Fresh licensing will strengthen microfinance sub-sector – Stakeholders

By Stanley Opara

Wednesday, 20 Oct 2010

Stakeholders in the microfinance sub-sector have said that the plan of the Central Bank of Nigeria to issue fresh licences to shut microfinance banks that meet recapitalisation conditions will strengthen the sub-sector.

They said the move would address lapses that had prevailed in the system and further drive the growth of the sub-sector.

The CBN had said on Monday that it might issue fresh licences to 36 out of the 244 microfinance banks, whose licences were recently revoked if they recapitalised.

The Head, Corporate Affairs, CBN, Mr. Muhammed Abdullahi, had said the apex bank would not restore revoked licences of MFBs that met its conditions, but would issue fresh ones.

In this light, the first National President, Association of Senior Staff of Banks, Insurance and Financial Institutions, Mr. Olusoji Salako, who spoke to our correspondent on Tuesday, said over the years the microfinance sub-sector had seen a lot of set-backs which remained a function of the industry‘s structural framework.

He said, ”There are a lot of loopholes in the industry; and some microfinance banks are not even licensed.”

Salako, however, said operators should not be afraid to submit themselves for assessment and re-incorporation, adding that they would be the ones to enjoy the benefits in due course.

The ASSBIFI boss agreed that there would be immediate challenges in the implementation of the exercise, but explained that in the long-run, the industry would have been fortified with the right institutional framework, which would make it stand the test of time.

”This is because we have to get things right from the basics again. That is what the CBN is doing,” he stated.

However, the President, National Association of Microfinance Banks, Mr. Matthias Umeh, who also spoke to our correspondent over the telephone, said the apex bank was not in any way making a mistake in its bid to ensure a healthy microfinance sub-sector.

According to him, being the regulator, the CBN knows what is good for the industry and will get necessary support from players to realise the aspiration.

Umeh said, ”For us, over the years, the CBN has been nurturing the sector and telling us what to do and not to do. Now, we don‘t believe that the CBN is making a mistake.”

The CBN recently said it had communicated with the Nigeria Deposit Insurance Corporation to put on hold the closure process of some microfinance banks with recapitalisation claims pending when the combined team of the CBN and NDIC would go to those banks and verify that what they claimed was true.

Source: Punch 


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