By Providence Obuh, Vanguard President of the Association of Micro Entrepreneurs of Nigeria (AMEN), Prince Saviour Iche attributes the high rate of unemployment in the country to poor funding of Micro Small and Medium Enterprises (MSMEs). In this interview, he urges State Governments to release the Industrial Development Centres (IDC) in their... 

By Providence Obuh, Vanguard

President of the Association of Micro Entrepreneurs of Nigeria (AMEN), Prince Saviour Iche attributes the high rate of unemployment in the country to poor funding of Micro Small and Medium Enterprises (MSMEs). In this interview, he urges State Governments to release the Industrial Development Centres (IDC) in their state for industrial development. He said the Central Bank of Nigeria (CBN) should do a critical check on the activities of Microfinance Banks.

What is happening in AMEN?

Presently the industry is not doing well, we are in the third month and the budget has just been passed, the industry is stagnant because the governments who are suppose to encourage local manufacturers with incentives are not doing so, knowing the importance of the industry and that is why unemployment is on the increase.

If the industry is doing well, unemployment will reduce and anytime you see high rate of unemployment, it shows that the industry is not doing well. The amenities that will make the local manufacturers active are not there, no power and there is no way you can run an industry without power, no matter how small it is.

Are you saying that budget implementation contributed to the slowdown in the industry?

In some countries, everybody is eager to listen to the budget, because it is important for the economy of a nation. If the budget can be implemented, then the problem of Nigerians would be less. They are budgeting billions of naira in the industry but we have never seen anything, we are still at zero level.

Power supply has improved, why complain about power?

If a country like Ghana can celebrate one year uninterrupted power supply, why are we celebrating three days power.. I run generator for my business and use N4, 000 worth of diesels per day, if you multiply four thousand daily for 26 working days, it is enough to pay salaries, is enough for me to buy equipments to help the industry. The issue of power should be a universal issue and not some having while others do not, we are all in the same country.

What do you want to achieve in the first quarter of this year

We want to sensitise more Nigerians on the need to own their businesses and be self employed. The only issue we have is the issue of finance, we have soap, cream, name it, it is an insult for a nation like Nigeria to import water, toothpick, little things that we can do and save the foreign exchange.

Our product do not sell much in Nigeria, they make wave outside than in the country. Some people bought our product from hawkers and took it to Spain, last week they sent somebody from Spain to come and buy that product. We have customers from Spain, South Africa, Ghana and Sierra-Leone who come to buy.

If government can encourage MSMEs, the likes of Dangotes will spring up in numbers. Let government raise money for us to industrialise Nigeria, if Nigeria must achieve vision 2020, the micro sectors must not be neglected or the vision will be a mirage

Have you ever met with any of the Ministries and what is the outcome of the meeting?

I seek audience to meet with them and they have written to us for a meeting, up till today nothing, I believe after they read some of my interviews on the papers they quickly call for a meeting but that meeting has never hold till date. it is easier to borrow money as a small business person from the commercial banks than the Bank of Industry (BOI)

We can beat the Asians in technology, the brains are there but we are financially handicapped. There is no business that can grow without money. We are calling on the CBN Governor to look critically into the activities of microfinance banks. I have one MfB account which I left a long time ago, they still charge me till day, the little money I have, I left it and they still charge me per month. This is what we are facing and if nothing is done, there may be problem because unemployment is on the increase.

I have 45 workers on my payroll but over 80 applications are waiting on my table. Check the ratio, employment 45, 80 applications waiting, even for a remote area like Ijegun.

What result has the one million man march produced and the achievements?

The one million man match is a huge success, after the match, youths are coming up, seeing the vision of one family one product, and the need to be self employed. Most Nigerians working for foreign companies remain casual workers, they are not permanent.

We have line up plan for 2013, the match we did last year was in Lagos, we intend taking it all over the Federation.

The problem most of our members are facing is finance, we are soliciting for fund, we have been given the IDC centre at Ikorodu, there are so many things we need there and it is a plus for us. We appeal to Governors of other state to release the IDC centres in their state because IDC centres have been converted to private use instead of the original plan, which is for industry. Let us come and revive the industries in your states.

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By Godfrey Okpugie, Nigerian Guardian Managing Director/CEO, FirstBank Micro Finance Bank (FBNMFB), a subsidiary of First Bank Plc, Mrs. Pauline Nsa, in an interview GODFREY OKPUGIE examines the various challenges facing microfinance business in the country. What are the objectives of introducing the Micro-finance Banks (MFBs) in the country and... 

By Godfrey Okpugie, Nigerian Guardian

Managing Director/CEO, FirstBank Micro Finance Bank (FBNMFB), a subsidiary of First Bank Plc, Mrs. Pauline Nsa, in an interview GODFREY OKPUGIE examines the various challenges facing microfinance business in the country.

What are the objectives of introducing the Micro-finance Banks (MFBs) in the country and have the objectives been realised so far?

Basically the reasons the Central Bank of Nigeria (CBN) introduced MFBs was to create opportunity for micro entrepreneurs i.e. small business owners to have access to loans. In the time past, this set of people never had opportunity of getting finance from the commercial banks.

The micro business owners also need finance like their big business owner counterparts. The only difference is size. So what we are looking at here is financial services that are smaller in sizes compared to those ones that can be accessed through the commercial banks.

The CBN launched the micro finance policy guidelines in 2005 to address those finance gaps that were created in the micro businesses sector, which could not be filled by the commercial banks. These comprise of unstructured businesses that are not well organised like the corporate ones.

In addition, the microfinance system was also designed to attract funds outside the banking system into the sector.

On whether the objectives have been achieved, it is said that Rome was not built in a day. It is wrong to say that the microfinance sector has not had the desired impact.

Well, we can say we have not had the type of impact that one would expect. But again, we believe that over time, that impact would be felt.

This is because the formal micro finance sector is relatively new compared to the informal microfinance, which has always been there since time immemorial. For instance, the alajo and esusu types of finance have always been there.

The formal microfinance that was introduced in 2005 has not had the impact that is as high as one would expect. Like any new thing, there have been challenges and we believe that with time, give it another 15 years, the impact would become obvious. This is because both the operators and the CBN are trying to make the new system work.

How will the impact be felt in future when a large number of the MFBs are closing shop now? And by the way, what do you think is responsible for the failure of those that have gone under?

When the microfinance policy guideline was launched in 2005, the CBN directed the defunct community banks to convert to microfinance banks. At the time this policy came out, many of the community banks were already on the verge of collapse because they were not doing too well. What many of them simply did was to raise fresh capital to convert to MFB.

Before they changed, what needed to be put in place in terms of development of the industry and building capacities were not done. All they did was to raise capital to embark on the newly introduced MFB. Issues like training and how to run the operations of the new MFBs were not done. What then happened was that the fresh funds, which the operators of community banks raised to embrace MFBs also went the same way their funds in community banks did.

A lot of them had their capital funds eroded by bad loans. They operated along the same old line they did when they were community banks. They ran their activities like commercial banks instead of facing those individual customers in the small businesses.

However, though many of them failed, some also survived and those that did are still offering services to their clients even till now.

Also, a set of new ones has come on board. We believe that these new ones will learn from the mistakes of those that failed and then do better businesses to ensure survival.

How has scarcity of funds and high interest rate impacted on MFB operations in the country?

Worldwide, microfinance interest rate are not determined by regulators like CBN or constituted authority. The reason is that microfinance business is expensive. It is expensive because if a commercial bank has N5 million, it can lend such fund to one customer. But if a microfinance bank has the same amount it can lend it to more than 100 clients.

After giving the loans to such large number of customers, it will need to administer it; and to do so; it needs to engage many staff. Beyond that, the microfinance bank also needs infrastructure too like accommodation, light, water, transport, computers etc.

If the loans are given out at four per cent per month, how much do you think that will amount to in a month that the microfinance bank will realise enough profit to meet all the various expenses associated with the loans? That is one reason the interest rate charged by MFBs is high.

Secondary, most MFBs had issue of capital. With N20 million capital base of a one unit MFB, how long will that sustain a business in Nigeria where a concern has to provide its own generator, water, security etc? In such a tough operating environment, capital employed in the business will be used up within a short time.

This made most MFBs – in order to remain in business – to go out to source money at very costly rates. That translates into the interest rate that they charge because they need to charge high to be able to pay back the loans and make small profit to remain in business.

But when you look at the target clients of the MFBs, the high interest rate is not really an issue. The issue is whether they will have access to finance because their transactions are short term.

What kind of businesses do the micro entrepreneurs do with costly loans in an environment such as Nigeria that the cost of funds is not an issue to them?

In fact, MFB clients do not complain about high interest rate. The issues have always been those of access. Some of the customers are involved in trading – commerce mostly.

(Cut in) not manufacturing?

No! Not manufacturing? You know that manufacturing is a different issue altogether. Most of our customers are involved in trading especially, financing of LPOs. However, a small percentage of them is involved in businesses like small time agriculture, pure water business and other small time cottage industries.

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By Florence Udoh, Leadership Mr. Godwin Ehigiamusoe is the Managing Director and Chief Executive Officer of LAPO, a development and microfinance organisation operating in Nigeria and Sierra Leone. In this interview with FLORENCE UDOH, he speaks on the challenges and issues concerning microfinance banking in Nigeria. What are the factors that led... 

By Florence Udoh, Leadership

Mr. Godwin Ehigiamusoe is the Managing Director and Chief Executive Officer of LAPO, a development and microfinance organisation operating in Nigeria and Sierra Leone. In this interview with FLORENCE UDOH, he speaks on the challenges and issues concerning microfinance banking in Nigeria.

What are the factors that led to the establishment of LAPO?
Let me begin from the socio-economic background. The prompting for the establishment of Lift Above Poverty Organisation (LAPO) could be ascribed to a number of factors. First was my ideological orientation as a young man. My years in university in the late 1970s coincided with the period of national enthusiasm and the desire to make Nigeria the greatest nation.

At the beginning of the decade we came out of the civil war strong. In 1975, we had a very charismatic leader in the person of Murtala Mohammed and Nigeria was at the forefront of the final de-colonialisation of Africa with massive support for liberation movements in Southern Africa.

Nigerians were excited and universities were centres of movements for a better Nigeria. This was the time I was in university. In conjunction with others, I devoted much time beyond my studies to sensitising the students who were obviously potential elites on how to make the nation greater through adequate attention to the condition of life of the poor.

The second factor was my involvement in the cooperative movement. My exposure to the cooperative movement began with my vacation job at the Cooperative Department in Benin City in 1980. I instantly believed, as I still do, that properly organised, cooperative societies are veritable institutional structures to improve the condition of members of low-income households, particularly in rural communities.

The final and perhaps immediate factor was the economic crisis in the early 1980s which culminated in the implementation of the Structural Adjustment Programme (SAP) in 1986. The effect of the programme was harsh on the people. That was the setting when I initiated LAPO as a non-profit organisation in the late 1980s in Ogwashi-Uku, now in Delta State.

How did it began?
LAPO began as a simple act. In the parish where I worshipped, I gave N100 each to three women, Felicia Monye, Monica Igwubuike and Obiageli Nwoko. At a major market in Ogwashi-Uku, in the evening of every market day, I would move around to collect repayment of N10 per installment.

It grew steadily. With steady repayment, a loan capital of N300 reached more women within a few days. The pace of development and the essential features of LAPO were influenced by my contact with the Grameen Bank of Bangladesh in 1989.

How did you get in touch with Grameen Bank of Bangladesh?
It was quite interesting. I read about Grameen Bank in Business Times, a Nigerian business paper which I doubt is still on the newsstands. Reading about Grameen Bank doing what I was doing was quite fascinating. I wrote a few lines to Dr. Muhammad Yunus as he was then known, highlighting what I was doing, but there was a problem with posting the letter.

In the features article on the bank in the Business Times, there was no street address. I simply addressed the letter to Dr. Muhammad Yunus, Dhaka, Bangladesh. Fortunately, a month or so later, I received a response with pamphlets and local newspaper cuttings on Grameen Bank. I was requested to forward a photocopy of the feature article on the bank as published in the Nigerian business paper, which I did.

In addition, I wrote to thank Professor Yunus for his response and documents and requested funding support. The letter was published in one of the early editions of the Grameen Dialogue, a newsletter of Grameen Bank. Fortunately for me, a Programme Officer at the West Africa office of the Ford Foundation, Frank Hicks, subscribed to the newsletter.

He read the letter and requested a meeting in Lagos. That was how the Ford Foundation provided the first external support for LAPO in July 1991. When LAPO won the Grameen Foundation’s Award for Excellence in Microfinance in 2006, we felt it was fitting to dedicate it to the Ford Foundation, and we gladly did.

The early years of the organisation were both challenging and exciting. Here I was, a young idealistic man brimming with ideas and with the grant support to implement the ideas. I felt it was the best thing that could ever happen to me. In addition, I had the fortune of attracting hardworking young men and women who, with little skills in microfinance (none had any such skills in Nigeria then anyway), were fantastic and highly committed.

We made our mistakes, we corrected them and here we are today. The unique thing about LAPO is that it did not start as a project of any international development agency. Perhaps LAPO is one of the very few microfinance institutions, if not the only one in Africa, which was not an international project but successfully scaled up to be what and where it is today.

Is LAPO still a non-profit organisation?
Let me correct one issue. LAPO as a pro-poor development organisation did not transform into a microfinance bank. What happened was that in 2010, the organisation set up a microfinance bank and transferred the bulk of its microfinance operations to the new institutional vehicle. LAPO as a non-profit organisation is still involved in the provision of a range of social and economic empowerment services, particularly in rural communities.

We came under regulation because we are convinced that the future and development of microfinance is in an appropriate and enabling regulatory environment. There were some misconceptions in a particular case, mischievousness about borrowers making deposits into the loan fund from which they take loans. This was and is a feature of traditional and non-profit thrift and credit schemes in rural Nigeria and indeed West Africa.

Let us look at the performance of LAPO. What will you consider as its achievements?
The achievements of microfinance institutions, like any poverty-reduction interventions, are usually at two levels. In terms of service delivery, such as how many people are benefiting and the volume of services delivered, and second is the impact on the beneficiaries.

In terms of outreach and services, we have succeeded in creating a sustainable and regulated financial institution which provides a range of flexible financial services to a large number of people. LAPO’s client base rose from 355, 502 in 2010 to 518,187 in 2011, an annual growth rate of 46 per cent which is remarkable in a challenging environment, especially at a time when most microfinance institutions globally are recording negative growth.

The client base rose to 593,111 in May 2012. The volume of loans disbursed to clients has also grown remarkably. LAPO disbursed N13 billion, about USD 83 million, in 2009. This rose to N21.9 billion in 2010 and N31.58 billion in 2011. This is an average growth rate of 56.5 per cent. We target N50 billion as disbursement in the current financial year. This is an achievement when one considers the fact that the average loan size does not exceed N50,000. As a regulated financial institution, we also provide savings opportunities for our clients.

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By Oluwakemi Ajani, Nigerian Guardian Edward Akinlade is Managing Director of Prolific Micro finance Bank in Ogba, a suburb of Lagos. He is also Chairman of Suru Group Ltd, an organisation that is involved in hospitality services, real estate and construction services. In an interview with OLUWAKEMI AJANI, he spoke on challenges facing micro finance... 

Khartoum – The African Insurance Organization (AIO) selected the chairman of the Association of the Sudanese Insurance & Reinsurance Companies; Hassan Mohamed for the chairmanship of its current session 2012. The Sudanese Capital Khartoum hosted the 33rd meeting in (27-30 May) at the Friendship hall with a wide international and regional... 

Khartoum – The African Insurance Organization (AIO) selected the chairman of the Association of the Sudanese Insurance & Reinsurance Companies; Hassan Mohamed for the chairmanship of its current session 2012. The Sudanese Capital Khartoum hosted the 33rd meeting in (27-30 May) at the Friendship hall with a wide international and regional participation from insurance and reinsurance companies and concerned bodies in many countries. SUNA interviewed the chairman of AIO Mr. Hassan Mohamed to shed light on the future of Micro insurance in Africa:-

Q: What are the main topics that tackled in the Conference?

A: The conference focused on the opportunities and challenges of the Micro Insurance in Africa. All African countries adopt these methods to reduce poverty and to create small productive societies, which support to increase the level of per capital income in the African societies. Thus the role of insurance is so important to provide means of finance for those weak sectors.

Q: What about the work papers of the participants?

A: The conference discussed many work papers that reviewed some successful experiences (Sri Lanka and other states). The representatives of the states exchanged views and opinions to create an African compound of Micro Insurance and to support each other in strengthen this kind of insurance, what decrease the suffer of the African people

Q: What are the kinds of participating in the conference?

A: About 52 states from worldwide participated in the conference including UK, Germany, Australia, Shelly and states of the Middle East. The participants’ number from outside the country was more than 500 and from inside was about 200 people.
Unfortunately, most African states don’t know more about Sudan despite we have a pioneered role in these fields. Sudan was one of the founding members of A I O, which had been established in 1972. While we participate with 2 companies including 30 companies, but we didn’t get the chance of hosting the annual meeting until this year.

Q: What are the important features of the conference recommendations?

A: The main recommendations of the conference are to support the finance and Macro Insurance as the principal factors of alleviating suffering of the people and to establish an African Institute of Insurance in Sudan, particularly the International University of Africa based in Sudan achieved great success as there are 5 000 African student, what will facilitate the studying, researches and training activities of the new -borne institute.
“Another recommendations of the conference called to encourage the Takaful Insurance companies (Re- insurance companies) to open new branches in the African states, what will motivate its work, that began with only one company in Sudan and reached now to about 180 companies and expected to increase in future ” declared Hassan and pointed that in Europe there are some companies directed to open windows to Takaful Insurance due to its great benefits.

Q: What about your future plans after getting the chairmanship of AIO?

A: We will exert efforts to focus on Sudan experiences in field of Micro-insurance and the role of Association of the Sudanese Insurance & Reinsurance Companies. In addition to convene a workshop of the African Insurance Observers in Khartoum to tackle the role of the African states in promoting the finance and Micro Insurance besides Sudan will host the workshop of the International Co-operative Alliance next November to reflect Sudan experience and to encourage the concept of Micro Insurance among the African people

Q: What are the impressions of the participants in the conference?

A: It is the first visit for most of the participants in the conference. They thought that Sudan is unstable country but they were surprised when they found the security and stability of conditions in the country particularly the participants from Europe who appeared happy touring peacefully in Nile Street till late time in night and commented ” The conference was a good opportunity to change our idea on Sudan after what we heard and seen in the misleading media.
SUNA learned that Sudan received the chairmanship from Zimbabwe and the next session conference will hold in Egypt.

SOURCE: Sudan Vision

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“Sulay, the Hope Micro MIS Administrator, tests Splash Mobile Money” (image provided by Kopo Kopo) Kopo Kopo recently announced the launch of Mobile Microfinance in Sierra Leone in partnership with Hope Micro and Splash Mobile Money, utilizing its mobile money aggregation platform. The platform enables Microfinance institutions to integrate... 

From National Daily, Nigeria - Microfinance banks in the country have been generating much controversy of late following the report from the Central Bank of Nigeria that most microfinance banks (MFBs) have misplaced their priorities, culminating in their insolvency and distress. In this interview, Prince Dele Oyekanmi, the Managing Director of... 

By Chima Nwokoji, Daily Sun Nigeria - Following recent revocation of licences of some microfinance banks, there have been calls from various quarters for the Central Bank of Nigeria (CBN) to scrap microfinance banking in Nigeria. Mr Wale Adeduro is a management consultant with ... 

By Matilda Nzioki, Standard Media - Dr Jennifer Riria, a distinguished micro-finance banker and gender specialist, is the chief executive officer of Kenya Women Group. She lets us in on what the award winning and the country’s largest micro-financing institution Kenya Women Finance Trust (KWFT) has been up to. She has spent her adult... 

Vanguard – Despite the challenges that the board and management of Integrated Microfinance Bank, IMFB, have been faced with, it is determined to come out stronger and bigger. In this interview, IMFB’s Managing Director, Mr. Adamu Ibrahim, takes us through the events of the past 9 months, steps being taken to regain public confidence and the...