The Nation Newspaper

Tag: MFB

  • MfBs seek assistance to recapitalise

    MfBs seek assistance to recapitalise

    Microfinance Banks (MfBs) are  seeking the support of Federal Government and Development Finance Institutions (DFIs) to meet Central Bank of Nigeria’s (CBN’s) December deadline on recapitalisation.

    Speaking with The Nation, the Managing Director, Support Microfinance Bank, Sunny Akahmiorkhor, said majority of the MfBs were not able to recapitalise because there was no support from the government.

    According to the CBN, they are supposed to recapitalise into the following categories: state and national. Those which are unable are to remain as units.

    To recapitalise, a unit MFB needs N20million, state N100 million and a national MfB N2 billion.

    He regretted that though the 2005 MfB framework set by the CBN requires state governments and local governments to contribute one per cent and five per cent of their yearly budget to MfBs’ operations, this is not being implemented.

    He said the government’s non-commitment to the operations of MfBs have made it difficult for leading DFIs, such as the International Finance Corporation, International Development Bank, and Department for International Development (DFID), to commit funds to them. He said DFIs are expected to give grants to MfBs to fund their operations.

    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 microfinance banks, 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.

     

     

  • MFBs await launch of intervention fund

    MFBs await launch of intervention fund

    The plan of the Central Bank of Nigeria (CBN) to launch Microfinance Banks (MFBs) intervention fund also known as Micro Small Medium Enterprises (MSME) fund this month is causing discontent among operators, who are awaiting the launch.

    CBN has fixed this month for the launch of the fund to ensure re-financing of the sub-sector of th economy and on-lending to the poor, but economically active poor. But, the apex bank did not give a specific date, prompting operators to conclude that the proposed launch of the fund may not take place.

    The Nation gathered that operators are no longer taking the apex bank serious on this since they have on several occasions been disappointed with moves to strengthen the sub-sector via making funding available to them. They argued that CBN has been showing a lacklustre attitude to financing the sub-sector.

    A managing director of a microfinance bank-based in Lagos, who spoke on condition of anonymity, said the operators have not been briefed on when and where the launch would take place.

    “Up till now, we have no inkling as regards arrangements for the launch of the fund. We have tried and persuaded CBN to release the N54 billion microfinance development fund, but to no avail. We have on several occasions been told that the banking watchdog would release the fund, but nothing has been done. They said the fund would be released towards the end of last year, nothing was done. At a time, we were told the fund would be released early this year. It is still the same old story. While waiting for this fund, CBN announced the introduction of a new funding scheme late last year at microfinance banks conference in Abuja,” the source said.

    Other operators said the issue has raised their expectations because they need the fund badly. They said whether the fund would be launched or not is a question begging for answer from the CBN because no specific date was given by the apex bank.

    Meanwhile, the Chairman, National Association of Microfinance Banks (NAMBs), Southwest, Mr Olufemi Babajide said the sub-sector is under-funded in the country. He said there is need for CBN to provide a bail out for the sub-sector as it has done for the commercial banks after the CBN/Nigerian Deposit Insurance Commission (NDIC) joint examination of the banks in 2009.

    He said inability of MFBs to mobilise capital has hindered the banks from achieving the its objectives.

    Chairman, King Solomon Microfinance Bank, Mrs Angela Adegboyega, advised the CBN to make funds available to MFBs.