Managing Director, Ilutitun-Osoro Microfinance Bank Limited, Ondo State, Mr. Ohizemokhai Mascot, in this interview, commended the recent decision of the Central Bank of Nigeria (CBN) to increase minimum capital base of MfBs. He however averred that the N200 million capital base stipulated for Unit MfBs is far more than what MfBs in rural areas need for their operations, while also calling for ways to curb loan default. Excerpt:

By Providence Emmanuel

HOW would you assess the MfBs subsector this year especially now that we are in the last quarter?

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The microfinance activities are robust especially as the CBN just imposed another round of recapitalisation on the industry. That means that the industry is growing. You would recall that there were MfBs that were not doing well before now. We commend the CBN for publishing those names so that they can know who is who in the industry. The recapitalization drive of the CBN puts the minimum capital base of a Unit MfB at N200 million, State MfB at N1 billion and National MfB at N5 billion, this is a welcome development.

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We the industry players are proud to say that we have touched lives and the microfinance bank sub sector is growing. Look at an industry that had a total paid up capital of less than N100 billion eight years ago, now increased to nearly N600 billion, such a thing is commendable. We must commend the CBN for what they are doing because it is a step in the right direction.

At a point, N25 billion was imposed on the commercial banks, it shows that the industry has come to stay particularly the way we have touched lives. Presently we are the only sector that is touching lives because we give out loan. The microfinance bank sub sector has come to stay in the sense that we have deposit insurance for products we offer. I can boldly tell you that the confidence in the sector is growing unlike before. The only sector that has been able to improve lives is the MfB sub sector. We are working on new products such as housing loan, which was never in existence before.

How is the new minimum capital requirement going to impact financial inclusion?

Again, we should not be seen not to be growing. CBN puts the figure of unbanked populace at 36 million, there must be a way on how to bankrole and support CBN in this drive. However, it is debatable in the sense that some MfBs in the rural area do not need N200 million. The essence of microfinance is for social mission, which is to touch lives and improve the standard of living of the people and be able to give people that need this money to do business outside the sustainability aspect.

That is a double bottom-line, if you put the two together, that is what we call the double bottom-line approach. Some people would complain and you cannot blame them for complaining because an MfB in the rural environment does not need N200 million. The CBN knows that we are going to review this matter all together because I don’t understand the essence of slamming N200 million on MfB in the rural environment. All the people need is N100, 000 or N200, 000 loan but again, I can tell you that the step taken by CBN is commendable.

What are the expectations going forward?

The people in CBN are knowledgeable enough to know that    when you bring out a policy, such policies are debatable and subject to stakeholders meeting, industry watchers and a whole lot of inputs. The input here would be all encompassing but I can tell you, it does not end here. We made recommendations sometime ago, that N20 million is too small for an industry to operate with. In my own bank, we have over N100 million as shareholder’s fund as a Unit MfB, but everybody cannot be in that category.

What we want the CBN to do is that they need to enact more laws so that when you give money out, people would return it back. A lot of money is outside which people do not want to pay back because of the policies of the CBN. But again the microfinance bank    sub sector is still new in Nigeria, so we must commend the CBN;  it is a learning curve    for everybody but for those in the village, there is nothing wrong if they can raise the N200 million but that should not be the minimum.

We understand that after our meeting we would resolve peacefully. There are industries who do not have more than N30 million and they are doing well and touching lives of the people, what is more important is how you are able to change lives of the people, I think those are some of the growth indicators which the CBN should be talking about.