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Govts should comply with 1% budgetary provision for microfinance

By Amaka Agwuegbo
The Managing Director of Good Neighbours Microfinance Bank, Mr. Ikechukwu Awa, has asked  state and local governments to comply with the  one per cent budgetary provision for microfinance and  on-lend to microfinance banks, MFBs.

Urging state and local governments to remit the funds, as enshrined in the MFB operating policy, Awa said such allotted funds, if remitted, would increase the deposit base of MFBs, thereby boosting the quality of financial services rendered.

“There have been cases where some state and local governments tried to give out the funds by themselves but they never recovered the money because the average beneficiary thinks it’s his own way of partaking of the national cake.

“But if this fund is channeled through MFBs, the borrowing public would know it’s not business as usual because we have the capacity to monitor the loans and make sure that they are repaid. So, I’m encouraging the state and local governments to give us this allocation.

Pointing out that the essence of microfinancing is to make financial services available to the ‘active poor’ and low income group of the society, Awa said this important aim would continue to elude Nigerians if the one per cent of state and local government budget for on-lending is not remitted to MFBs.

According to the Microfinance Policy, Regulation and Supervisory Framework for Nigeria, states and local government are to set aside an amount of not less than 1% per cent of their annual budgets for on-lending activities of microfinance banks in favour of their residents.

This is to ensure stable macro-economic environ-ment, and the provision of basic infrastructures, political and social stability.

States and local government are to foster adequate land titling and other property rights sufficient to serve the collateral needs of borrowers and financial institutions, while instituting and enforcing donor and foreign aid guidelines on micro-finance to streamline their activities in line with this policy.


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