South-West Zone NAMB made the statement in a communiqué where it expressed shock over the new rule of the apex bank, describing it as a regulation targeted to ruin the sub-sector.

The zone maintained that the sub-sector is still at its recovery stage from the financial meltdown of 2008 and so does not expect such rule to be coming at the moment.

According to the zone, “By the year 2014, the apex association would have put in place, very firmly our self regulation and supervisory structure which will assist the regulatory authorities in their supervisory roles.”

However, the zone believes that if the banking watchdog could consider the apex association’s regulation, it will help restore the lost confidence of the sub-sector.

The communiqué signed by the Chairman of the zone, Mr. Olufemi Babajide stated; “We have no problem with capitalisation. It is a continuous process in all sectors, including the banking industry. Categorisation is also a welcome development.

“MFBs with branches should be accessed on the basis of N20, 000, 000 capital base/shareholders’ fund per branch (I.e. MFB with a head office and one branch will be required to have N40,000, 000 capital base/shareholders’ fund and not N100, 000, 000). Loans have been disbursed by the various branches to customers whose tenor varies from 30 days to 720 days, if such branches are closed, that will automatically result into bad debt.

“Nigerians have been employed to man the branches and if they are closed, they will automatically lose their jobs. Branch closure will reduce the reach out to extend financial services to the poor and underbanked in Nigeria. This will further compound the crime rate in the country. The sub-sector is not presently attractive to existing and new investors in view of the economic meltdown of year 2008, the licence revocation of year 2010.

“Mergers and acquisition, outright sales are going on in the sub-sector but the pace is slow in view of lack of funds and the need to carry out due diligence which requires time. By the year 2014, the CBN support fund, Nigeria Incentive-Based Risk Sharing-System for Agricultural Lending (NIRSAL) and other donor funds would have been disbursed to MFBs. This will make the sub-sector very attractive to investors.”