Microfinance Bank susceptible to high spate of distress, failures – CBN

By Odunewu Segun

The Central Bank of Nigeria has said the Microfinance Banks subsector is highly dominated by a high spate of distress and failures with many institutions, particularly unit MfBs, technically insolvent or inactive resulting in business closure.

Director, Other Financial Institution and Supervisory Department (OFISD) Central Bank of Nigeria (CBN) Mrs. Tokunbo Martins, disclosed this at the just concluded second annual two-day professional seminar organized by the National Association of Microfinance Banks, Lagos State Chapter (NAMBLag) in conjunction with CA Compuconsult &Associates with the theme: ‘Strategic Options for Sustainability of Microfinance Operations in a Challenging Environment.’

Martins who was represented by Deputy Director, OFISD, Mr. Bassey Ekpo, advised MfBs to consider the provision of digital financial services through the use of Fintechs as a possible strategic options adding that embracing technology must be preceded by identifying and understanding the risks and followed by adequately managing the risks.

“This will require collaboration with IT service and software providers, telecommunication companies,” she said. On the seminar, Martins said that more training and seminars across the country will drive significant improvement in the operations of MfBs given the quality of knowledge impacted during the trainings and seminar.”

“This will further lead to well run and sustainable MfBs that would contribute positively to the Nigerian economy and help drive financial inclusion and reduce poverty.”

“What is clear is that recession is the manifestation of fundamental and structural weaknesses in the Nigerian economy characterized by the country’s over-reliance on crude oil export as a major source of foreign exchange earnings, high import dependent and weak productive base, among others.”

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“Financial institutions have a critical and facilitating role to play in this regard through the provision of a variety of financial and ancillary services. This is particularly so for OFI’s such as MfBs given their objectives and mandates. However, to effectively play this role, the MfBs need to be safe, sound and viable and to be able to engender public trust and confidence”, she said.

Also, Chairman NAMBLag, Mr. Omololu Fatunbi, said that the two days seminar is in furtherance of the NAMB vision to build capacity building and support members business. Fatunbi who explained that it is working hard to meet up with the BVN deadline for MfBs,

“For NAMBLag, we are working to meet the CBN deadline for August 1, BVN registration of our customers through the collaboration with NIBSS. We have deployed five BVN machines to registers our customers in Lagos even though the deadline appears very aquiline.”

“The MSMEDF has not been fully being accessed by our member banks, quite a number of our applications for both fresh and renewal are still awaiting approval even after 10 months,” he said.

Dignitaries at the seminar include: Erstwhile President, NAMB, Mr. Valentine Whensu; Managing Director, Hasal Microfinance Bank, Mr. Rogers Nwoke; Mr. David Adelana and Mr. Ekpo, both from OFISD CBN Lagos; Mr. Fatunbi; among others.