By Providence Emmanuel
IT is imperative for Microfinance Institutions (MFIs) in the country to lower their cost of operation due to   recession so that lending rate being charged could be moderated.

By so doing MFIs can now expand their scope of work and simultaneously provide entrepreneurial ideas and skills to the rural people and further reinforce the rural economy and ultimately help in poverty alleviation which has been a priority.

A Microfinance operator, Mr. John Isikwe, who spoke with Vanguard said, “Many MFIs have deviated from the core objectives and values of rural financing, they should cater for the financial needs of low-income people and help them expand their businesses by providing required support. However, some seem to be exploiting low-income people.”

He added that financial education should be introduced to rural customers of MFIs to motivate the learners to understand the advantages of transactions with microfinance banks and adopt available formal financial services. Financial inclusion is the process of bringing people from the margin to the mainstream, linking them to mainstream financial institutions so that they become customers of banks and are able to access the full range of services – savings, deposits, loans which the banks offer.

Financial education is key to promoting financial inclusion which is a step towards customer protection as it ensures linkage with mainstream financial institutions so that the hapless borrower is not at the mercy of the informal service providers who charge notoriously high rates of interest. According to Isikwe, “Financial education programme should be able to demonstrate the advantages of savings and loan and suggest how the populace can implement savings decisions and how to take steps to start saving and using banks.”

Meanwhile, Minister of Finance, Mrs Kemi Adeosun, penultimate week, urged the Central Bank of Nigeria (CBN) to extend Bank Verification Number (BVN) requirement to account holders in Microfinance Banks (MFBs).

She said this would facilitate the detection of bank accounts which might have been opened and operated in such banks by ghost workers and other syndicates.

Adeosun said that the introduction of BVN by the CBN had contributed immensely in improving the integrity of the Federal Government payroll on which more than 50,000 ghost workers were detected and removed.

She said that operating bank accounts in Microfinance Banks without requirement for BVN had left a huge loophole which individuals intent on financial crimes could use to hide and launder proceeds of crime and successfully escape detection by law enforcement agencies.

A statement made available by the ministry’s Director of Information, Mr Salisu Dambatta, said Adeosun had written to the CBN Governor, Mr Godwin Emefiele, to make her case.