By Amaka Abayomi

Five months after the announcement of the proposed establishment of the Microfinance Development Fund (MDF) by the Federal Government, microfinance operators are worried by the delay in the take-off of the Fund which is anticipated to boost their financial activities.

Under section 11.9 of the Microfinance policy framework ‘Establishment of a Microfinance Development Fund’, it states that “In order to promote the development of the sub-sector and provide for the wholesale funding requirements of MFB, a Microfinance Sector Development Fund shall be set up.

The Fund shall provide necessary support for the development of the sub-sector in terms of refinancing facility, capacity building, and other promotional activities. The Fund would be sourced from governments and through soft facilities from the international development financing institutions, as well as multilateral and bilateral development Institutions.”

Acknowledging the benefits of the MDF, President Goodluck Jonathan, who spoke at the 5th Annual Microfinance Conference and Entrepreneurship Awards, noted that the creation of a MDF would, among other things, allow for an accelerated growth of Nigeria’s real-GDP, register increased investment, and create additional employment opportunities and thereby reduce the poverty rate in the country.

Before September 2010, the state of the microfinance sector was such that MFBs were incapable of providing diversified, affordable and dependable financial services to the active poor, in a timely and competitive manner. Savings mobilisation was quite difficult as most prospective customers were weary of the dubious activities of some operators.

Thus, the MFBs were unable to create employment opportunities and increase the productivity of the active poor in the country, thereby increasing their individual household income and uplifting their standard of living.

But sources close to the CBN revealed to Vanguard that the apex bank is not likely to facilitate the establishment of the MDF anytime soon as there is still a lot of cleansing to be done in the sector before the Fund can take effect.

“The microfinance sector is not ready for the MDF because serious cleansing is still being carried out by the regulatory bodies, and until that is done, the Fund would still remain elusive.

“The house cleaning would help separate unhealthy from healthy MFBs and this would determine the banks we would channel the Fund through. This is very important because we want MFBs that we and the banking public would have confidence in and would not mismanage the Fund.”

But MFB operators think differently as they insist the sector is more than ready to access the MDF as it would accelerate economic growth.

Pointing out that the sector is the only structured institution that can galvanise economic growth in Nigeria, Chairman of the Lagos State chapter, National Association of Microfinance Bank, Mr. Babajide Olufemi, said accessing the MDF would help achieve that.

“The microfinance sector is more than ready to access the MDF because we have the structure to deliver the financial services that would propel economic growth. We also have the human resources and technology, and the market is there.

“Saying that we are not ready for the MDF is not true as we have a number of Development Finance Institutions (DFIs) and state governments working with us. Our capacity building certificate is superb and the certification programme is excellent and we still remain the only structured institution that can galvanise economic growth in the country.

“Besides, we send our monthly returns and yearly accounts to the regulatory bodies which they approve of, so they can’t say the sector is not ready for the Fund. We are properly regulated by them and have commenced our internal regulation.”

In agreement with him is the PRO of Enugu based Umuchinemere Procredit MFB, Sir Abuchi Anueyiagu, who is optimistic that the Fund would boost the sector’s operations.

“The MDF is long overdue and we are ready to access it because it would boost our operations. The CBN can’t say that the sector is not ready for the Fund because there are a lot of well managed MFBs that the CBN can disburse the money through, especially considering the good structure we have in place.”

For the Managing Director of Halmond MFB, Mr. Jide Tade, accessing the fund would enable the sector provide quality financial services that would better the standard of living of their customers.

“We are ready for the Fund and we need to access it more than ever as it would help us provide micro-funding that would be beneficial to the ‘active poor’. The only challenge I see us facing is that of collectability, but aside that, we want to access the Fund to enable us operate better.”

Though the CBN and MFB operators differ on the take-off of the Fund, but with the assurances from the operators on the workability of the Fund, the internal regulation by the operators and the on-going reforms in the sector by the regulatory bodies, it is hoped that the, CBN may reconsider its stand and establish the Fund sooner than expected.