In this interview, Managing Director, Molusi Microfinance Bank, Ijebu Igbo, Ogun State, Otunba Bayo Ogunbanjo, stressed the need for further clarification on the recapitalisation in the ‘Unit’ category of Microfinance Banks, MfBs. He also gave an assessment of the sub-sector in 2019. Excerpt:
By Providence Emmanuel
WHAT is your assessment of the MfB sub-sector especially in this last quarter of the year?
MfBs are now doing better especially in the area of e-banking. Many MfBs are connecting to Interswitch and doing digital banking. Many are now connected and some that are not are working hard to make banking seamless. Our credit portfolio has grown; the level of financial inclusion have improved with the new policy of the CBN that every branch of an MfB must attract 45 new customers every month. The National Association of Microfinance Banks, NAMB, has just established a private company registered as Microfinance Development Company Limited, to enhance inter-MfB financial intermediation while it will also act as lender of last resort to any MfB that have liquidity challenge. We are moving forward but the issue we are facing now is the issue of recapitalization, which would be effective from April 2020 and would be terminated by April 2021.
The MfBs are mandated to meet up with the new capital requirement for this period which spans over two years. The Unit MfBs are divided into types 1 and 2. Type two are those in the less banked area while Type one are those in the densely populated cities. We are waiting for the CBN policy framework on whether we can have branches if we want to convert to a Type 1 bank with N200 million, from a Type 2 bank. What would we be doing with all that money when the CBN has not told us whether we can have branches? What is the essence of having N200 million and sitting in the same place. But with the policy framework, the CBN should be able to tell us how many branches we can establish and from there we can know where we are going. Molusi is not a bank that should stay in one place, we have the financial muscle, but until the CBN comes up with the policy framework of the new recapitalization, we cannot go beyond our limit because we don’t want to be fined for contravening regulatory policy.
How feasible is the CBN target of 45 new customers per branch of MfB?
Although I am a Muslim, but the Bible says,“If you ask for three things and God grants you one, you should be thankful”. If the CBN has set the target and they said it is an examining issue, in three months, the impact is going to serve as a feedback, so they would see if it is realizable or not and then, they can come up with another figure. Some banks would meet up and some may not, but since they will get feedback, they will be able to set a realistic target. You do not expect the CBN to say 10 new customers in a month, that would mean condoling indolence, but by the time they run it for six months or more, they would have come up with a realistic target.
In what ways has your bank impacted its host community?
When we were establishing Molusi Community Bank in 1995 before we transformed into an MfB, the place was desolate, but the coming of our bank opened the environment. The bank has brought so many people out of poverty. We gave as low as N1000 or N1500 as loan back then on daily contribution (esusu) to bread sellers.
One of them today, now owns a very big shop and is also living big. Civil servants, primary and secondary school teachers bank with us. We have enhanced quality of life and impacted positively on the community where we operate. We do corporate social responsibility; we have sunk borehole to enable the community get quality water. We have trained over 300 students sent to us on industrial attachment from the higher institutions around us.