By Amaka Abayomi

The launch of the Microfinance policy framework by the Central Bank of Nigeria (CBN) brought a level of confidence to bank customers, especially as microfinance banks (MFBs) held a lot of promises for small and medium entrepreneurs, and there were feelings of better things to come.

However, most MFBs’ banking halls today are occupied by more staff than customers as a gulf has emerged somewhere somehow.

According to the Microfinance Policy Framework, licensed MFBs are to provide financial services to the unbanked 65% of the active poor adult population that are excluded from formal financial services of mega banks.

But going by the 2010 survey on Access to Financial Services in Nigeria conducted by Enhancing Financial Innovation and Access (EFInA), 3.2 million people (3.8% of the adult population) have MFB accounts, while 63.5% of adult males, 76.8% of adult females, and 78.8% of the rural population are still unbanked.

Intrigued by this revelation, Vanguard went to find out why people whom MFBs were established for have refused to enjoy the financial services these banks are supposed to provide them with.

According to Mama Ronke, a roadside trader in Balogun market, she would rather keep her money under her mattress than an MFB.

“My sister, the thing wey these microfinance banks don do some of the market women here no be wetin I wan experience. One woman put all her life savings for the bank, then one day wey she go collect money, dem don close the bank, and till today, she never recover from am. I no wan make that kin thing do me, so I dey keep my money for house or esusu people.”

For Iya Bilkis, another roadside trader, MFB is a no go area for her as she has sworn never to deal with any.

“I get account with one before, but one day, I just make up my mind to close the account, and I thank God say I close that time because the next week, I hear say the manager don run with people money. Na God save me because I no know how I for survive am if to say my money dey among the one wey im thief.”

When asked if she operates a microfinance bank account, Iya Alaba, a roadside trader, with a puzzled look on her face, asked what a microfinance bank is. When told what it is, she said she prefers esusu contribution than to keep her money with one.

“Wetin be microfinance abi na wetin you call am. I prefer to do daily contribution with esusu people than to put my money for bank wey I no know when e go close. Also, the esusu contribution dey help me grow my business and feed my children because when e reach my turn to collect money, them no dey fail me.”

Explaining why this group of people have continued to remain unbanked despite the concentration of MFBs in these markets, the Chairman, Lagos State Chapter, National Association of Microfinance Banks (NAMB), Mr. Olufemi Babajide, said the mobile nature of most of these traders has made it impossible to keep track of them.

“Due to the mega city plans of the state government, these roadside traders are highly mobile because of the activities of the task force men that makes them to relocate so often. So doing any financial transactions with them is at your peril.

“We tried banking them but got our fingers burnt as we could not locate them again after they took loans from us. We became wiser and prefer to deal only with those traders that have shops as it is easier for us to locate them.”

But a visit to shop owners proved the chairman wrong as most of them claimed to prefer money deposit banks to MFBs due to the recent happenings in the sector.

Eight out of every 10 shop owners said banking with MFBs is like gambling with their future, especially considering the dubious nature and recent liquidation of some banks.

Attributing the low patronage of MFBs to lack of public awareness, a source close to the Central Bank of Nigeria, who refused to disclose his name, said prospective customers need to be educated on the activities and benefits of banking with microfinance banks.

“Publicity of the activities of these banks has not been as much as it should be and the regulatory bodies have a larger share of the blame because the individual banks may not have enough capital to run these advertisements.

“Being a peculiar institution, it needs to be assisted by the apex bank because of the huge cost of running these adverts. And I can tell you that the CBN has been running adverts on behalf of MFBs on the benefits of banking with them, and we run these adverts in various languages and pidgin English. But I guess that due to the duration and infrequent nature of these adverts, people are yet to be aware of their activities.”

With over 59 million unbanked adults, MFBs are saddled with the responsibility of ensuring that the unbanked and low income population fully understand the benefits of being financially included and fashion out new ways of reaching out to this market through new though process and innovation in bank product and service offerings needed to capture this market.