The Managing Director, Busu Microfinance Bank, MfB, Niger State, Mr. Gana Caleb, in this interview, said it will be impossible to achieve the nation’s financial inclusion goal if MfBs are excluded from various intervention funds and policies to support micro businesses. Excerpts:
By Providence Emmanuel
WHAT is your assessment of MfBs in the northern part of Nigeria, especially in respect to the new minimum capital requirements?
Actually it has not been easy, this recapitalization thing is like a threat from Central Bank of Nigeria, CBN, to us. But I think the CBN should look into the Unit microfinance banks and re-categorize them into two such as rural and city microfinance banks.
There are MfBs in remote areas, getting to where they are is difficult and they expect them to recapitalize with N200 million? It is on the high side and I can tell you such amount is like a threat to us.
How are you managing insecurity in the microfinance bank business?
We thank God that in our area we are very safe in terms of security, we are in the North Central; particularly, we are in Bida, though not Bida town but very close to it. So Bida is a bit safe in terms of security.
What is your experience in terms of loan repayment?
In terms of loan repayment, what we do is that we ask anyone applying for loan to look for somebody who is collecting salary with our bank to sign as a guarantor. If the person refuses to pay or settle before the due date, then we quickly hijack the salary of the guarantor to offset the loan.
How do you want some of the challenges confronting the subsector to be addressed?
For the agric loan, there are situations where we give out the agric loan and there was rain, definitely there is going to be challenges because to get that money back would be very difficult. Already you have given them the agric loan and at the end of the farming season may be there was excess rainfall and probably flood came and destroyed their farm or there was less rain as expected, automatically there would be problem because it would be difficult to get the money back.
Another thing is the low deposit level, a lot of people think microfinance bank is a place where you can walk in and get money, so their aim is to open account today and get the loan today and it doesn’t work that way. They don’t believe microfinance bank is a place where you can come and make deposit they believe in opening account and getting loan, once they open that account and you are unable to give them loan immediately, they will turn back and you will not see them again. These are the challenges that we always face.
What can be done to address this attitude?
First is the issue of recapitalization, it is one of the biggest issue, the banks that are not strong and you are asking them to recapitalize with N200 million, that alone is a big threat. For instance, I do not see how it would be easy for us to raise such money in our own place of operation here. Also, the MSMED (Micro, Small and Medium Enterprises Development) fund that was given by the CBN, some MfBs were excluded. We didn’t get it and there were conditions given by the CBN and to meet such conditions is no joke. If they are to follow that condition, I don’t see any Unit MfB accessing that fund because those conditions are too stringent for us.
If you look at our customer base and the nature of environment we operate, you can count more than 100 villages surrounding us and majority of the people there are farmers and small business people. They need loan to do well in their business but to access fund is another problem because we do not have money to give to them. If the federal government really wants to help the poor, those intervention funds are supposed to be channelled through the MfBs. There are so many ongoing programmes; most of the money is even being channelled through big banks while microfinance banks are excluded.
They are talking about financial inclusion, how is that possible when the MfBs are not carried along. I heard about a programme in our place in which they gave farmers all the farm inputs and money and all these money were collected through the big bank. If they really want to help the farmers or come down to support the grassroot, those money are supposed to be channelled through the MfBs. You cannot talk about financial inclusion or talk about including the poor when MfBs are not included but excluded.
There are people in our area of operation that cannot go the big banks, due to so many buttons that they would have to press to gain entrance, so they prefer to come to MfBs. How do you want somebody who cannot go to the bank to be financially included? For them to be financially included, then all the funds must be channelled through MfBs which is in their communities.