By Amaka Agwuegbo
The Central Bank of Nigeria has threatened to sanction any microfinance bank or institution that continues to flout the regulatory and supervisory requirements.
Speaking at the workshop on commercial microfinance and savings mobilization for microfinance banks and institutions organized by the World Bank/Nigeria MSME Project, in collaboration with the Central Bank of Nigeria (CBN), the Deputy Governor, Operations, CBN, Mr. Tunde Lemo, said the CBN has put in place a reasonable and adequate policy and regulatory environment to ensure the safety of depositorsâ€™ fund.
â€œThe CBN is undertaking aggressive supervisory and oversight functions on the licensed microfinance banks and it is investing in capacity building through the certification programme scheduled to commence very soon.â€
Continuing, he said the apex bank is collaborating with donors to implement programmes that, if taken advantage of by the microfinance banks and institutions, will put them on the path to success.
Speaking on the adoption of commercial principles by microfinance institutions, Lemo said the adoption will create incentives for providers of services to continue to develop their skills, institutions and clients for the betterment of all.
â€œCommercial microfinance engenders competition, efficient and cost effective services for the clients of microfinance institutions.â€
He listed the effectiveness of the initiative to include: using/adopting simple technologies; charging reasonable cost recovery rates for loans and advances and appropriate rate for savings; entrenching good corporate governance; instituting appropriate and effective internal control measures; and adhering to prudential norms and standards.
Lemo averred that savings products increase client base, enhance customer satisfaction and retention, provides means and incentives for loan repayment, represent sources of funds for the institution and improves corporate governance of microfinance institution.
He urged microfinance banks to design products for savings mobilization, adopt appropriate and cost effective strategies, commensurate pricing and position themselves to secure the confidence of savers while continuing to strive for the best, especially in a competitive environment like ours.
On his part, the Small and Medium Enterprises (MSME) Project Team Leader, Mr. Emeka Ile, said that commercial microfinance and savings mobilization will allow microfinance banks and institutions operate on commercial principles.
â€œThis will enable them lend and recover loans at a profit, grow their businesses to a large scale and become self-sustaining, thus allowing them to continue to run the business without depending on any government subsidy.â€
Ile said that for any microfinance bank to be able to successfully operate commercial microfinance, they need to have the capability to expand to be able to reach out to a lot of people by providing them with the needed services and encouraging them save with you.