Nigeria: 450 Microfinance Banks Set to Emerge

Dec 2007
Lagos, Nigeria, December, 04 2007 - By January 1, 2008, only 450 out of a total 700 community banks across the country would operate as Microfinance Banks to cater for the needs of the micro, small and medium-scale enterprises, the Central Bank of Nigeria (CBN) said yesterday.

He said as at end of last month, about 407 have already been given licence to open and commence business along side four non-governmental organizations (NGOs).

Oni said by the December 31, 2007 deadline, the remaining 250 community banks that are unsuccessful would have their licences revoked by an exit strategy that is being worked by the CBN and NDIC. This he said was in order to create a soft-landing for the institutions and instil confidence in depositors.

THISDAY however gathered that the CBN and NDIC may adopt the Purchase and Assumption option in resolving the case of failed institutions just like they did for the failed banks.

According to Oni, "as at November ending 407 microfinance institutions had been approved by the CBN. By the end of the exercise, about 450 institutions would have scaled through out of a total of 700. This means that about 250 institutions may not make it come December 31, 2007.

"Out of the 250, a very large number (over 150) have actually closed down prior to the launching of the policy. So, we are looking at very few institutions to know those on ground so that we would see how we can come in to ensure that depositors' fund are protected."

Oni who was represented by Deputy Director, OFID, Mr. Olufemi Fabanwo, disclosed already about 150 community banks out of the 250 that are unlikely to meet the deadline have closed down even before the commencement of the consolidation exercise in the sub-sector.

He however assured of CBN's commitment in ensuring that depositor's funds in the remaining institutions are protected.

"The CBN and NDIC are working out an exit strategy for these institutions in a way that we will not hamper depositors confidence;" he said.

Oni, who was represented by the Deputy Director OFID of the CBN, Dr. Olufemi Fabanwo, said that the CBN would commence a certification programme for operators and regulators in the first quarter of 2008.

The programme, he explained, will help them to upgrade the skills of operators in the industry.

"All licensed microfinance institutions will undergo a certification programme within the next three years. This is to ensure that the programme is self sustained and driven by credibility and professionalism on the part of the institutions selected to drive it. The supervisory board of the programme would be headed by the CBN," he added.

The certification programme, he said, was aimed at establishing high standard for the certificate, benchmarked on international best practices and training curricula.

Commenting on corporate governance in the sub-sector, Oni stressed that the CBN would adopt zero tolerance in ensuring that the issue of insider abuse, which was common with the community banks, does not arise.

"Management must be suitably qualified, experienced, competent, committed and certified microfinance practitioners. MFB should operate in line with commercial principles, best MF practices and high accounting, auditing and MIS standards. Compliance with the code of good corporate governance," he said.

Source : All Africa

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