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CBN’s parallel National MfB against microfinance principles – Operators

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By Providence Emmanuel

MICROFINANCE Bank, MfB, operators have condemned plans by Central Bank of Nigeria, CBN, to establish National Microfinance Bank, saying it is against one of the principles establishing the industry. Also, the operators challenged the CBN to make public, names of MfBs who secured the intervention funds and defaulted.

The CBN recently said it will collaborate with NIPOST to establish a National MfB which will commence operation in January 2019 to address the concerns around the several intervention funds that are lying idle in its vaults.

CBN Governor, Mr Godwin Emefiele, disclosed this while speaking at the 10th annual Bankers Committee retreat, saying, “Today, the CBN has N220 billion that is set aside under the Micro Small and Medium Enterprise, MSME, fund. We have over N60 billion sitting in CBN and why should that money be sitting in CBN and just earning Treasury bill rates. It is meant for the MSMEs and for the weak in our economy.

“That was why we voted last week at the Bankers’ Dinner, that a national MfB would kick off by January 2019. “We have called on NIPOST and they have agreed to join us in this. They would provide their facilities in 774 local governments and this would be their own contribution by way of equity into the establishment of the bank. We would provide the infrastructure and this MFB would be available in 774 local government across the nation.”

Reacting to the development, Managing Director, Global Initiative Microfinance Bank, Mr. Valentine Whensu, said that the CBN exists as a regulator and an enabler, adding,  “there are 12 principles of MfB, one of it says that government should be seen as an enabler and not an operator. Suddenly, they have forgotten those principles and decided to set up a national MfB.

“Let’s start with the N220 billion earmarked  for MSMEs, can they tell us how many MfBs defaulted. You would likely not see. Why, because our treasury bills are used as collateral, CBN has that as back up. “For me, I collected the fund and paid as at when due, I requested for another and never got it. If the CBN claims MfBs are not disbursing the money the way they want, then they should tell us how many MfBs they disbursed money to and publish those that did not pay. You will hardly see one or two.

“Let us do a check and see how MfBs in Nigeria are being regulated and compare with other clime and see what is obtainable in places such as Bangladesh, Kenya. Some people come to us believing the money is government money, what is the CBN doing as campaign to create awareness, they are not doing it and so these people do not understand that these money are meant for developmental purposes. They leave us to our self and they are claiming we are not disbursing.

“MfBs are in this industry for business, we are set up for two things, the social and the financial. The financial must be there and strong before you can do the social. But if you are coming up with a hard bargain for financial, then social would not exist.

“If they are complaining that MfBs are charging high interest rates, we have bases to compare. What is the problem of Nigeria, two things are established, access to finance, when there is finance so many things would be in place, today, if the federal government work and ensure that there is power, things would be easy for everybody.

“Microfinance is a sub sector in a financial sector. Any country that seeks to develop in this world must not joke with the SMEs because it is from the small that the  big comes. Some of our graduate complain of unemployment and so many of them have intellect to produce, they need as low as N100,000 to produce but they cannot get such money  except from the MfBs.

“They set up the MfB and promised  in the policy direction that they are going to partner and ensure that most of the government intervention pass through this MfBs. But what we are seeing now is the setting up of specialised banks like Development Bank of Nigeria, DBN and if you want to collect money from development bank they will go on air and tell people that they routing their money through the MfBs. Meanwhile, to access money from the DBN today, you have to sign a 61 to 70 pages agreement. Why will I give what I do not have. And they want me to give it to the people at the bottom end, who cannot sign even one page,” Whensu said.

Another operator who spoke on condition of anonymity, said that the national MfB is not a welcome development and that it was intended in bad faith, stating: “Everywhere in the world, government has no business in microfinance bank, whoever is encouraging them to establish that bank is not helping them. They taught  us according to their principle number eight and I quote: “The job of government is to enable financial services not to provide them directly, government can almost never do a good job  but they can set a supporting policy environment”

“They are our regulators, what does the law states? The law says don’t be caught stealing, it is the bible that say don’t steal. If you are caught stealing there is punishment for it. If the CBN has given money to somebody who did not do well, what about those who did excellently well? What the CBN has done is to lump all MfBs together.



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