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It is being speculated that the Central Bank of Nigeria (CBN) would be coming up soon with a holistic review of microfinance policy framework, which was established in December 20005 and reviewed last in April 2011.
It is still a proposal, according to Tokunbo Martins, director, other Finance Institutions Directorate (OFIsD), CBN, who said the exact new requirements are yet to be finalised.
This review will see microfinance banks operating capital being increased from the current level. The sub-sector is currently categorised into three types of license – Unit MfBs with N20 billion capital requirement, State MfBs with N100 million and National licence MfBs with N2 billion operating license.
Operators want the CBN to amend this policy in terms of segregating those operating in the rural areas from the urban areas.
There are about 1008 microfinance banks operating in the country. Lagos, Nigeria’s commercial hub accounts for 197 MfBs, the highest as of 2017.
Based on geopolitical zones, the North East with just 42 MfBs has the least number of MfBs in the country. The South-South region with 112 MfBs has the second lowest units of microfinance banks in the country. The North West has 133 MfBs; South East, 177 MfBs; North Central, 182 MfBs and South West, 362 MfBs.
Other States include Edo with 21 MfBs, Katsina 23, Anambra, 81; Abuja, 60; Oyo, 56; Ogun, 51; Kano, 47; Imo,43; Delta, 36; Niger, 34, Osun, 32 and Abia State with 19 microfinance bank.
Microfinance banks notably are faced with a lot of challenges which are not limited to infrastructural inadequacies, human capital, and social misconception among others.
“Another thing CBN needs to do is to segment the sector by putting it by region based on their developments. For instance, if you want to run a Microfinance bank in a developed state or region, a certain amount should be tagged to it because the amount a unit MFB will rent an office space in Lagos, for example, will be quite different from the amount someone will rent it in Ibadan that is much more rural in terms of location. So someone in a rural area can comfortably run with a N20 million capital base”, Akintunde Adeniyi, managing director/CEO, Solid Allianze Microfinance Bank, said in an interview with BusinessDay.
Some of the requirements of any stable Microfinance bank include a stable technology, a sizeable office space; specific minimum numbers of customers and staff to run with, among other minimum requirements to operate a unit MFB. “It’s absolutely impossible to run with those numbers of infrastructure with just N20 million” Adeniyi added.
Rogers Nwoke, president, National Association of Microfinance Banks (NAMB), said the CBN should look at the entire MfB model and define a Unit MfB in terms of those operating in the rural and urban areas.
This, according to the operators, would strengthen them to focus more on their mandate of delivering quality financial service to low income earners.
Emeka Osuji, lecturer, School of Management and Social Sciences, Pan Atlantic University, had written, that “for the MFBs to help in achieving the objectives of the policy framework, there is need for some review or overhaul. This review should not focus only on the operators but also on the regulators.
Sometimes we see policy review as a way for policy-makers to make life harder for operators. This should not be the case. In fact, policy reviews should aim at simplifying complex procedures and removing ambiguities. Any review of the microfinance policy should aim to enhance the capacity of operators for compliance and hence, to deliver while ensuring they focus on their mandate”.
HOPE MOSES-ASHIKE
