The Nation Newspaper

Tag: microfinance bank

  • FirstBank sells its microfinance bank

    FBN Holdings Plc, the holding company for FirstBank of Nigeria (FBN) and its former subsidiaries, has concluded arrangements for the sale of the group’s microfinance subsidiary-FBN Microfinance Bank Limited, to Letshego Holdings Limited.

    Letshego, a Botswana company, is  a holding company with consumer and micro lending subsidiaries across nine countries in Southern and East Africa including Botswana,  Kenya,  Lesotho,  Mozambique,  Namibia,  Rwanda,  Swaziland,  Tanzania  and Uganda

    In a regulatory filing obtained at the weekend signed by FBN Holdings’ company secretary, Tijjani Borodo and head of finance, Oyewale Ariyibi, the group said it has obtained the requisite approval from the Central Bank of Nigeria (CBN) for its divestment from FBN Microfinance Bank.

    FBN Holdings has executed Sale Purchase Agreement (SPA) with Letshego Holdings Limited to sell its shares in FBN Microfinance Bank to Letshego Holdings.

    “We expect that the sale will be concluded before the end of the current financial year,” the group stated, referring to its business year ending December 31, 2015, within the next 24 days.

    FBN Holdings’ holding company structure allows it to own and operate the microfinance bank. Central Bank of Nigeria (CBN)’s Scope of Banking Activities and Ancillary Matters No 3, 2010 requires banks to fully concentrate on core banking functions. The new model requires banks to either sell all non-core banking businesses or form a holding company to hold such non-core banking businesses including activities such as insurance, asset management and capital market operations.  Three banks including First City Monument Bank (FCMB) Plc, First Bank of Nigeria (FBN) Plc and Stanbic IBTC Bank Plc then opted for holding company structure while others opted to divest from non-core subsidiaries.

    FBN Holdings’ share price declined by 1.80 per cent to close at N4.90 per share at the weekend, playing the negative contrarian stock in a market with modest average gain of 0.26 per cent.

    Head, Media & External Relations, FBN Holdings Plc, Mr. Babatunde Lasaki, in a response to The Nation’s enquiry said the divestment was part of the a strategic intent to refocus the group.

    He said the board of FBN Holdings decided to divest its interest in FBN Microfinance Bank to a strategic investor on a going concern basis.

     

  • Microfinance Bank: Untapped window of foreign direct investment

    Nigeria in the last 18 months has battled the sharp drop in foreign exchange inflow following the fall in crude oil price and the unhealthy general global economic outlook.

    The development among other things in recent times forced the Central Bank of Nigeria (CBN), to adopt some monetary policy measures to safeguard the nation’s foreign reserves and remain economically viable within the committee of nations’.

    Some of the proactive measures include a stop in accessing foreign exchange from the official market for the importation of about 40 items, among other things.

    JP Morgan, an international economic rating agency also raised its concerns about the nation’s foreign exchange liquidity profile among other things and threatened to delist Nigeria bonds from the emerging market bourse.

    Although the CBN has reassured Nigerians on the nation’s strong economic fundamentals, Mr Alex Enyinnah, Vice-President, African Microfinance Transparency (ATM), said the concerns were unfortunate.

    The concerns raised about Nigeria’s foreign exchange liquidity profile, Enyinnah argued, would not have arisen if attention was paid at the other potent sources of earning foreign exchange outside crude oil.

    In a fresh voice towards diversification, Enyinnah said that Microfinance banks and institutions remains one of the newest and potent vehicles for attracting added new foreign inflows.

    According to Enyinnah, who is also the Director of Programmes, at Grooming People for Better Livelihood Centre, a microfinance institution, Nigerians have failed to effectively buy into the global trend of empowering micro-businesses, youths and women.

    “Our late entry in the multi-dollar global business of empowering micro-businesses, entrepreneurs’, poor representation and interaction at international microfinance banks and institutions meetings robbed us of huge foreign inflows.

    “We initiated the policy in microfinance banking some years back but the operators refused to take advantage of the international convergence of financers to attract foreign funds through direct equity participation, loans and grants for microfinance banks and institutions,” Enyinnah said.

    The ATM Vice-President also insisted that Nigeria’s huge population of 170 million leveraged the nation in attracting investments targeting the empowerment of the rural poor, women and micro and small entrepreneurs’.

    While insisting that microfinance banks and institutions can attract more than 300 million dollars, geared toward poverty alleviation, he also floated a caveat that would make global financers to cavort and shift attention to Nigeria.

    According to the Grooming Centre director of operations, “Nigeria will only benefit from the pool of global funds, if operating microfinance banks and institutions internalise international micro-banking best practices and develop its micro-banking human capital.”

    Expanding the submissions of Enyinnayah, Grooming Chief Executive Officer, Mr Gowin Nwabunka, said microfinance banks in Nigeria must develop peculiar strategies of meeting the needs of micro and small businesses.

    The strategies, as suggested by Nwabunka, must be driven by a vision and mission that understands and appreciates micro and small businesses in Nigeria.

    According to him, the recent growth of microfinance banks and institutions operations in Nigeria, especially in the urban centers, makes it imperative for operators to define standards and establish code of operational conduct or ethical standards.

    Nwabunka insisted that contrary to other opinions, transparency and shared confidence between the masses and microfinance banks provides major link to economic growth, food security, youths and women empowerment.

    The other gains of microfinance banks in an emerging economy like Nigeria, he said, are robust health provisions, education and general well-being.

    But the unresolved issues surrounding the poor management of most microfinance banks and institutions in Nigeria, Nwabunka also said, challenged Grooming Centre into bridging the gap through capacity building and strategic operational development.

    To him, “our added mission as a microfinance institution is to prepare and reposition interested  microfinance banks to attract the attention international finance organisations.’’

    • Egbunike writes for News Agency of Nigeria (NAN)

     

     

     

  • Surge in MfBs fraudulent e-mails, says CBN

    Surge in MfBs fraudulent e-mails, says CBN

    •Customers get N4.3b refund

    FRAUDULENT e-mails in the microfinance bank sector have been on the increase, the Central Bank of Nigeria (CBN) has said.

    The apex bank said the sector recorded and processed 10,845 e-mails on various financial crimes.

    The crimes, which include cheques knitting, forging of banks’rubber stamps, letter headed papers, and signatures of the managing directors of the over 700 microfinance banks were committed in the past few years.

    Other Financial Supervisory Institutions Department, CBN Examiner, Mr David Adelana, disclosed this during a conference organised by the National Association of Microfinance Banks (Southwest Zone) in Lagos.

    He said the crimes were mainly advanced fee fraud.

    He delivered a paper entitled: Frauds and forgeries in microfinance banks: causes, detection and control.

    Adelana said the number of fraudulent cases reported against the banks fell by 3,433 from 5,960 in 2010 to 2,527 in 2011. He said the number of complacent cases recorded and treated was 1,526 in 2010 as against 1,800 in 2011.

    He said the refund to customers was N4.3billion in 2011, as against N2.2billion in 2011, adding that the apex bank has put in place institutional frameworks to check sharp practices in the industry.

    He divided the perpetrators of the criminal activities into three groups, namely internal, external and mixed. He said the internal group relates to the financial crimes committed by the staff of the banks, while the external group has to do with non-staff of the banks, while the mixed group includes the staff and non-staff of the banks.

    According to him, CBN has organised capacity building programmes for the management of the banks to prevent undue exposure to risks. He said the banks have been directed to provide measures that would prevent poor management of funds and further check unwholesome practices.

    He said: “We have said it times without number that banks must tightening control on dormant accounts. Dormant accounts should be transferred to the table of the managing directors of the banks, and not information and technology (IT) among other ordinary members of staff to prevent manipulation. To ensure firm control of dormant accounts, the managing directors and the IT section should be allowed to have access to dormant accounts in the banks.”

    On cheques knitting, Adelaja said its becoming harder for fraudsters to succeed because the system of transactions has improved considerably.

    “Cheques knitting cannot fly again because the system has gone 3+3 and 3+2 transactions. Based on this, it would become difficult to manipulate the transaction process and made away with the bank’s money,” he added.

    Also, the Chairman, National Association of Microfinance Banks (NAMBs), Mr Olufemi Babajide, said the association was aware of sharp practices people were committing in the name of the banks. He said cases abound where people forged the signatures of the managing directors, the logos, letter-headed papers among other documents of the banks to get visas.

    “On the issue of people approaching embassies with forged documents of the banks to get visas or conduct any other transactions, we made our positions known on it. What we agreed is that the statements that are being taken to the embassies must bear the original signatures of the managing directors of the banks. The names of the MDs must be handwritten. We have advised the embassies, among other agencies to confirm the identity of any statement brought to them in the name of MFBs,“ he said.