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Unworthiness of microfinance banks in Nigeria

By Moses Nosike

As the CBN approves the harmonisation of the two association in the microfinance sector, the Association of All Microfinance and National Association of Microfinance Banks of Nigeria, the CBN and the umbrella body regulating the activities of microfinance banks in Nigeria is hereby advised to launch deep in bringing sanity in the sector. This came following the unduly and unethical practices going on in some quarters of the credit finances. From industry report, 50 percent of microfinance banks exist on paper.

Low income earners and small scale business owners have become victims of inhuman practice existing among microfinance banks who will send their staff on the streets, asking people to deposit certain sum of money and then promise to double the amount as credit facilities and what have you, only  to discover that after a period of operation, they will disappear with people’s savings with them.
As it’s now, it became difficult for people who rely on their savings with these credit finances to continue in business or make ends meet. Too, it’s difficult also to identify a few of them operating according to the rules and regulations stipulated.

Originally, microfinance if practiced well is  supposed to be a type of banking service that is provided to unemployed and low-income individuals or groups who would otherwise have no other means of gaining financial services. Ultimately, the goal of microfinance in any society is to give low income people an opportunity to become self-sufficient by providing a means of saving money, borrowing money and insurance. It’s also the provision of financial service to the self-employed, who traditionally lack access to banking and related services. But what we are seeing today is on the contrary in an economy where unemployment rate is on the increase and people are finding it difficult to survive.

The condition of microfinance banks in Nigeria is seriously bleeding and therefore calls for remedy before low income earners and small scale business owners resort to suicide. This is so because many of the banks had disappeared with deposits of innocent Nigerians thereby inflicting unwanted poverty in families and business owners who expected elevation from their savings in those banks, are forced to start afresh.

Unfortunately, more microfinance banks are still disappearing without considering their depositors. Few days ago, it was a rowdy session at the gate of another microfinance bank along Lawanson road, Surulere area of Lagos. Depositors who came to withdraw their hard earned money saved with the bank couldn’t withdraw and the irony of it is that management of the bank could not give cogent reasons why these people couldn’t withdraw money to meet their various responsibilities. It sounds funny as the angry depositors thought it was one of those jokes. Bankers will tell you there is no money but will later resume payment.

But to their greatest dismay, the MD of the bank was in a sneaky mood for escape when the angry depositors who laid siege at the premises of the bank sighted him and went after him. It took the intervention of soldiers  to escort him to safety after the bank made some  frantic calls for help.

One of the victims who told this reporter his ordeal said that he went there to withdraw part of a N100,000 a relation sent to him and after completing the withdrawal note to withdraw, the cashier told him there was no money. According to him, he insisted he must make withdrawal  and he engaged them in an argument until they allowed him withdraw N20,000.00. He said, when he went there the second day, he made up his mind to fight if they didn’t allow him to make any withdrawal and after much argument, he also withdrew N20,000.00 and N20,000.00 the following day until he went there one Thursday and discovered that the premises were deserted with N40,000.00 remaining with them.

Other victims met at the bank’s gate also narrated their ordeal as well. “This is inhuman treatment, unworthiness, unaccepted deceit at the highest order meted to innocent citizens of this country.
“Government, CBN and regulating authorities should not allow this to continue.”


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