By Amaka Agwuegbo
Microfinance operators who had their operating licenses revoked by the Central Bank of Nigeria (CBN) have condemned the action, saying such moves would kill the economy.
The CBN, last Friday, revoked the operating licenses of 224 MFBs due to their non-performing loans, resulting in high portfolio at risk (PAR), which had impaired their capital; gross undercapitalization in relation to the level of operations; poor corporate governance and incompetent boards; high level of non-performing insider-related credits, and other forms of insider abuse; heavy investments in the capital market, with the resultant diminution in the value of the investment, among others.
Chairman of Solace Microfinance Bank, Pastor Glory Abrefera, said MFBs try their best to operate despite the harsh operating environment they have found themselves in.
According to Abrefera, “MFBs operate under the same harsh climate as other sectors of the economy without any form of bail-out for the operators. Commercial banks, aviation, manufacturing, etc have been bailed out, but the CBN has turned its back on MFBs.
“An economy that has lost N8trn in its stock market is not a healthy one because if such monies were to be in circulation, things would have been better for it.
“The CBN talks about only liquidity of the banks, without considering infrastructure and how much was used in floating the banks.”
Also condemning the revocation is Barrister Jude Nosagie, Chairman of Prosperity MFB, who said such moves would negate the impact that Nigerian MFBs have made.
“Since we started operation, my bank has been living up to expectation and we have never had any liquidity issues, so I wonder why we should have our license revoked.”
On the way forward, MFB operators said the CBN can stabilize the economy by bailing out microfinance banks.
“The CBN can help by bailing us out with N100 million each, just like it did for commercial banks. It can even appoint board members so as to ensure that nothing goes wrong and that the banks are run the way they are supposed to.
“The revocation is the wrong thing right now because we have been left to source for funds by ourselves. We have not seen the one per cent that the state and LGs are supposed to set aside for onlending, nor are there any fund coming from the FG or CBN.
“If the banks are left to operate for some years, even if it means not taking deposits, we can generate some money to pay off our liabilities and be saved of this stress.”
On the effect of this on the sector, operators said the little confidence the sector has earned over the years has been eroded.
“The ripple effect of this is the increase in confidence crisis in the sector as those banks that still in operation will feel the effect.
“It would have been better to have about 200 functional MFBs through mergers and acquisition than to revoke our licenses and still threaten to hand us over to law enforcement agencies.”