By Providence Emmanuel

Managing Director/Chief Executive Officer, Ospoly Microfinance Bank Limited, Mr. Femi Fapohunda, in this interview spoke on factors affecting confidence in the subsector as well as its role in reviving the nation’s economy. Excerpts.

WHAT do you think the subsector is doing differently to add value to its operation?

The Bank Verification Number, BVN and Credit Bureau are to add value to the operations of the MfBs. An instance of the credit bureau is this: most people still lack confidence in the microfinance subsector, the only confidence they have for the subsector is that anytime they come around for credit, they are sure that they would be given credit. If the MfB asks them if they owe any other bank, you can trust Nigerian borrowers, they will lie that they do not owe. So the issue of being on the platform of credit bureau has addressed that. In fact, we are not permitted to grant credit to any customer without reference to credit bureau platform.

MfBs are mandated to subscribe to  two credit bureau companies, at least two of them. So if any MfB grant credit without verifying from the credit bureau and that bank is caught, you are on your own and you would be sanctioned by the regulator, I mean the Central Bank of Nigeria, CBN. I know this would curtail serial borrowing in the sub sector, meaning that the level of default would at least be reduced to the barest minimum except for those default that have occurred before the enactment of the credit bureau law. Look at the issue of BVN, this is also to curtail what I would call money laundering;  people launder money for various purposes and if you have enrolled for  BVN you would be tracked definitely. Some MfBs even go to the extent of not allowing customers to withdraw if they don’t  have BVN.  Today, most MfBs have acquired their own BVN machine and I see this as a very good and positive development in the subsector. Everything the regulator and the government are doing is to impact the subsector and that is the way I understand it.

 Why is interest rate still high in the sub sector?

The cost of operation is also high. If you take a unit MfB for instance, they are just in one location. But the Deposit Money Bank, DMB have several branches, if branch ABC make losses, branch DEF can pay and in the end, when they bring out their balance sheet of profit and loss, you would see that they still make profit. It is the cost of operation. The world over where microfinance is adopted, I realized that the poor can pay whatever interest rate. Example is Bangladesh and Philippines. It is the MfB that is pivoting the economy of those countries. Microfinance is for the poor, we call them bankers to the poor.

How true is the report that another Tsunami is about to hit the subsector?

There cannot be any tsunami because an injury to one is an injury to all. The CBN would not allow it because of confidence, the MfB subsector, remains the only subsector that can pivot the ailing economy so CBN would not allow any tsunami in the sub sector.


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