Nigeria: 2011 in retrospect, Microfinance Banks Score Sector high

Jan 2012
Abuja, Nigeria, January, 02 2012 - Despite the shaky start of 2011 due to the tsunami that engulfed the microfinance sector in the last quarter of 2010, which led to the liquidation of 103 microfinance banks (MfBs) by the regulatory bodies, MfB operators have rated their efforts at providing access to finance and enhancing financial inclusion above average, saying these were signs that they are on the right path.

Highlights of 2011 include the release of the revised operational framework for MfBs by the Central Bank of Nigeria (CBN), chief of which borders on the increase of minimum capital base by 500 per cent from N20 million to N100m and state MfBs by 100 per cent from N1billion to N2billion.With the deadline for meeting the new minimum paid-up capital at December 31, 2011, the increase is part of the reform package for the CBN.

Besides the prudential requirements, MfBs are expected to make compulsory investment in treasury bills, maintain specific liquidity ratio, capital adequacy ratio, fixed assets/long-term investments, and maintenance of capital funds, amongst others.

In its bid to ensure that MfBs remain relevant to the development of the Nigerian economy, operators witnessed intense and continuous capacity programmes embarked upon by the CBN, the National Association of Microfinance Banks (NAMB) and some state chapters of association.

According to the CBN, the aim of the capacity programmes is to equip operators with the necessary knowledge and skills required to run a profitable institution.

Also, loans and advances disbursed by MfBs in the first half of year 2011 increased by 23.8 per cent to N65.5bn, as against N52.9bn recorded at end-December 2010.

According to the Economic Report for the first half of 2011 released by the CBN, MfBs’ total assets and liabilities increased by 9.9 per cent to N187.2bn,  while their paid-up share capital and shareholders’ funds increased by 7.2 and 7.8 per cent over the levels in December 2010 to N44.5bn and N47.4bn, respectively.

Investible funds available to the microfinance sub-sector amounted to N17.7bn, compared with N8.8bn at end-June 2010, the report said.

For operators, these have helped to restore confidence of their customers which resulted in the stability being experienced in the sector.

Rating MfBs’ 2011 performance above average, the Chairman, NAMBLAG, Mr. Olufemi Babajide, said some measures undertaken by the association helped instill accountability and financial responsibility in members.

“2011 was the beginning of the re-organisation of the sector because it was the year started to reap the benefits of our investments in the sector.

“The sector suffered from severe image laundry, but I thank God that is behind us and the regulatory bodies are beginning to listen to us and take us serious.

“That aside, 2011 has been a good year as MfBs in Lagos State disbursed over N29bn to more than one million customers. We now have microfinance interbank lending aimed at supporting each other.

“MfBs can now breathe easy with the registration of the NAMBLAG Trust Fund to serve as a lender of last resort us by providing short, medium and long term funds for MfBs so as to avoid liquidity shocks, complement the efforts of the CBN, facilitate our growth and forestall the recurrence of license revocations by the apex bank.

In agreement is the General Secretary, NAMBLAG, Mrs. Clara Oloniniyi, who attributed the successes achieved to the better understanding of the market by operators.

“2011 has been good and stable because we now have a better understanding of the market. After overcoming the challenges of 2010, we have settled and are restoring the lost confidence of the public who are begging to benefit from patronising us.”

Attributing the level of stability experienced in the sector to the various capacity building programmes operators underwent, the Managing Director of Moneycom MfB, Mr. Olusola Olubode, urged operators to be particular about focused lending.

“MfBs fared better in 2011 and were more stable due to the various capacity building programmes we underwent as they helped the reorientation of a lot of us. I urge us not to rest on our oars but be particular about focus lending as there is need and relevance for MfBs to know who to lend to.”

For the Assistant General Secretary, NAMBLAG, Mr. Ken Iweha, “though 2011was challenging but members, especially the executives, have been proactive. The picture of the microfinance concept is getting clearer and we expect some efforts of 2011 to materialise in 2012.”

But despite the numerous challenges and successes operators in the sector may have encountered and achieved, one thing they agree on is that 2012 would be a year of reaping the benefits of the hard work of 2011.

Source : Vanguard

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