By Amaka Abayomi

Despite the global financial crisis, there has been increased foreign investment in microfinance sector globally, both in debt and equity, and this has quadrupled to over $13bn globally.Indeed, microfinance investing has become the flagship of the rapidly growing impact investment movement and the Nigeria’s microfinance sector is not left behind as there have been major foreign investments in sector in the past year.

Notable among them are Netherlands-based Oikocredit, which recently opened shop in Nigeria; Germany-based BANK IM BISTUM ESSEN has just concluded preliminary steps to investing through Enugu-based Umuchinemere Pro-credit Micro Finance Bank Nigeria (UPMFB); while the World Bank Micro, Small and Medium-scale Enterprise (MSME) project being executed by the Nigeria Investment Promotion Council (NIPC) through some microfinance banks.

The foreign investments in the sector are expected to bring about a remarkable change in the microfinance landscape and reduce the cost of doing business and reduction in poverty, especially with the BANK IM BISTUM ESSEN and Oikocredit investing 150 million euros and 30 million euros respectively in the sector

For Mr. Tor G. Gull, Managing Director of Oiko Credit International, investing in the Nigerian microfinance sector would enable it extend financial assistance to those MFBs that need it.

He explained that Oikocredit’sexpansion to Nigeria reinforces its long-term development strategy to increase support and investment in microfinance institutions, agricultural cooperatives and small and medium enterprises across Africa.

Having worked with more than 592 MFIs in 80 countries to reach over 20 million people worldwide for the past 36 years, Oikocredit’s investment in Nigeria is certainly coming at the right time as most MFBs are hindered by lack of funds.

Also recently,a 2-man delegation of the BANK IM BISTUM ESSEN,led by the CEO, Heinz-Peter Heidrich, met with UPMFB management team with the aim of collaborating with the bank on investment and partnership in the microfinance sector.

Explaining that they are impressed with UPMFB’s books, BANK IM BISTUM ESSEN’s Director, Foreign Clients/Sustainable Investment, Mr. Michael Sommer, said, they want to invest in Nigeria’s microfinance sector through UPMFB with the aim of fighting poverty and increasing their business portfolio.

Sommer said having invested in Latin America, they are interested in investing in and building long term business relationships in Africa, with Nigeria as their first entry point of contact in Africa.

Meanwhile, the Federal Government/World Bank Micro, Small and Medium-scale Enterprise (MSME) project executed by the Nigeria Investment Promotion Council (NIPC), with some MFBs offers assistance through the issuance of performance or prospecting grants, as well as helping business development service providers in Lagos, Abia and Kaduna states.

.Speaking on the success of the scheme, Executive Secretary of NIPC, Mr Mustafa Bello, said the pilot project of the World Bank and the Federal Government has recorded marked improvement in skill development for SMEs as the engine of economic growth, adding that the project has, so far, exceeded its initial target of building capacity for 20 Business Development Service providers with the goal of impacting on 1,000 MSMEs.

With an initial target of supporting 2MFBs in financial literacy and access to finance, the MSME Project has, so far, offered technical and financial support to, at least, 5MFBs in the country among whom are Accion MFB, AB MFB, Susu MFB,Microcred MFBand the Development Finance Department of Oceanic Bank.

For the Nigeria’s microfinance sector to be able to attract more foreign investors, there has to be transparency on the performance of benefitting microfinance banks. This is because in a more difficult and competitive market environment like ours, foreign investors need to more carefully assess the capacity of fund managers, their commitment to social performance, and the quality of their investment processes.