By Babajide Komolafe
Finance Houses Association of Nigeria, FHAN, has called on the Central Bank of Nigeria, CBN, to design and implement a stimulus package for the subsector.

Meanwhile, in reflection of the declining fortunes of finance  houses,  the operating surplus (excess income) Association fell by 45 per cent in the year under review.

FHAN President, Mr. Eddie Osarenkhoe said this is necessary to stem the tide of business failures and apathy in the subsector. “We make bold to call on the Central Bank of Nigeria to design and implement a unique and special ‘’stimulus package” for the subsector in order to urgently stem the uncertainty, hopelessness, apathy, and business failures in the system,’’ he said

Speaking at the  2010 annual general meeting of the association in Lagos, Osarenkhoe, he noted that the year under review has been challenging for the subsector with finance house posting poor financial result or closed shop.

‘ For our subsector specifically, the year was yet another that posed enormous business challenges in the operating environment with a good number of finance companies posting very poor financial results.

This unfortunate scenario is clear evidence that our major business challenge has been the lack of a robust regulatory and supervisory reform programme that will address the issues of the pervasive low investor confidence, and narrow funding structure, and the concomitant inability to attract and retain high managerial capacity in the system.

“‘The harsh realities of the business environment which impacted negatively on our members’ financial performance adversely impaired our income generation ability.

Consequently, our income shrunk by 15 per cent  from N 13.85 million recorded in 2008 to N 11.8 million. This was due mainly to the consolidation of all levies payable by members into one item namely subscription fees. Similarly, proceeds from our training programmes decreased drastically due to the low level participation by members.

On the reverse side, the expenditure profile decreased marginally from N 9.4 million in 2008 to N 9.3 million. This impacted negatively on the excess of income over expenditure which dropped from N 2.8 million  to N 0.5 million. On the balance sheet side, net assets grew from N 8.8 million  in 2008 to N 9.3 million.”

Osarenkhoe noted that some finance houses have not been complying with the directive of the CBN concerning mandatory membership of the Association as a condition for renewal of operating license.

‘’ We wish to note with regrets however, that a good number of Finance companies have failed to comply with this directive. Worse still, many of us have consistently failed to even apply yearly to the Central Bank of Nigeria for the renewal of their operating licences as required by regulation. Most also have since abandoned the rendition of the various statutory quarterly reports to the bank as and when due.

The combined effect of all these infractions is that the operating licences of the affected companies — which are held at the pleasure of the apex bank, and which are deemed lapsed due to these issues, can be withdrawn by the bank without recourse to them’’.