Despite the challenges that the board and management of Integrated Microfinance Bank, IMFB, have been faced with, it is determined to come out stronger and bigger. In this interview, IMFBâ€™s Managing Director, Mr. Adamu Ibrahim, takes us through the events of the past 9 months, steps being taken to regain public confidence and the recent injection of funds by an investor.
What led to IMFBâ€™s closure?
As a result of our desire to reach out to as many people as possible due to the increase in demand for our services, the management of Integrated Microfinance Bank embarked on a massive expansion programme at the beginning of 2009.
But soon after we started the expansion exercise, we found out that we needed to inject more capital to boost our operations and sustain the expansion. But unfortunately, we went to the market at about the same time that we had the board tussle and this impacted negatively on the expansion exercise, which led to its failure.
Equally responsible for our misfortune was the banking reform which saw the sack of some commercial banksâ€™ managing directors, including our correspondent banks. Naturally, the pressure became too much and we were unable to meet customersâ€™ financial demands which led to a run on the bank.
To further aggravate the problem, some members of staff went to customers, telling them to come and close their accounts because IMFB was going to close shop. We had to stop operations when we could no longer cope with the demands and go back to the drawing board to find lasting solutions on how to move IMFB forward.
According to the MFB operational framework policy, any MFB that has been out of operation for 6 consecutive months or any 6 months of the year would have its operating license revoked by the CBN. How do you reconcile this to your bankâ€™s closure for 9 months?
The situation we are in is not peculiar to IMFB as evidenced by the fact that 90 per cent of MFBs have been shut down and the CBN has the right to wield the big stick. But since it is a systemic problem and not a deliberate act, I think we are being given a leeway by the CBN to see if we can, on our own, start operations before they take any punitive measures.
Like you know, microfinance banking is relatively new in Nigeria _ about 5 years old _ and naturally, it is expected to encounter some problems. But there is no escaping the fact that microfinance banking is the best way to reach the poor. I am of the view that because operators are still finding their way, the CBN is giving us the opportunity to see if we can overcome our various challenges without them unnecessarily coming down heavily on us.
Though people may have said different things about IMFB, but in the affairs of men, God has the final say. We never for a day believed that the IMFB dream is dead and this propelled us to keep doing the best we could with the resources available and we kept on looking unto God for a way out. With the turn of events, the dream is not dead because IMFB will come back stronger and we will continue to do business.
How would IMFB regain the confidence of the banking public after being out of operations for almost a year?
Though the problems we are facing are not peculiar to us alone, but we intend to carry out massive campaigns and hold customersâ€™ forums to explain to our esteemed customers what brought us to where we are and what we are doing to get out of such problems.
We are going to gradually come back to the market, pay those we owe and within a short period, begin to give money to people to trade with. So instead of asking our customers for deposits, we will be giving them money to grow and expand their businesses.
I believe that once we are able to restore confidence in the banking public, most customers would want to continue banking with us.
IMFB recently entered into a partnership with ACBS. How would it work?
The operational framework of IMFB has always been and will continue to be despite the injection of funds by Africa Capital and Business Support Limited, ACBS. But based on our experience, we will carry out some over hauling because there are certain areas we need to put right.
ACBSâ€™s participation would be by way of providing the much needed technical assistance by supporting us with the IT platform. They would also have an executive director and non executive director on our board. Other than these, IMFB would continue to run normally.
Their representation on the board and management is perfectly normal because if you are going to inject N6bn into an organisation, you must have a way of making sure that the money invested is being used for the purpose in which it was intended for. And the CBN has been duly informed about the partnership with ACBS.
How would the partnership benefit IMFB and your banking public?
When someone is sick and you administer the right drugs to the person, it is expected that the person becomes well. What IMFB need now is funds to jumpstart our operations since we have the network, branches, name, expertise and experience.
When the funds are injected, the bank would come alive again and become a growing concern which would enable us service our customers and achieve our objectives which is basically to alleviate poverty and reach out to as much people as possible.
Basically, the partnership will bring the bank on track and we will continue from where we stopped.
But why zero in on farmers and not all customers?
The fund would be in two parts _ N4bn and N2bn. The N4bn is for the normal business while the N2bn will be invested in agriculture. This is because farming is a specialized area which calls for specialized attention. Assuming you give a farmer a loan, he may not pay until after 6 months, depending on the type of crop he grows.
Sometime back, government set aside N200bn to fund agriculture which was to be disbursed through commercial banks, but the money had to be withdrawn because the banks lacked the expertise to administer the fund.
We place a lot of emphasis on rural banking and most rural Nigerians farmers, and since our target is poor people with farmers constituting a large percent of the population, it makes sense that reasonable resources be devoted for any meaningful impact to be made in that sector.
The money will be disbursed through us and since the farmers that bank with us already have cooperatives groups of 10, 20, 30, the money would be given to the groups which they will use for their farming and pay back.
What is your take on the Nigerian microfinance sector, considering the fact that it is beset with problems ranging from poor asset quality to poor corporate governance?
Microfinance banking is still relatively new in Nigeria and there were no institutional and human capacity. It is now that the regulatory authorities are putting in place processes of building the necessary capacity to sustain the industry but we are learning from experience and will be better for it. We have not scratched the surface yet because Nigeria is the largest black nation on earth with skilled potentials, though 70 per cent of the population is under_banked. And in trying to provide financial services to the 70 per cent, we made mistakes, but with the support of government and regulatory agencies, we can get it right.
In what ways can government assist MFB achieve their objectives?
Already, they are providing capacity in terms of training facilities, education and friendly policies. But you know there is a provision that says that federal, state and local governments should remit one per cent of their annual budget to MFBs for on_lending. If this is done, it would go a long way in helping us achieve our goals in a short while because there is a limit to how much fund you can mobilize from private sector.
Therefore, if government is willing to encourage us, like Lagos and Oyo states have done, it would make it easier for MFBs to reach more people within a very short time.