The Managing Director, Fortis Micofinance Bank Plc, Mr. Kunle Oketikun has called for more financial empowerment for Nigerians. This is following a breakdown of EFInA’s report, showing that out of 84.7 million Nigerian adults and only 15.9 million individuals in Nigeria borrowed money in the last 12 months and only 7.9 million of individuals who borrowed money used it for business purposes. In this interview with PROVIDENCE OBUH, he said, “With about 900 Microfinance Banks (MfBs) 22 Commercial Banks, and other financial institutions, there is a need for all stakeholders to do more and empower more people.”
How best would you measure the Nigerian Microfinance Industry?
In corporate Nigeria, officially, commercial microfinancing is under a decade and in comparison with what obtains in other climes where micro financing has been practiced for over three to four decades; it will only be fair to say microfinancing in Nigeria is doing well and will do much better in the coming years.
The sector is gradually gaining momentum more Nigerians are beginning to gain increased confidence in the sector.
The Microfinance Sector has done well with over four million accounts of which 57.3 percent are male and 42.3 percent are female.
According to recent statistics, the sector has disbursed over N97 billion in risk assets. In comparison to where we are coming from, this is reasonably okay.
But if we are comparing with what it should be, it is a far cry as well over 67.2 percent of Nigerian adults summing up to 56.9 million are still financially excluded as stated in EFInA latest Access to Financial Services survey report in Nigeria.
Nigeria still lags behind South Africa, Kenya, Namibia and a couple of others in financial inclusion indicators. Generally, there is more to be done.
A healthy Microfinance sector should trigger a very active Micro, Small and Medium Scale Enterprises sector, the lifeblood of most viable economies.
On the whole, microfinance banks in Nigeria have actively engaged a substantial number of Nigeria’s population in the area of financial literacy and access to finance. Through facilitation of group formation and lending more social skills and interaction have been imbued into the consciousness of Nigerians at the base of the economic pyramid, particularly the women.
In this wise, the sector have not only provided the supply of financial access but are also doing some work in the area of empowering the customers to be well informed on what to demand for. If the current tempo is sustained and a well-structured support on funding and monitoring is maintained by the apex regulatory bank, the sector will do better and will add significant value to our economy.
In borrowing to the low income earners, how would you rate the sector?
There is a strong correlation between financial access and poverty alleviation. If we are looking in terms of available statistics how many people that have been affected, then you can aptly say that there is much room for improvement in the activities of all stakeholders. Take for instance, a further breakdown of EFInA report revealed the following: out of 84.7 million Nigerian Adults only 15.9 million individuals in Nigeria borrowed money in the last 12 months, only 7.9 million of individuals who borrowed money used it for business purposes. In the last 12 months, Commercial Banks advanced loans to only 5.6 percent with microfinance banks advancing loans to only 4.7 percent of the 84.7 million Nigerian Adults.
These figures show that we are collectively not doing enough with about 900 Microfinance Banks (MfBs) 22 Commercial Banks, and other financial institutions. There is a need for all stakeholders to do more. We have to empower more people, we have to give out more loans, we have to sensitize more Nigerians and we have to ensure they have access to finance in a more cost effective and sustainable format.
What difference do you think the MSMEDF would bring to the sector?
The funds will enable more Nigerians have access to funds at a more reasonable rate. One of the basic reasons why MfBs can not immediately service more Nigerians is due to paucity of funds. The market is huge, largely untapped but the funds available for the banks that are MSME focused is very meager. It is expected that once institutions begin to access the funds, there will be a substantial difference in the impact that will be recorded on the MSME and SME sectors of the Nigerian economy.
Going forward from Independence what should we expect from the sector
The Sector would have to do more in providing more channels to create access to finance, also, embrace mobile money and other forms of electronic payment to reach more people. As it is at the moment, Kenya and South Africa are doing well in the area of mobile payment, but by the time the microfinance sector in Nigeria embraces the use of mobile channels in dispensing their financial services what they have in other climes will be smaller than what we will have in Nigeria because we have the population advantage. Players in the sector need to urgently up their game in the area of customer education to ensure they know precisely what financial service to demand for. Players also need to build capacity in other to know the right financial service to supply customers in a way it will impact them positively.
The midpoint between customer education and capacity building for microfinance operators is providing the appropriate financial service that will usher the hitherto excluded into financial freedom which is the basis for sustained financial capability. It will enable operators to be able to demystify banking and to be able to bring banking services that were thought to be for the rich to the door step of the poor.
We need to design product that are customer centric, we need to expand our reach through application of technology into our processes so that more Nigerians can be seamlessly serviced.
The regulators have to ensure that the new MSME funds are disbursed through a secured framework that will also make it accessible by microfinance institutions in Nigeria.