By Collins Nweze, The Nation Tunde Popoola is the Managing Director, CRC Credit Bureau, one of the fastest growing credit bureaux in the country. In this interview with Collins Nweze he speaks on development in the sector What major progress has been made by credit bureau to ensure that banks, primary mortgage institutions, and microfinance banks... 

By Collins Nweze, The Nation

Tunde Popoola is the Managing Director, CRC Credit Bureau, one of the fastest growing credit bureaux in the country. In this interview with Collins Nweze he speaks on development in the sector

What major progress has been made by credit bureau to ensure that banks, primary mortgage institutions, and microfinance banks book their loans with them?

I think we have had major positive changes in terms of acceptability of credit bureau infrastructure in the Nigerian financial landscape. There has been major improvement in terms of joining and usage of the products of credit bureau.

In terms of adaptability, I think that we have moved beyond the issue of regulators telling commercial banks to use our services. It is now the issue of seeing value in the products and services we have given them and keying into them.

The next sector that is in dire need of our services is the primary mortgage institutions (PMIs). Going by the list of functioning PMIs, we have 50 per cent of them, which are 40 firms that have joined. Although not all of them are really very effective, but those that are effective are really using the system. We have now some microfinance banks that have also joined us. But we would have loved to have more of them than what we have now. We have over 800 microfinance banks in Nigeria and less than 20 per cent of them have joined credit bureau. This is where the challenge is because they are finding it difficult to see the value that we can give.

What has the experience been like for those that have subscribed to your services?

Those of them that have joined have given us very good testimonies of how our products have been assisting them to price their risks and assess the credit worthiness of their customers as well enhancing recovery of bad loans.

The beneficiaries have also seen an improved turnaround time in processing the loans of their customers. Other sectors like all the discount houses have equally joined. A lot asset management companies and finance houses have also joined. We have some retailers that have also joined. There are some development  institutions like the bank of industry, federal mortgage banks that have subscribed to our services.

What is the position of consumer loans in the economy?

Consumer loans are increasing due to services of credit bureau. More and more banks are going into services of retail business. More institutions are churning out consumer products. I am aware of many of them that are in the process of launching one consumer product or the other simply because they have discovered that there is infrastructure that is credit bureau that can support the ?

The crises in the finance houses have not negatively a risk management element of processing and managing the product. I can confirm to you that more and more people are having access to credit now because of our services.

How have the crises in the finance houses affected your businessesffected our business. I think it is an appeal to all credit grantors in the economy to know that there are lots of values in registering with credit bureau and in pooling reports of credit bureau in credit applications. What normally brings down financial institutions from what we have seen all over the world is bad credits.

We know that bad credit is occasioned by people taking money and not repaying. And we also know that institutions that do not repay loans go ahead and take loans from unsuspecting institutions. It is in the interest of operators in the financial institutions to be able to ostracize the bad borrowers completely. There is need to ensure they do not have access to credit at all.

What advice do you have to offer finance houses that are closing shops?

So, most of those finance houses, especially those that are closing, can still come to the bureau to see how they can recover the loans. If you have finance house that is closed down, the chances of recovering loans becomes slimmer. But there are chances that if other institutions find out that they owe you, then they may not give loans to such institutions. Credit bureau is the easiest way to find out who owes what and in which bank or banks.

So, they can know the credit worthiness of their customers especially those of them that are doing badly. We should ensure that there is no hiding place for anybody trying to defraud the lending industry. There is no hiding place for anybody borrowing and not paying back in the credit industry.

All of us who are in this business should know that information sharing is key in isolating bad customers. It is also key in knowing good customers and encouraging them to be able to have unhindered access to credit. Information sharing also is key to coming out with the right products that will boost the credit market. Owners of finance companies, retail businesses especially telecommunication companies to know that credit bureau is an infrastructure that can move their businesses to the next level.

What are some of the challenges affecting service delivery as far as the accessibility of your services is concerned?

There are. One of them is internet access. The broadband in most cases is very low. In some institutions, it slows down the process of processing customers’ data. Some institutions want to check hundreds of applications in a day but they are not able to achieve that because access to internet is erratic. There is low penetration of IT infrastructure due to low electricity availability. Because our system is available online, it becomes effective where internet is cheap and accessible. For now, internet is still expensive and is not accessible as we would want it to be.

What is your view on cashless banking?

I think the cashless society is a good thing. People should look at it with very high level of open mindedness. There are costs of possibility of attack, if you carry cash around. In cashless economy, you cannot waylay busses carrying people because they know they will not be carrying cash. People do not need to carry huge cash for any reason because of the risks associated with it.

What in your view is the implication of the cashless policy on the economy?

The volume of cash we are printing is high and costly which has to be reduced. An economy that thrives on cash is regarded as a rudimentary economy. An economy that relies largely on cash cannot be developed. We need to move from this level of development if we really want to join the list of emerging economies.

Now, once you are conversant with usage of cards, the introduction of debit cards becomes the next thing. You can now go to shops and pay with your cards. At that point where people begin to carry cash, banks can then begin to extend overdrafts to individuals that are carrying those cards and more and more people will come into the banking system. As we speak today, we have more than 70 per cent of the population that are still unbanked. But when you do cashless, it means that more people will now be banked. It is out of those that are banked that you give access to credit so that the figures will grow.

Suppose about 30 million Nigerians are carrying credit cards, then it enhances access to credit. Once more people begin to carry cards, and then banks can introduce credit cards products. In advanced countries, credit review is done auto. In South Africa, credit bureau process about 80 million records in a month that is about 2.5 million in a day.

As an upwardly mobile executive, how do you relax?

I do not have a good culture of relaxation because I am involved in so many things outside my official engagement at CRC. I currently provide leadership for some organisations such as The Companion – an association of Muslim men in business and professions – and the Obafemi Awolowo University Muslim Graduates Association (UNIFEMGA). Until two years ago when I finished my term as the Chairman of Lagos District, I was fully involved in the activities of the Institute of Chartered Accountants of Nigeria (ICAN). I play visible roles in the activities of my town’s elite association, the Sepeteri Improvement Union (SIU). All these require attending meetings, events, programmes etc especially during the weekend. I also provide mentoring to budding young entrepreneurs and students. I make a lot of presentation and deliver speeches which take my time in preparing my papers or speeches.

However, I try to be with the family from Sunday afternoons during the weekend. I play with my children; catch up with what is going on in school and their studies. We go out as a family to eat and watch films or visit family friends. We play scrabble or watch football matches on the television.

Besides, I read a lot especially books on leadership, strategy and small business.

What has been your best investment?

The best investment I had was in the school project of my wife. I am always happy seeing how the school is growing in terms of number of pupils and number of employees that have now grown to 40 over a seven year period. I am always happy when I attend their end of the year programme or inter house sports, etc. I consider it as the best not in terms of financial returns but in terms of joy that it brings to me and my family because of our involvement in molding young minds. I have a fanatical passion for education.

What about your worst investment?

The worst investment I had was in transportation business. As a young banker, I was trying to explore how I could invest my savings and make my money work for me. I bought two ‘danfo’ buses against the advice of my uncle. Within six months, I realized that they would not pay back the investment. I could not even salvage them to realize any scrap value. I learnt a big lesson that one should be wary of going into a business you know nothing about and that if you are going to do that, you need to go and learn the trade or business to have some knowledge and idea.

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The National Association of Microfinance Banks (NAMB) says the sub-sector has been repositioned to ensure efficient service delivery to Nigerians. Mathias Omeh, the President of NAMB, who spoke in Lagos on Wednesday, explained that the sub- sector had focused on advocacy, capacity building and information sharing through ICT in the last one year. He... 

From Triple Pundit For those of us who follow microfinance news closely (I’m not the only one out there who gets “microfinance” Google alerts, right?) it’s been hard to see some of the trash talking about the industry in mainstream media in the last couple of years. Critics point to greed via excessive interest rates imposed on the poor, and... 

From Business Day Online Infinity Microfinance Bank on Wednesday said it had introduced the use of Point of Sale (PoS) terminals to improve service delivery to customers. Mrs Clara Oloniniyi, the Managing Director of the bank said in Lagos that the bank had acquired 80 PoS terminals and distributed them among its loan officers. She said that the... 

From Business Day Online

Infinity Microfinance Bank on Wednesday said it had introduced the use of Point of Sale (PoS) terminals to improve service delivery to customers.

Mrs Clara Oloniniyi, the Managing Director of the bank said in Lagos that the bank had acquired 80 PoS terminals and distributed them among its loan officers. She said that the loan officers had been going to the customers to get them to make deposits and loan repayment through the PoS.

Oloniniyi said the bank introduced the POS terminals to stem the rate of frauds being perpetrated by some loan officers of microfinance banks. “Customers of microfinance banks are being defrauded large sums of money regularly by some loans officers.

“Some of the loan officers would not record and account for the deposits or loan repayments from customers, which are factors disfiguring microfinance banks today. “With the deployment of the terminals, we now monitor customers’ transactions with our loan officers effectively,’’ she said. Oloniniyi, who is also the treasurer of the Lagos Chapter of National Association of Microfinance Banks, said that Nigerians needed to know that microfinance banks were genuine and had passion to help the active poor. “We want to tackle the problems that may want to prevent our vision from being realised,’’ she said.

She said the bank had recruited qualified Information Communication Technology (ICT) experts, in addition to deploying PoS, to enable it monitor and analyse transactions effectively. Oloniniyi said that the bank had 12 meeting points with over 50,000 customers in Lagos State.

She said that the bank often deployed management staff to these meeting points to enlighten customers on the cashless policy. “We realised that some of these micro traders do not want to key in to the policy, fearing that they may be defrauded.”

But the bank is putting in all efforts to encourage our customers to embrace the policy and ensure that their transactions are secured.

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Bukky Olajide, The Guardian Dr. Abdullahi Shehu is a Nigerian and the Director-General of GIABA, French acronym for Intergovernmental Action Group Against Money Laundering and Terrorist Fnancing in West Africa.  Shehu is a product of Ahmadu Bello University and the University of Abuja, where he obtained his B. Sc. and M. Sc. degrees in International Relations... 

Bukky Olajide, The Guardian

Dr. Abdullahi Shehu is a Nigerian and the Director-General of GIABA, French acronym for Intergovernmental Action Group Against Money Laundering and Terrorist Fnancing in West Africa.  Shehu is a product of Ahmadu Bello University and the University of Abuja, where he obtained his B. Sc. and M. Sc. degrees in International Relations respectively. He got his PhD degree in Criminology at the University of Hong Kong, specialising on anti-corruption and money laundering.  He is a member of the International Association of Financial Crimes Investigators (IAFCI), member of the Hong Kong Society of Criminology and member of the Nigerian Society of International Affairs.   With vast knowledge in money laundering, Shehu has been able to establish GIABA firmly as one of the most effective and efficient ECOWAS Institutions with sound management and governance structures, processes and procedures. In this interview with BUKKY OLAJIDE, he bares his mind on how GIABA is facing the challenges of tackling money laundering. He also expressed optimism that the war against it would be strengthened in Nigeria with Central Bank of Nigeria’s cash-less policy.

GIABA is about ten years old. How is the journey so far?

We have recorded giant strides, particularly in the main thrust of our mandate in two specific areas; the first is the conduct of mutual evaluation of our member states. We would have finished the evaluation by last year, but for the political situation in Cote d’Ivoire and in Guinea Conakry.

So far, we have evaluated 13 countries, the reports have been published and we are following up on these reports until we cover all the 13 countries.

Now that the security situation is conducive in both Guinea and Cote D’Ivoire, we have scheduled their evaluations for May and June, 2012.

The second core area of significant impact was in the area of technical assistance and GIABA is mandated to coordinate the technical assistance in the area of anti-money laundering and counter financing of terrorism to member states.

Now, our technical assistance is divided into various components in terms of provision of assistance to member states to develop the necessary legislation required to criminalise money laundering and financing of terrorism.

Also, we are to provide training for the various sectors of rule of law organisations to complement the legislation. So we have training programmes for investigators, because without understanding the real nature, pattern and manifestation of the problem, investigation can be difficult. So, we focused on training investigators.

In order to facilitate effective prosecution, we also carried out training for prosecutors, we do this on annual basis. We have also extended our own sensitisation to the members of the judiciary on yearly basis, we organise a programme for the judiciary, in particularly those judges that are designated to adjudicate on cases of economic and financial crime in our member states.

West African countries have instituted anti-graft agencies. Would you say they are living up to expectations in countering money laundering and terrorism financing?

Well, they are doing quite a commendable work. But this is not something they can eradicate in one day. It will take time. And given the limited resources of our member states, we have to appreciate the efforts of our member states.

We are concerned over the limited number of convictions in the area of money laundering. We believe that with continued effort and commitment of the member states, we will record more successes in the years to come.

And that is why a significant component of our technical assistance is targeted at the anti-corruption and anti-money laundering agencies, so that we strengthen the capacity of their personnel. We provide them with necessary equipment where possible in order to enhance their performance on duties.

What is your opinion about the cash-less policy?

It is a welcome policy and the Nigerian government should be commended for it. Its one of the policies in recent times that I believe will help a great deal in preventing money laundering in Nigeria.

Therefore, I will encourage Nigerians to look at this policy from the perspective that it will help to reduce the movement of illegal cash. It will also help law enforcement agencies to trace the movement of money within the financial system and therefore detecting crime becomes very easy.

In addition to that, it will also help in the management of the cash itself because printing the naira notes costs the government a lot and if the handling of that notes is reduced, it will help government to make some savings on the printing of it and management of cash and in particular, naira notes.

So, I think that the initial reaction and criticisms towards this policy is informed by the habit of people that they have been used to cash and they feel insecure if there is no cash.

But with increased awareness as the Central Bank is doing, over time, people will come to realise that it is a good policy and it must be supported and strengthened.

There is a plan by ECOWAS countries to merge into a single currency, do you think this will hinder perpetrators of economic and financial crimes ?

I do not see how it will do so. I can tell you that on an incremental basis in the next 20 years, there may be fewer currencies in the world.

You can see that in Europe, before there used to be several currencies in the circulation but in all the European countries how, they have only one currency, the Euro. You see, that has reduced many currencies in circulation.

Now, in the ECOWAS region, among the countries, they have a common currency, which is the Franc Cefa. So, the only countries now that need to either develop their own monetary union towards the harmonisation of the two monetary unions would be Nigeria, which is having its own national currency, the naira, Liberia, which is having is own Liberia dollar, Ghana with its ceddi, Sierra Leone with its leons and Guinea with its Guinean Alfranc.

So, efforts are being made through the West African monetary agency, which consists of the central banks of the West African countries.

They are working out the modalities for establishing a monetary union within these countries and also the possibilities of merging the two unions together so that there will be a common market and common currency.

I think the target is 2015. I can say it is achievable based on the convergence criteria that has been set out. Although many countries are having challenges meeting the convergence criteria, but I am optimistic that with commitments from our Central Bank, they will be able to meet the convergence criteria by 2015 and we may eventually have a common monetary union.

Why was GIABA set up in the sub-region?

Among other things, it is to champion the adoption of standards against money laundering and terrorist financing in accordance with acceptable international standards and practices.

It is also to facilitate the adoption and implementation by Member States of measures against money laundering and terrorist financing, taking into account the specific particularities and conditions of the region.

It serves as a forum where members can discuss issues of regional interest and share their experiences and organise self-evaluations and mutual evaluations to determine the effectiveness of measures adopted, including their level of compliance with acceptable international standards and impact on the implementation of the global fight against money laundering and terrorist financing in  West Africa.

Nigeria recently passed the anti-money laundering and terrorism financing. How does GIABA view this development?

We welcome this development and we commend Nigeria for this initiative. Indeed, this has been on our desk for a long time and it took quite a long time for the National Assembly to pass the law and this is commendable for passing these two pieces of legislation.

However, we have reviewed the legislation, and we feel that there is still need for government to undertake some amendments of the law.

In particular, we have drawn attention to the criminalisation of money laundering, which according to acceptable international standards, if you criminalise money laundering based on the predicate offences for money laundering, you have to include all the 21 predicate offences in the criminalisation of money laundering.

So, in the case of Nigeria, we noted that one or two elements are missing – issues relating to fraud and sexual exploitation and we have drawn the attention of government to consider amending the law in this directive.

With regard to the Terrorism Prevention Act also, we have reviewed it and made some comments to the Nigerian government to take a look at the legislation.

The challenges of money laundering and terrorism financing are varied and numerous. How has the ECOWAS been able to cope with the global phenomenon?

The transnational organised crime is a big challenge to international community and therefore the ECOWAS member states are working conceitedly with either partner in the global community.

The establishment of GIABA is a demonstration of the political commitments of the authorities of Head of States and government of ECOWAS to combat money laundering and terrorism financing within a regional framework and through a regional alliance fighting this through a regional alliance is effective in the sense that we now pull resources together, support one another, enhance co-operation between and among our respective institutions and agencies and also raise awareness within the civil society so that we have a common perception of the spread, we have also a common definition of what we are supposed to do and then we can easily mobilise community action against this phenomenon.

Illicit drug movement and sale is a major challenge in West Africa, how is GIABA rising to this challenge considering the fact that drug trafficking is a conduit for money laundering?

Indeed drug trafficking is a major predicate offence for money laundering. We do not have a direct mandate for prevention and control of illicit trafficking in drugs. Our concern about drug trafficking is in its relationship with money laundering.

In other words, the proceeds are generated from ….. narcotics. So, to that extent, we include in our technical assistance, components support to draw enforcement organisations in our member states.

The emergence of Financial Action Task Force (FATF) was a direct response to the slow process of the convention-based approach to the prevention and control of the escalating money laundry activities activities. How is the performance of ECOWAS Member States with respect to compliance with the AML/CFT standards?

Although, the FATF Recommendations are considered as “soft laws”, they have been recognised, endorsed and adopted by over 183 countries and jurisdictions. The framework sets out principles of actions by governments and their competent authorities, and they permit flexibility in implementation with due regard to countries unique circumstances and constitutional arrangements.

This poor performance is of serious concern as this component constitutes about 55 per cent of the entire AML/CFT requirements. Thus, weaknesses in this area portend a major source of concern. This, therefore, calls for a holistic action by both the reporting entities (Financial Institutions and DNFBPs) and the supervisors and regulators to improve compliance. You are aware that two of our member States (Nigeria and Ghana) are on the FATF list of countries that have not made significant progress in addressing the lacunas in their AML/CFT regimes. This list has some potential negative consequences for the countries.

Do you think there is a significant compliance with Customer Due Diligence as per working towards reducing money laundering?

The low level of compliance with Customer Due Diligence requirements shows that Financial Institutions  and Designated Non Financial Businesses and Professions are yet to adopt comprehensive measures in identifying and verifying the identity of their customers, including that of legal persons, legal arrangements and beneficial ownerships. In this regard, compliance officers have a critical role to play.

Also, most of the Financial Intelligence Units (FIUs) in this region are operating sub-optimally, hence their capacity to collect, analyse and disseminate suspicious transaction reports (STRs) that facilitate investigation and prosecution is impaired. Furthermore, the mutual evaluation reports indicated a general low rating on recommendation.

Revised standards are expected to provide governments with stronger tools to take action against financial crime, while at the same time addressing new priority areas.

In view of rural nature of the country, and in line with the microfinance policy of ensuring access to funds by the under-banked segment of the society, there may be need to give exceptional concession to the microfinance banks/institutions who are required on daily basis to carry out several transactions with their clients for both deposit taking and granting of credits.

There is the need to address the issue of porous borders as many business people may resort to using banks in neighbouring countries with lax banking policy. This is a major challenge for curbing cross-border transportation of cash into Nigeria.

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Nse Anthony Uko, Leadership As part of its financial inclusion strategy, the Central Bank of Nigeria (CBN) has mandated banks across the country to open accounts for customers with zero balance. This move is to promote easy access to banking services for the unbanked public. This means that, without having any money to use in opening an account, a... 

From IPP Media ISLAMIC finance has been growing rapidly in developing and developed countries in recent years. Its financial assets have expanded by over 10 per cent annually and represented over 0.5 per cent of the global financial assets in 2010. The strong growth is likely to continue in the coming years despite the recent financial crisis.... 

From IPP Media

ISLAMIC finance has been growing rapidly in developing and developed countries in recent years. Its financial assets have expanded by over 10 per cent annually and represented over 0.5 per cent of the global financial assets in 2010.

The strong growth is likely to continue in the coming years despite the recent financial crisis. The National Bank of Commerce (NBC) and KCB Bank Tanzania have launched Islamic banking services to meet market needs.

Tanzania Global Learning Agency (TaGLA), formerly called Tanzania Global Learning Centre (TGDLC), in collaboration with Tokyo Development Learning Centre (TDLC) has organised on May 14-June 7, this year, a videoconference workshop on introduction to Islamic finance to share fundamentals of Islamic finance with a special focus on policy makers and officials of the financial sector in Africa and Asia.

This banking system is based on the principles of Islamic law and Islamic economics. It aims at ensuring that banking services and products appeal to all customers regardless of their belief system or background. Under Islamic banking, products and governing contracts are structured with strict observance of Islamic law on just and fair business transactions.

According to TaGLA Interim Executive Director Charles Senkondo, Islamic banking or finance is TaGLA’s newly introduced programme with a view to raising public awareness and building capacity on modern banking in compliance with Shariah law. It is open to all customers – Muslims and non-Muslims alike.

It is operated free of interest and any ambiguity under the principle of profit-risk-sharing. In contrast to conventional finance, business transactions under Islamic finance require underlying genuine trade and assets.

The Islamic finance market is still below its true potential and its market is still below its true potential. However, some countries in Africa and Asia are making considerable effort to capitalise on the growing popularity of Islamic financial services.

This programme will feature international experts of Islamic finance from the World Bank and other international organisations and will be offered in English and French.

Speakers include Zamir Igbal, a PhD holder and lead investment and principal financial officer with the Quantitative Strategies, Risk and Analytics (QRA) Department of the World Bank Treasury and Etsuaki Yoshida, an economist at the Bank of Japan and joined as adviser in charge of policy planning of Islamic finance in the Japanese Bank for International Cooperation (JBIC) since 2007 to date.

He is also visiting associate professor teaching Islamic finance at the Waseda Graduate School.

The videoconference workshop will be moderated by Mor Seck, Manager/Director Senegal Distance Learning Centre and President of the Association of African Distance Learning Centres (AADLC).

“Many banks across the world are now changing from conventional to Islamic banking. We are part of this change and Tanzania is doing the same. We need to raise public awareness on this banking system and how to utilise it,” said TaGLA programme coordinator Dickson Mwanyika in an interview with this reporter.

Participants will be able to describe fundamental concepts in Islamic finance and its growth potential, structure financial products and mechanisms under Islamic finance, understanding key actors and roles in regulating, supervising and monitoring and learn from practices in other countries on Islamic finance.

The workshop is divided in four sessions. Session I is scheduled for May 14, this year, and will be about introduction to Islamic finance and will focus on the definition and fundamentals of Islamic finance, global trends and estimated growth of the sector and an overview of emerging markets, products and services in Islamic finance.

Session II is scheduled for May 24 and will focus on structuring Islamic financial products and will present basic models of Islamic finance (trade-based and investment-based models) and various financial products and transaction models (loans, deposits, Sukuk-bonds, funds, Takaful-insurance) with practical examples.

Session III is scheduled for May 31 and will focus on geographical expansion of Islamic finance. It will address emerging markets and their government policies and jurisdiction and international organisation.

Session IV is scheduled for June 7 and will focus on risk management in Islamic finance. The session will seek to analyse market and credit risk management and briefly present legal issues under Islamic finance.

Target groups include national and local government officials from financial ministries and agencies, officers from commercial banks, legal department, insurance, security and asset management companies, microfinance institutions and NGOs who wish to develop knowledge on Islamic finance for their business activities in Africa and selected countries in South and East Asia and the financial sector staff from international organisations.

There are two basic principles behind Islamic banking. One is about the sharing of profit and loss and, the other is about prohibition of the collection and payment of interest. Interest collection is not permissible under Shariah law.

Globally, Islamic banking started in 1993 and since then commercial banks and other financial institutions started and continued offering Islamic banking products and services under the Islamic banking scheme (IBS).

Videoconference workshop participants can follow the programme at their nearest GDLN centres. In Tanzania, the programme will be run by TaGLA at Institute of Finance Management (IFM), Dar es Salaam.

Each session will be a 2.5-hour interactive session using videoconference technology. Each session consists of presentations followed by a question and answer session and open discussion. Webcasting (live streaming via internet) will be available at http://streamng.jointokyo.org/ so, internet access and Windows Media Player are required.

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By Kayode Fasua, National Mirror Bedecked in full traditional regalia on a Monday morning, Ismail Akinode Awikonko sauntered into the premises of Royal Trust Microfinance Bank in Ishaga, Lagos. He swaggered in, apparently fantasizing what the egungun (masquerade) festival scheduled to kick-off that day would look like. He is the head-chief for... 

By Kayode Fasua, National Mirror

Bedecked in full traditional regalia on a Monday morning, Ismail Akinode Awikonko sauntered into the premises of Royal Trust Microfinance Bank in Ishaga, Lagos. He swaggered in, apparently fantasizing what the egungun (masquerade) festival scheduled to kick-off that day would look like. He is the head-chief for the egungun or oje fraternity in the locality.But for the festival to be really chummy, being the leader, Awikonko was expected to produce at least two mature billy-goats and one ram with convoluted horns, for the merriment of revelers. He surely had made his calculation and was certain that if he withdrew N70, 000 that morning, the festival was as good as done.

But as he approached the doorpost of Royal Trust, the community’s pet micro-finance bank, he stopped short. The bank was shut. And the time was 9am. Dazed, the chief almost tripped, as he looked around for someone to provide an explanation for the embarrassment. Soon, a passerby came and told him, “The bank has closed down.”

Though this distraught chief said his money and that of his native group total-ing N200,000 had been trapped in the bank, he was not as traumatised as the ignominy his inability to withdraw N70, 000 caused him, as he was unable to buy the requisite two billy-goats and one ram. “My brother, it was a big disgrace, an embarrassment; and this is a bank I personally went round to lobby our people to patronise,” he la-mented.

Awikonko is not the only depositor ut-terly let down by the gale of ill-wind that swept through over 100 micro-finance banks in the country. Still in the Ishaga locality, a cleric, Pastor Peter Odeleye, said his N150,000 is still trapped in the bank and that this has stalled a personal project he recently embarked on. “At a time, this same bank asked us to buy shares of N25,000 each and many of us embraced the idea. So with our favourable response to the coming of microfinance banking, I wonder why the banks are getting distressed and closing down,” he said, look-ing straight ahead in deep contemplation.

Distraught customers of the bank in the area are in legion and they come with different tales of woe. Joseph Adeleye is unhappy over his trapped N11, 000; J.M Duason Nig Ltd, a company in the area is concerned over its trapped deposits of undisclosed amount while a thrift society in Tokotaya area of Agbado, Lagos, is hav-ing a tug of war placating its members whose contributions have been trapped in a microfinance bank in the area, which recently went under.

Elsewhere in the country, it has been the same swan-song for microfinance banks. In Akure, Ondo State, Abayomi Ogundele, a depositor with a microfi-nance bank on Oba Adesida Road in the capital city, said he got a contract to drill a bore-hole, worth half a million naira and that he deposited the money with the micro-finance bank. “But today, this bank has been shut. Oh, it is finished! The com-pany that gave me the contract has set the police after me; I now operate under-ground, living mostly in my village in the Akoko area, as I can hardly come to Akure again,” he lamented, almost sobbing.

Awikonko, Odeleye, Ogundele and other disappointed depositors can still afford to accept their fate with equanimity. Per-haps, not so with John Apeh, a customer with IC Global Microfinance Bank, Ozoro, Isoko North Local Government area of Delta State. He went to lodge his N1.4 mil-lion gratuity in the microfinance bank and two weeks after, the bank went under.

“I did not know that the bank had fi-nancial problems. I decided to put my gra-tuity into the bank, with the hope that the building project for which I intended to use the money would commence as soon as possible,” he told newsmen.

But Olufemi Babajide, acting chair-man, National Association Microfinance Banks (NAMB), Lagos State chapter, in a recent interview, attributed part of the problem facing microfinance banks to the compelling high interest rates on loans to customers and that the government had to bail out the banks. He said his associa-tion was making efforts to get the ears of government and other agencies, to revive the banks.

But Ogundele, the bore-hole contractor, thinks differently. “It is the profligate life-styles of the microfinance bank owners that have been responsible for the collapse of the banks. For instance, my microfi-nance bank manager is a regular feature at different beer parlours (pubs) in Akure, where he buys beer and ‘pepper soup’ for people and womanises ‘like mad’”.

Whatever is responsible for the declin-ing fortune of these microfinance banks, depositors, whose monies are trapped, are still groaning.

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By Akinola Ajibade, The Nation The inability of microfinance banks to scale through the hurdles of growth has been attributed to wrong operational models, managerial ineptitudess, illiquidity among others. According to experts who spoke separately on the issue, the problems have been besetting the operations of microfinance institutions since two... 

By Akinola Ajibade, The Nation

The inability of microfinance banks to scale through the hurdles of growth has been attributed to wrong operational models, managerial ineptitudess, illiquidity among others. According to experts who spoke separately on the issue, the problems have been besetting the operations of microfinance institutions since two decades ago.

A Senior Partner, Biodun Adedipe & Co., Biodun Adedipe, said promoters of microfinance banks got it wrong from the start. Adedipe said some owners of MfBs have decided to compete with money deposit banks which have better structure, adding that development made it difficult to meet obligations to their depositors.

He said: “Most of them have wrong business models because they came and tried to operate like money deposit banks. Microfinance banks are expected to engage in neigbourhood banking. All their customers are supposed to be those who operate within their localities. They are supposed to know them and have the capacity to monitor their progress,” he said.

Adedipe said the loss of focus is responsible for the myriad of problems confronting microfinance institutions.

Also, Chief Executive of Financial Derivatives Nigeria Limited, Bismark Rewane, said the trouble with microfinance institutions is not peculiar to Nigeria. He said bank failure is a consequence of economic problems besetting the global community, as over 155 banks have failed in the US alone.

However, Rewane said apart from the global economic crisis, other impediments to a regime of smooth operation of MfBs are the Nigerian economic crisis and lack of capacity of the affected banks. He said the low capacity of the MfBs was responsible for the systemic failure of these banks. He would not indict the system or regulators as the current challenges, according to him, can be described as the consequence of the general downturn in the economy.

Rewane, who noted that MfBs are lending at the retail level, said most of those who took facilities in the MFBs are facing problems that make it difficult to service their loans.

“Lending to someone who has lost his job can be challenging. How do you expect a man that has just been sacked to repay his facilities? The process is, therefore, fallout of the general recession in the country,” Rewane said.

But a former director of the Nigeria Deposit Insurance Corporation (NDIC), Joel Ahimie, attributed the liquidity crisis in the MFBs to haste for profit and wrong lending practices as well as inadequate supervision by the regulatory authorities.

He said: “Our people were just too much in a hurry. Most of the operators see microfinance banks as a mini bank, and that is wrong. Some see it as a profit-making business, forgetting that the profit will come but not now. The money-lenders are making money and they charge 100 per cent interest, but MFBs charge over 30 per cent, which is a lot of money.

Chief Executive Officer, ACCION Microfinance Bank, Bunmi Lawson, said: “The principle behind MFBs is that you give a lot of small loans and you should ensure that you have a steady capital base that would enable you meet any liquidity problems at any point in time. Most MfBs operators are regrettably not too conscious about their lending processes.

They give loans to too many people without proper monitoring and at the end of the day, what you would hear are issues of bad loans. MfB operators lend to Small and Medium Enterprises (SMEs) and instead of giving to say 10 people, they actually loan to over 10,000 clients and before you know it, there would be cash problem.

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By E. J. Nathaniel Daygbor, The New Dawn In keeping with his pledge to make available 1.4million Liberian dollars as micro loans for marketers in Grand Bassa County, Senate President Pro-Tempore Senator Gbehzohngar Findley has presented the first L$600,000.00 to six markets in Buchanan City. Each of the markets received a check for L$100,000.00. Making...