CBN, MFB operators’ disagreement keeps new guideline on hold


WEDNESDAY, 07 JULY 2010 01:11


Failure of the Central Bank of Nigeria (CBN) to keep to its promise of evolving a new policy guideline for microfinance banks (MFBs) by the middle of this year, which just ended, could be attributed to its inability to reach a compromise with MFB operators over new increase in capital base.


One of the operators in Lagos, who pleaded anonymity, for instance disclosed that there has been an argument between the CBN and microfinance operators over the increase in share capital for urban MFBs to the tune of N100 million, while noting that it is too high.


The new capital base represents about 400 percent increase compare with the last one, which was N20 million for unit MFBs. The CBN’s argument, according to the operators, is that there are not much active poor in the urban areas, as a result, those who want to operate under low capital base should go to the rural areas and set up MFBs with N50 million share capital.


Meanwhile, operators are showing more interest in the release of the new policy guideline, saying since the CBN has given them between now and December 2011 to increase their capital base to N100 million, then what do they need the new policy for?


However, Olutayo Adenekan, chairman, National Association of Microfinance Banks (NAMB), Lagos State chapter, the delay in the release of the new policy guideline has no impact on the sub-sector because it is better to come up with a holistic and good policy framework than to release a hastily formulated policy that can bring confusion into the industry.


Adenekan believes that there is no delay in the release of policy guideline because the CBN is taking time to consult with stakeholders on the policy framework, noting that “the CBN wants to make sure the policy guideline is okay and stakeholders are involved,” he states in a telephone conversation.


Also in a telephone discussion with BusinessDay, Mathias Omeh, president, NAMB, states the CBN has not come out with a specified increase but that it is still consulting with stakeholders and may come up with a new policy guideline at the end of this quarter.


It could be recalled that at a recent meeting with managers of the National Poverty Alleviation Programme (NAPEP), Joe Alegienu, the CBN’s director of development banking, disclosed that the apex bank was developing a framework to regulate microfinance banking in the country.Alegienu said the decision to create a new framework was because microfinance banking had failed in the fight against poverty as a result of the proliferation of commercial bank operators masquerading as microfinance operators.


The new microfinance banking policy framework was expected to become operational by June this year. However, the CBN will soon publish an operational template that would serve as a guide on how MFBs are going to do business.


According to him, “we do not want a situation where the microfinance banks that were established to support the fight against poverty among rural people are allowed to turn into a monster that would consume the people. We will soon publish an operational template that would serve as a guide on how microfinance banks are going to do business. It is time to tell those not qualified to do the business to stay away”.






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