By Providence Emmanuel
THE Central Bank of Nigeria (CBN) has said the ten microfinance banks account for 40 percent of total loans in the subsector.
Director, Other Financial Institution and Supervisory Department (OFISD) Central Bank of Nigeria (CBN) Mrs. Tokunbo Martins, disclosed this at the just concluded second annual two-day professional seminar organized by the National Association of Microfinance Banks, Lagos State Chapter (NAMBLag) in conjunction with CA Compuconsult &Associates with the theme: ‘Strategic Options for Sustainability of Microfinance Operations in a Challenging Environment.’
The underlying objective behind the seminar theme is the low adoption of the Nigerian Sustainable Banking Principle by the MfBs compared to the Deposit Money Bank who have fully embraced the principle.
Tokunbo added that a recent in-house report point to a sub-optimal performance of the different players in the Other Financial Institutions, OFIs, subsector relative to their potential, expectedly their impact had been muted and below par.
Martins who was represented by Deputy Director, OFISD, Mr. Bassey Ekpo, pointed out that total industry credit and asset of MfBs stood at a meager N214.32 billion and N365.51 billion respectively as at 31st December 2016, adding that this is considered grossly inadequate given Nigeria’s population of 170 million which largely comprises of people at the bottom of the social pyramid who constitute a veritable target market for MfBs.
“The industry is highly concentrated and unevenly distributed with the top ten out of the existing 991 MfBs accounting for 40 percent, 37 percent and 39 percent of the industry total loans, deposits and assets respectively as at 31st March 2017. The subsector is also dominated by a high spate of distress and failures with many institutions, particularly unit MfBs, technically insolvent or inactive resulting in business closure.
She advised MfBs to consider the provision of digital financial services through the use of Fintechs as a possible strategic options adding that embracing technology must be preceded by identifying and understanding the risks and followed by adequately managing the risks.
“This will require collaboration with IT service and software providers, telecommunication companies,” she said.
On the seminar, Martins said that more training and seminars across the country will drive significant improvement in the operations of MfBs given the quality of knowledge impacted during the trainings and seminar. “This will further lead to well run and sustainable MfBs that would contribute positively to the Nigerian economy and help drive financial inclusion and reduce poverty.
“This seminar comes at a time of monumental economic challenges as we all know the Nigerian economy is just getting out of recession following the five consecutive quarters of negative GDP growth, the worst in the country’s existence.
What is clear is that recession is the manifestation of fundamental and structural weaknesses in the Nigerian economy characterized by the country’s over-reliance on crude oil export as a major source of foreign exchange earnings, high import dependent and weak productive base, among others.
“Financial institutions have a critical and facilitating role to play in this regard through the provision of a variety of financial and ancillary services. This is particularly so for OFI’s such as MfBs given their objectives and mandates. However, to effectively play this role, the MfBs need to be safe, sound and viable and to be able to engender public trust and confidence”, she said.
Also, Chairman NAMBLag, Mr. Omololu Fatunbi, said that the two days seminar is in furtherance of the NAMB vision to build capacity building and support members business.
Fatunbi who explained that it is working hard to meet up with the BVN deadline for MfBs, said: “For NAMBLag, we are working to meet the CBN deadline for August 1, BVN registration of our customers through the collaboration with NIBSS. We have deployed five BVN machines to registers our customers in Lagos even though the deadline appears very aquiline.
“The MSMEDF has not been fully being accessed by our member banks, quite a number of our applications for both fresh and renewal are still awaiting approval even after 10 months,” he said. Dignitaries at the seminar include: Erstwhile President, NAMB, Mr. Valentine Whensu; Managing Director, Hasal Microfinance Bank, Mr. Rogers Nwoke; Mr. David Adelana and Mr. Ekpo, both from OFISD CBN Lagos; Mr. Fatunbi; among others.