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Tag: MFB

  • Service vulnerable people, CBN urges MFB

    Service vulnerable people, CBN urges MFB

    The Central Bank of Nigeria (CBN) has urged operators of Micro-finance institution to devise strategies to accommodate vulnerable groups, such as women, youths and disable persons in the design of their financial products.

    It said the apex bank is already collaborating with stakeholders such as Lift Above Poverty Organisation (LAPO) on producing a road map for the provision of financial inclusion services for people Living with Disabilities (PLWD) in the country.

    Governor of CBN, Godwin Emefiele,  made this known in Benin-City while delivering a keynote address during the 2015 LAPO Institute’s annual conference with the theme, ‘Microfinance Development and Challenges of social inclusion in Nigeria,’

    Emefiele who was represented by CBN Director, Development Finance, Olaitan Mudashiru, said the roadmap would entail ease of access to financial service providers, supportive transaction processes and service channels.

  • Recapitalisation: MfBs’ funds hit N173b

    Recapitalisation: MfBs’ funds hit N173b

    Microfinance Banks (MfBs) paid-up capital and shareholders’ funds have risen to N173.45 billion, the Central Bank of Nigeria (CBN) has said.

    Its Deputy Governor, Financial Sector Stability, Dr. Joseph Nnanna, made this known in the Financial Stability Report released at the weekend.

    He said the increase in capital was due to the recapitalisation of MfBs which upgraded from Unit to State MfBs and State to National MfBs.

    He said the funds increased by 13.48 per cent and 7.37 per cent to N82.44 billion and N91.01 billion  at the end of December last year, from N72.65 billion and N84.76 billion, at the of end of June, last year.

    He said the total deposit liabilities and net loans/advances also increased by 0.99 and 25.80 per cent to N145.83 billion and N162.91 billion, compared with N144.4 billion and N129.5 billion, as at last June.

    He explained that the improvement in the operations of MfBs was attributed to the impact of the CBN’s initiated Microfinance Certification Programme (MCP) for the boards and management of MfBs, and the growing acceptance of the microfinance banking model.

    Reserves, he said, however, decreased by N3.5 billion to N8.6 billion at the end of last December, from N12.1 billion at the end of last June, no thanks to increased loans.

    The bank chief said the apex bank collaborated with development partners and other stakeholders to establish a unified application (Core Banking System) for the MfB sub-sector.

    The proposed unified platform, and the Rural Financial Institutions (RUFIN) project for online rendition of electronic returns by MfBs, he added, is expected to facilitate accurate and prompt rendition of statutory returns.

    He said in the review period, 289 candidates completed the Microfinance Certification Programme (MCP), bringing the number of certified operators to 2,882 at last December.

    The certified operators are spread over 632 microfinance banks, representing 71.5 per cent of the sub-sector.

    The number of primary mortgage banks (PMBs) increased to 42  by December last year, from 40 at by last June, as two dormant PMBs were reactivated following their recapitalisation.

    “National PMBs remained at 10 at end of December 2014, while State PMBs increased to 32 from 30 at the end of June 2014,” he said.

    Nnnanna said the CBN extended the deadline, from last June 30 to last December 31, for some PMBs that are recapitalising. However, the total assets of PMBs decreased by 5.97 per cent to N389 billion at the end of last December, compared with N413.7 billion at the end of  last June.

    “However, their paid-up capital, deposit liabilities and loans/advances increased by 51.78, 35.33, and 22.18 per cent to N121.69 billion, N703.74 billion and N133.02 billion, at the end of December 2014. Aggregate reserves declined by 74.53 per cent, from N94.61 billion to N24.10 billion, while shareholders’ funds increased by 35.95 per cent, from N107.24 billion to N145.79 billion at end-June 2014,” he said.

    Continuing, he said: “There were 3,538 Other Financial Institutions (OFIs) in Nigeria at the end of December last year, compared with the 4,220 licensed institutions at the end of June last year, representing a decrease of 682 institutions (16 per cent).

    “The change was attributed to the net effect of the exit of 733 Bureaux De Change (BDCs) owing to their inability to meet the recapitalisation requirements, the licensing of 54 new OFIs (51 MfBs and three Finance Companies (FCs); and the revocation of two MfBs licences during the review period.

    “The total number comprised six Development Finance Institutions (DFIs), 42 Primary Mortgage Banks (PMBs), 903 Microfinance Banks (MfBs), 64 Finance Companies (FCs) and 2,523 Bureaux de Change (BDCs).”

    He said the total assets of the sub-sector increased by 23.2 per cent to N1.69 trillion at the end of December, last year, from N1.37 trillion at the end of June, last year. The total paid-up capital, however, decreased by 0.36 per cent to N444.8 billion at the end of December, last year, from N446.4 billion at end-June, last year, while the total net loans/advances increased by 58.03 per cent to N1,048.5 billion at end December 2014, from N663.5 billion at end-June 2014.

    Total deposits decreased by 22.81 per cent to N357 billion as at last December, from N462.5 billion last June.

  • NASSI mulls micro-finance bank

    NASSI mulls micro-finance bank

    Operators of small scale enterprises and industries in Nigeria, acting under the aegis of Nigerian Association of Small Scale Industrialists (NASSI), are considering setting up their own Micro-Finance Bank (MFB) to get round their challenge of lack of access to finance, The Nation has learnt.

    The Association’s National President, Chief Chuku Nwachuku, said in the next couple of weeks, NASSI would be asking for investors so that it can have its own micro-finance bank in every local government area of the country.

    He said the MFB would grant loans to NASSI members at a friendly interest rate instead of the prevailing rate of between 25 and 30 per cent interest rate. “How do you expect a deposit money bank with shareholders funds to give you interest of nine per cent, for instance, instead of their prevailing interest rate of 25 to 30 per cent?” he asked.

    While describing the N220 billion Micro, Small and Medium Enterprises (MSMEs) fund put in place by the Federal Government through the Central Bank of Nigeria (CBN’s) as a serious and commendable intervention, he expressed regrets that the problem with the fund, like similar funds in the past targeted at the sub-sector, is difficulty in accessing them.

    “That (N220b MSMEs fund) is a serious intervention. But the problem with funds like that, and over the years we have had so many funds like that in place, is that you cannot access them. So they remain a mirage. And this N220 billion has continued to be a mirage. That means you can’t touch it,” he said.

    He said a memo that came up at the first meeting of the National Council on Micro, Small and Medium Enterprises chaired by Vice President Namadi Sambo was access to finance, and that the Vice President realised there and then that a big chunk of the problem small scale industrialists are having is how to access finance.

    “The CBN guideline as published makes it impossible for anybody to access that fund. That is what happened to all kinds of funds that is domiciled with the CBN and other government agencies. Nobody can access them,” he lamented.

    Nwachuku, a  former Director-General of National Directorate of Employment (NDE) however, said the VP in his right thinking set up a sub-committee with NASSI as a member, and together with Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), CBN, Bank of Industry (BoI), and Bank of Agriculture (BoA), NASSI is trying to find a practical approach on how entrepreneurs can really access the fund.

    The NASSI boss however, argued that rather than put such intervention funds in the hands of government agencies, the best thing is to get the funds directly into the businesses to create employment.

  • N220b MSMEs fund: MfBs, finance houses shun loan over collateral

    N220b MSMEs fund: MfBs, finance houses shun loan over collateral

    Microfinance Banks (MfBs), finance houses and Designated Non-Financial Businesses and Professions (DNFBPs) are not drawing from the N220 billion Micro Small and Medium Enterprises (MSMEs) fund because of stringent drawn-down policy of the Central Bank of Nigeria (CBN).

    An insider in Finance Houses Association of Nigeria (FHAN) expressed the group’s challenges in drawing from the fund.

    The source said CBN’s demand that borrowers provide 100 per cent near-cash cover in treasury bills or fixed deposit has made it difficult for any finance house operator to draw from the fund three months after drawn-down started.

    The source said there was no point providing total coverage for loans and still lend according to the CBN’s directive.

    “The demand that borrowers provide 100 per cent near-cash cover on loans is unacceptable. As I speak with you, no finance house operator has drawn from the loan because the CBN cannot force people to invest in treasury bills or keep fixed deposits because they want to borrow,” the source said.

    The source claimed that as the situation is now, only commercial banks are meeting the drawn-down policy and are accessing the loans, a practice, he said, defeats the objective of setting up the fund.

    Part of the CBN’s policy guideline on the loan requires 80:20 ratio for on-lending to micro enterprises and Small and Medium Enterprises (SMEs) and request that 60 per cent of the fund, representing N132 billion, be earmarked for providing financial services to women-owned businesses were said to be reviewed in the final guidelines concluded at last week’s meeting with stakeholders.

    There is also a clause that participating financial institutions can only finance agricultural value chain activities, trade and commerce; cottage industries, artisans, among others.

    The banking watchdog said to ensure that productive sectors of the economy continued to attract more finance necessary for employment creation and diversification of the country’s economic base, a maximum of 10 per cent of the commercial component of the fund will be channeled to trading and commerce.

    CBN Governor, Godwin Emefiele said MSMEs are globally recognised as the critical engines of economic growth due to their potential to create jobs, boost production, generate income and reduce poverty.

    In spite of this recognition, MSMEs do not have the adequate financing needed to play this pivotal role in its development trajectory.

    A joint report by the International Finance Corporation (IFC) and McKinsey, the financing gap of this critical sub-sector of the country, is about N9.6 trillion as of 2010.

    The N220 billion, Emefiele said, is meant to address this gap and unlock the potential of the MSMEs  as an innovative way of improving their access to finance, shoring up their potential for job creation and enabling them reduce poverty within the country.

    Emefiele said the CBN would be committing human, material, and financial resources to monitoring both the disbursement and utilisation of the funds by the participating financial institutions. These stakeholders, he said, will be required to submit periodic returns on disbursements as well as an analysis of the social impacts of the Fund adding that the regulator will also undertake regular on and off site checks to ascertain veracity of the reports received.

    The CBN chief said while the micro-loans would be administered through private or state owned microfinance institutions, Finance Houses, and Cooperative Finance Agencies, the SME loans would be disbursed through the DMBs. State governments will be able to access up to N2 billion each for lending to eligible beneficiaries through participating financial institutions in their states.

    He said the fund is also in conformity with CBN’s resolve to create a professional and people-centred central bank that will act as a financial catalyst for job creation and inclusive economic growth.

    “While these are our ultimate goals, our main intermediate objective is to ensure that these funds get to people at the very bottom of our social pyramid at single digit interest rates. Without achieving this objective, I have no doubt that it would be impossible to achieve the ultimate goal of job creation and poverty reduction,” he said.

     

  • CBN,MfBs to meet on disbursement of N220b

    CBN,MfBs to meet on disbursement of N220b

    The Central Bank of Nigeria (CBN) is to meet operators of Finance Companies (FCs), Microfinance Banks (MfBs) and Designated Non-Financial Businesses and Professions (DNFBPs) tomorrow to finalise the guidelines for the disbursement of the N220 billion Micro, Small and Medium Enterprises Development Fund.

    The meeting, the fourth  to be held at the CBN headquarters, is meant to rejig the initial disbursement guidelines released by the apex bank after the fund was launched last year.

    Stakeholders are expected to finalise the guidelines to enable participating institutions to access the revolving loan.

    The stakeholders  met last week but could not agree on key issues,  such as allowing Deposit Money Banks (DMBs) to have access to the fund, hence tomorrow’s follow-up.

    The 80:20 ratio for on-lending to micro enterprises and Small and Medium Enterprises (SMEs) and the request that 60 per cent of the fund, amounting to N132 billion, be earmarked for providing financial services to women-owned businesses, are also being discussed.

    The clause that participating financial institutions can only finance agricultural value chain activities, trade and general commerce, cottage industries and artisans, among others, are also on table for review.

    The banking watchdog said to ensure that productive sectors of the economy continue to attract more financing necessary for employment creation and diversification of the country’s economic base, a maximum of 10 per cent of the commercial component of the fund would be channelled to trading and commerce. This clause, the source said, is also under review.

    CBN Governor, Godwin Emefiele, said at the N220 billion MoU Signing Ceremony between the CBN and participating state governments, that MSMEs are globally recognised as the critical engines of economic growth due to their potential to create jobs, boost production, generate income, and reduce poverty.

    Despite this recognition, MSMEs  do not have the adequate financing needed to play this pivotal role in its development trajectory.

    A joint report by the International Finance Corporation and McKinsey, stated that as at 2010 the financing gap of this critical sub-sector  is about N9.6 trillion.

    The N220 billion, he said, is meant to address this gap and unlock the potential of the MSMEs  as an innovative way of improving their access to finance, shoring up their potentials for job creation, and enabling them reduce poverty within the country.

  • Recapitalisation:MfBs urged to consider merger, acquisition

    Recapitalisation:MfBs urged to consider merger, acquisition

    Microfinance banks  (MfBs) yet to recapitalise  in line with the Central Bank of Nigeria (CBN) directive have been urged to seek local or international funding or go into mergers and acquisition.

    The National President of Nigeria Association of Microfinance Banks (NAMB), Valentine Whensu, told The Nation that the MfBs have been advised to merge or ask their directors for fresh funds.

    According to the CBN, MfBs are supposed to recapitalise into state and national categories. Those which are unable to recapitalise are to remain as units. To recapitalise, a unit MFB needs N20 million, state MfB, N100 million and national MfB, N2 billion.

    A unit MfB bank is authorised to operate in one location without branches/cash centres, while that of a state is allowed to open branches in the same state or the Federal Capital Territory (FCT). But a national MfB can operate in more than one state, including the FCT. It is allowed to open branches in the states and the FCT, though subject to the approval of the CBN.

    Whensu, who is also the Managing Director and Chief Executive Officer of Global Initiative Microfinance Bank, said: “So far, so good; we have advised our members who cannot meet up with the CBN directive to merge with other microfinance banks, or ask the directors to inject fresh funds. And again, they also need to look properly at their books, to see exactly what they needed to do to meet up the recapitalisation move.”

    The banker said by severally shifting the recapitalisation deadline, the CBN has shown that it is committed to the success of the subsector.

    “The CBN has been so kind with us. I just appeal to our members to meet up with these conditions,” he said.

    The bank chief said the association can only help in terms of capacity building, so as to enable operators improve their businesses.

    “A lot of us are here to ensure that operators in the MfB subsector do things right, since we don’t have funds for giving them. But I advise them to embrace international funding, where available,” he said.

    The CBN said many MfBs were deficient in their understanding of the microfinance concept. It said poor corporate governance and a high level of non-performing loans, among others, are also key challenges facing the subsector.

    According to CBN’s operational guidelines for the establishment of MfBs, they are not expected to engage in excessive spending.

    The CBN had shifted the recapitalisation deadline for the subsector by one year to December 31, 2013.

    In a circular to banks before the new deadline, CBN Director, Other Financial Institutions, O.A. Fabamwo, said it was exigent to remind directors and shareholders of MfBs that the deadline is sacrosanct.

    He, however, advised the banks to conduct due diligence and seek legal and financial advice. He reminded directors and shareholders of MfBs on the deadline for compliance with the Revised Microfinance Policy Framework, particularly on the capital requirements for each category of MfBs and branches/cash centres.

    He said henceforth, ‘customer interaction centres’, ‘meeting points’ and ‘customer service centres’, or similar outlets, located outside the registered business premises of a unit MfB shall be regarded as unauthorised/unapproved branches/cash centres if the deadline is not met.

    Besides, previous approvals for such outlets for unit MfBs have become null and void from the date of approval of the Revised Policy Framework by the Board of Directors of the CBN.

    “Also, insider-related loans shall not exceed five per cent of the shareholders’ funds unimpaired by losses. For this purpose, loans under a staff scheme shall not be taken into account. State and local government’s equity participation in MfBs is allowed under the revised guidelines to facilitate financial inclusion. However, all such investments must be gradually divested to private-sector investors within a maximum of five years.

    “In addition to the Head Office, Unit MfBs are allowed to have not more than one branch within the Local Government Area approved for their operation. This is subject to the availability of free funds (shareholders’ funds unimpaired by losses, less fixed assets and long term investments) of at least N20 million and maintenance of the prescribed minimum prudential requirements,” the CBN said in  new guidelines for the subsector.

    Many of the MfBs liquidated by the Nigeria Deposit Insurance Corporation (NDIC) ran into trouble when their debtors refused to pay back their loans, over 80 per cent of which were unsecured. Besides, some of the MfBs were taking excessive risks, and branching out too quickly without considering resources at their disposal and whether utilised funds were short or long term obligations.

  • MfB secures five million euros loan

    Fortis Microfinance Bank Plc has received a five million euro loan from the FMO, the Netherlands Development Finance Company.

    In a statement, the firm said the fund, which is a five-year unsecured term loan, would be applied for on-lending to boost activities in the microfinance sector.

    Its Managing Director/Chief Executive Officer, Kunle Oketikun said the facility would enable his organisation deliver on its core services of making funds available to small scale businesses at the least cost.

    He said: “This loan will ensure that our esteemed customers have access to finance at cheaper rates and longer tenors.”

    Chief Investment Officer (CIO) of FMO, Linda Broekhuizen said Fortis Microfinance Bank Plc is the first Microfinance that his organisation will be providing such support to in Nigeria.

    FMO is a Dutch development bank that supports sustainable private sector growth in developing and emerging markets by investing in ambitious entrepreneurs. FMO operates on the philosophy that a strong private sector leads to economic and social development, empowering people to employ their skills and improve their quality of life.

    FMO focuses on three sectors that have high development impact. The sectors include the financial institutions, energy, and agribusi-nesses with emphasis on food & water. With an investment portfolio of 6.3 billion euro, FMO is one of the largest European bilateral private sector development banks.

    Broekhuizen said this unique loan to Fortis is being provided because the firm has positioned itself to provide microfinance banking services to support entrepreneurship and the empowerment of the large unbanked population with a focus on (mostly female) micro clients and small enterprises.

    The CIO further noted: “Fortis will receive a local currency senior loan equivalent to EUR 5.0 million. FMO supports Fortis as one of the leading MFI’s in the country to further implement the client protection principles (‘CPP’) with the aim to become CPP certified. The FMO facility will contribute to further financial inclusion and stimulate the further development of financial services.”

    Oketikun said his organisation is committed to the future growth of microfinancing noting that the only thing really micro about microfinancing is in the smallness of the loans and not that the entire operations would be small and confined to a room and parlour.

    “With the introduction of mobile money, electronic banking and internet banking the services of formal financial institution will soon get all Nigerians irrespective of location,” he added.

     

  • ‘Create Microfinance Training Institute’

    ‘Create Microfinance Training Institute’

    The Nigeria Deposit Insurance Corporation (NDIC) has urged thecreation of a world class Microfinance Training Institute in the country to enhance continuous capacity building in the banking subsector.

    The Managing Director / Chief Executive of NDIC Alhaji Umaru Ibrahim, who made the call, also advocated for the incorporation of All Women Microfinance Bank (MFB) wholly owned by Women NGOs in the country, to protect the interest of small depositors and boost public confidence in the microfinance banking sub sector.

    Alhaji Ibrahim, made the call when he played host to the Executive members of National Association of Microfinance Banks (NAMB) who paid him a courtesy visit in his office, said that the NAMB request for Unit MFBs to have multiple branches and operate cash centres in local government areas of their operations was before a joint Committee which must be critically analysed and judged based on its merit. He, therefore, advised the Association to await the recommendations of the Committee on the matter.

    The NDIC boss reminded the association of the fundamental role of MFBs as grassroots business units toward enhancing financial literacy and consumer protection in promoting financial inclusion.

    He emphasized that only happy and satisfied depositors could guarantee the much needed public confidence in the banking system, saying that the NDIC had put in place 24 hour toll free Help Desk to respond to all enquiries from depositors across the country.

    Alhaji Ibrahim lamented the low level of payment of assessed premium amongst the MFBs which necessitated the need for a tripartite agreement between the Corporation, MFBs and their correspondent banks to facilitate prompt collection of premium in the subsector.

  • MfB launches salary advance scheme

    MfB launches salary advance scheme

    Lovonus Microfinance Bank Limited has launched salary advance scheme for employees of small to medium size companies to ease financial difficulties often faced before the monthly remuneration is due for payment by the employer.

    The scheme provides salary advance or instant loan to the employee, with a flexible repayment plan of one to three months, Usman Onoja, its Chief Executive said.

    He said to ensure the convenience of the employee, the salary advance is processed within 48 hours from the application or documentation, with delivery almost immediately, stressing that interest rate on the product is negotiable.

    To further deepen its customer service, the microfinance bank launched three new products recently, branded lovflex, lovflexplus and lovflexpremium. According to Onoja, lovflex is targeted at micro traders in need of N5,000 to N30,000, stressing that interest rate on the facility was cut to seven per cent per month for a maximum four months tenure while the repayment plan could be by daily or weekly contributions.

    “Lovflexplus is for traders in need of N40,000 to N70,000 credit, for a four month tenoure with interest rate of seven percent, while Lovflexpremium is for 80,000 to 100,000 loan, on four months maximum tenure, with interest rate of seven per cent monthly and repayment scheduled daily or weekly,” Onoja added.

     

    “Interestingly, our customers can access their funds from anywhere in the country. We also run mobile banking, which permits our marketers to carry mobile phones for deposit collection and lodgments into customers’ accounts. The customer gets immediate phone alert on every deposit to his account,” he said.

     

  • MfBs urged to comply with IFRS

    MfBs urged to comply with IFRS

    The National Association of Microfinance Banks (NAMBs), Southwest Chapter has advised its members to keep to this year’s deadline for the adoption of the International Financial Reporting Standards.

    The body, in a statement, said failure of the operators to adopt IFRS promptly means that they would be able to integrate into the global best practices in financial reporting and disclosure.

    According to its Chairman, Mr Olufemi Babjajide, operators will get more recognition when they fully comply with the standards.

    He said: “We would ensure that our members adopt IFRS. We have told our members to do everything possible to comply with IFRS. We said as from 2013, it would not be good enough if they fail to use the internationally acceptable standards.”

    Babajide said the motive was to enhance market discipline and preparation of accounting statements that would be internationally compatible.

    He said the apex bank had given microfinance banks up till last March to comply with the standard and that the association would begin to sensitise operators from April.

    The chairman said many operators initially thought that the adoption of IFRS was meant for only quoted companies,

    “But now, microfinance banks have been directed to comply by 2013 as no sector will be exempted,’’ he said.

    He said IFRS would be a major change for the banks because it would lead to major changes in internal systems, business processes, performance management, and external communications.