MFBs look offshore to beef up capital




Following the liquidity crisis that has crippled operations of microfinance banks (MFBs) in the country, operators are looking offshore to beef up their capital. This formed part of the recently released 10-point plan to revitalise the sector by the national executive council of Nigerian National Association of Microfinance Banks (NAMB).


One of the central components of the plan is to strengthen ties with developmental institutions, donor agencies and foreign MFBs that would take the form of bilateral visits, meetings, conferences and exchange programmes. More so, the plan includes the creation of an emergency endowment fund for banks to use during critical emergencies. Interestingly, some financial firms in conjunction with foreign investment companies are already coming into the Nigerian microfinance sector to meet their needs.


To this effect, BusinessDay Media Limited and Africa Capital and Business Support Limited (ACBS) over the weekend, held the first Annual Master Class for MFBs and Microfinance Institutions (MFIs) at Transcorp Hilton, Abuja. The theme of the two-day conference was “Options for Recapitalising MFBs and institutions” – it included Cooperative Trust Funds, Tractorisation Programme, GloProf Trust Fund, and Warehouse Receipt Financing.


Speaking on the conference, Benjamin Aduli, vice-chairman, ACBS, said the objective was to discuss in details how the entire microfinance industry could recapitalise efficiently. “If you look at the most of the recapitalising programmes that government and the CBN have, none of them address the need of microfinance banks. The bailout by the CBN was never addressed to microfinance banks, the AMC that is going on now do not address the needs of microfinance banks. “Several funds that the CBN has created for Small and Medium Enterprises (SMEs), textiles and so on, none of them is addressed to microfinance banks,” he disclosed.


On that perspective, he stated that MFBs on their own were not having anybody focusing on providing solutions for them, as far as access to capital was concerned, and “what we are doing therefore is helping the microfinance to identify different ways they can access capital to grow.”Meanwhile, ACBS has secured funding, totalling $400 million (N60 billion) for MFBs in the country. The funds were provided by Mainsail Trading Limited (Dubai) and secured with bank guarantees from Suisse Bank plc, a private bank based in the United Kingdom.


Against the backdrop of growing call for increase in capacity for MFBs, operators are seeking new financing options. This perhaps is coming on the heels of speculations that the CBN is making moves to increase the share capital of MFBs to N100 million, especially for those in the urban areas, and N20 million for those in the rural areas. Presently, MFBs are operating with N20 million share capital, for unit microfinance banks and N1billion for state microfinance banks.


According to Mathias Omeh, national president, NAMB, although, the CBN had not come out with a specified increase, but “it is believed it is still consulting with stakeholders and may come up with a new policy guideline at the end of this quarter.”


Meanwhile, Lagos State Microfinance Associations recently announced its move to bail out members from drowning by establishing an intervention fund.Olutayo Adenekan, chairman of the association, believed that the association had come to the realisation that the contribution of MFBs toward the fund might not be enough to make meaningful impact, rather it was planning to mobilise funds from outside the country as well as from private individuals.


“Some people and organisations have already shown interest, but they want us to register the fund first,” he stated.






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