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How govt policy undermines MfBs, financial inclusion – MD Shongom MfB

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The Managing Director, Shongom Microfinance Bank, MfB, Gombe State, Mr. Richard Shehu, in this interview, speaks on impact of government policy on MfBs and financial inclusion efforts in the state as well as challenges of accessing intervention funds from the Central Bank of Nigeria (CBN). Excerpt:

By Providence Emmanuel

What is the state of MfBs in Gombe state?

There are challenges in the MfB sub sector in Gombe. At a time government issued a circular that all staff collecting salaries from MfB should move to commercial banks and this affected us and I can say that the relationship between the government and the MfBs in the state is not cordial.

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Even as I speak, some of these people want to come back to MfBs because of the kind of services we render to them, but most of the time, the state government do not want them to come to MfBs. They only welcome those that are leaving MfBs to commercial banks; this has been the challenge for us.

There is another programme on financial inclusion initiated by the Central Bank of Nigeria (CBN) in which committees were set up in every state. I told them that MfBs are located in the rural area but they said all the people should move to commercial bank and most of these commercial banks are concentrated in the state capital. You now find somebody from a far distance travelling down to Gombe to collect salary.

With this, they are not bringing financial inclusion closer to the people because of the problem of travelling a far distance to access financial services. The state government should reconsider their stand on the issue of MfBs in order to actualize their target on financial inclusion. There is need to allow MfBs to operate so that many people can get into the financial system.

What informed the state government’s decision to move staff salaries to commercial banks?

Anyway, these things depend on state governors, particularly, some have interest in MfBs so as to assist the poor, so they encourage people to open account with MfBs. But in the case of Gombe, a notice was sent within one month that their account should be moved to commercial banks.

Anyone who refuses loses his or her salary. Honestly this thing has affected the MfBs. I believe that before such decision is taken, as stakeholders, we are supposed to be informed. They are supposed to meet with us and discuss with us so that any decision they want to implement, they can implement it in a way that it would not affect us. The problem now is, people no longer have confidence in MfBs because of that movement.

What about access to intervention funds from the CBN?

They give the loan but the conditions attached are so stringent that most MfBs find it difficult to access. I think that the CBN should relax some of their conditions. For instance, when they say that 60 percent of the loan from the N220 billion Micro, Small and Medium Enterprises (MSMEs) intervention fund made available by the CBN, be given to women. This depends on the peculiarity of the communities. There are communities where women don’t go out for trading and commercial activities.

So in such situation what happens to the 60 percent? So it depends on the communities, you find some communities that are afraid of collecting loan. They are not business inclined, sometimes you have to push hard for them to collect loan. I think whenever there is a policy of this type, all the stakeholders such as NAMB should be involved so that they can seat down and look at it because the stakeholders understand the system better than those making the policy.

What is the experience of MfBs in Gombe regarding loan repayment?

During the movement of government staff from MfBs to commercial banks, we did not find it easy because most of the people that collected loan refuse to pay and so sometimes we had to  purse them. There was no due process, even till now some them still owe and we are still battling with them, although not all of them but some of them. We were able to recover some money from some of the staff that was returned back to us.

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