Central Bank of Nigeria Governor, Sanusi looks for a way out for microfinance banks
March 26, 2010 by Microfinance Africa
By Oluwaseyi Bangudu, 234 Next.
The Central Bank is still in search of suitable regulatory and supervisory model for Nigeria’s ailing microfinance banks.
The Central Bank disclosed that the frequent trips of its governor, Sanusi Lamido Sanusi, to Malaysia is in search of a supervisory framework for Nigeria’s microfinance banks, which have been experiencing some regulatory and monitoring setbacks.
Mohammed Abdullahi, the spokesperson for the regulatory body, said that the Central Bank is still in search of a suitable regulatory framework for the sub sector.
He denied claims that it was in quest of the establishment of Islamic banking. “If it was on Islamic banking alone, he would go to Sudan or Saudi Arabia because that is the best place to go for Islamic banking, not Malaysia.”
However, shareholders are wondering when the travelling session would be over as they claim it is their funds that the managing directors, members of Sanusi’s entourage, are using on their trips.
Microfinance is the provision of credit and other financial services to people in lower income groups. One of its major characteristics is that it offers limited products with no formal collateral.
In October 2009, at the peak of the banking industry’s crisis, the Central Bank of Nigeria said that it was working out modalities to address current challenges of microfinance banks in the country.
Many proposals have been drafted towards strengthening the sector. Central Bank’s officials have proposed policies they believe will improve the efficiency of microfinance banks and tackle the challenges faced by the banks at present.
Among the suggestions is the one proposed by Olufemi Fabanwo, the acting director in charge of the Other Financial Institutions Department of the CBN, that the banks increase their capital base above the present N20 million to about N100 or N200 million, as the development is necessary due to the challenges facing the banks in the country.
Challenges thrive
With more than half of the adult population unable to access retail banking services, the introduction of microfinance banking by the Central Bank of Nigeria (CBN) was welcomed by Nigeria’s development partners and the general populace.
However, this laudable concept was soon caught in the thorns of an inefficient Nigerian economic system and hijacked by money bags, having failed to capture its target market – ‘the poor’.
Tunde Lemo, the then deputy governor of the Central Bank, confirmed last year that some of these microfinance banks are simply ostentatious, with some of them having holidays abroad as part of their executive remuneration.
“With a package like this, how do such banks hope to reach out to those not using any bank and alleviate poverty, which are the main reasons for setting them up?,” Mr. Lemo had queried.
The Central Bank directed that every microfinance bank should have a minimum reserve of N20 million, while the National Deposit Insurance Corporation (NDIC) insures each depositor for a maximum of N100, 000, regardless of the amount of money invested.
Experts have identified the problems of microfinance banks in Nigeria to be similar to those of commercial banks. Some of these include severe under capitalisation, extremely high levels of non-performing loans, insider lending, lack of transparency, inexperience and supervision, meagre capital base, loss of customers’ confidence, and high overhead cost. They have also expressed fears that the sector might collapse soon if the operators did not change their strategy.
car insurance Financial Executive Scott Gelbard
nice post. thanks.
I think the problem with Nigerian banking industry is spending excess and mismanagement among the executive
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CBN just released the Prudential Guidelines for DMB’s, effective from 1st May. For Microfinance, there is only a mention that current guidelines to MFBs will hold good. An overall relook would have been better, touching upon Macro & Meso aspects of Microfinance. It is the need of the day, in Nigeria……Ashok
Ashok
Your comments are very interesting. You are quite right that much more needs to be done by CBN. Please read my article in EDITORS VIEWS. Like you I think there needs to be tighter regulation and a detailed capability audit of most of the existing MFBs. I think they will find that there are many that are not fit for purpose
Infact, it seems what is happening in the microfinace Bank now is a wake-up call and a timely move in the right direction…..this has neccesitated the CBN , NDIC and CIBN to have started since last week monday , 3-weeks intensive trainning on the “DO and DONTS ” as regards the practice of MFBS in Nigeria by the OPerators.., the first batch wiil end next week monday…………i think there should be a possitive impact as intended after the whole exercise…………..Conclusively, we really appreciate ACBS (Afriaca Capital and Business Support ltd to have into the rescue of IMFB( Integrated Microfinance Bank Ltd) by giving them #6 billion with 3-years moratorium ……this will surely restore back the lost confidence in the industry as the bank in question opens up customers by june 12, next week friday.
I totally agree with you that CBNs training programme will yield some very positive results. However, I don’t think compulsory training for just the CEOs is enough. The CEO can not be directly responsible for all parts of a business. All MFB must be encouraged to train other key staff. There are other imporant areas that are key to MFB success and training in these areas should be encouraged, possibly subsidised. These include MIS, Financial reporting, loan management, risk management, etc. We at Microfinance Africa are currently putting together a training service for MFBs in Nigeria and Africa. We are making contact with some prominent names in the industry with a view to enlisting them as trainers. Please check our website in a month or two for an update.
cbn nigeria has been in review by usa banking re delays re delayed holding
usd held too long by cbnc nigeria and related bank oceanic re unlawful
handiling of usd so held by us citizen ?? attempt at possible? e mail
extortion?? suit for damages pending @ 20 millon usd,incurred damages
This is a nice peace. I trust the CBN Governor will assist in turning the economy around for the good of the country and I believe it is the begining of better things for Nigeria.
I have a question about the Govenor Sanusi Lamido Samusi and if he could be involved in any money scams. I was contacted by him or someone that said they was him.In regards to a sum of money that will be delivered to me at my home .
I don’t think the Governor is involved in any money scams and I suspect who ever contacted you is not the Governor.
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just wanted to knw if this is fake /fraud
CENTRAL BANK OF NIGERIA
TINUBU SQUARE VICTORIA
ISLAND LAGOS NIGERIA
OFFICE OF THE GOVERNOR
CONTRACT #: MAV/NNPC/FGN/MIN/2010,
Swift Code: BPH KPL PK,
A/C#:329606=101244=169=678
FOREIGN REMITTANCE DEPARTMENT CENTRAL BANK OF NIGERIA
Our Ref: CBN/IRD/CBX/021/
PRIVATE TELEPHONE NO; +234-80611-75627
Dear Sir/Madam,
IMMEDIATE PAYMENT NOTIFICATION
We have on this 23th of August ,2010 received a payment credit instruction from the Federal Governmet of Nigeria in collaboration with IMF and World Bank to credit your account with your full contract funds valued at $10.7m(Ten Million Seven Hundred Thousand Dollars) from the government reserve account with our bank through diplomatic delivery.
This is to notify you that your funds have been programmed for immediate release into your nominated bank account but we can not transfer this fund direct to your nominated bank account, because we are having a little problem with International Monetary Fund (IMF) so our method of payment is by Diplomatic Courier Service.
Be informed that every arrangement regarding your cash payment through diplomatic services has been made, note that your funds have been packaged like a consignment.Note that the Diplomatic Agency has to move down to your country in order to deliver the Consignment to your doorstep. Kindly re-confirm to me the followings:
1) Your Full Name.
2) Phone, Fax and Mobile #.
3) Company Name, Position and Address.
4) Profession, Age and Marital Status.
5) Working Identity Card/Int’l Passport.
6) Nearest airport
7)Assisting the diplomat in getting the YELLOW TAG PAPER which is needed for the clearance and immunity of the boxes on arrival. As soon as the above mentioned details are received, your payment will be made to you via diplomatic courier delivery inaccordance to World Bank and IMF recommendations. A diplomat with international travel immunity will be contracted to deliver the funds at your doorstep.
Yours Faithfully,
Mallam Sanusi Lamido
Executive Governor, Central Bank of Nigeria
I’m afraid it is. The Governor of the Central Bank of Nigeria would not use a mobile number and would not have sent such a correspondence via email.
Great summary, bookmarked your website with interest to see more!
I got scaled by Dr. Sanusi lamedo Sanusi had to pay in total more than 20k
In exchange for 10.7 M US$
They faked his office numbers , homeland security at JFK at. New York and more official
I can get you docs from that criminals
s in Nigeria must put that criminal activity to an end.
That’s a criminal act supported or done by himselves who knows. CBN must investigate
It is obvious that the major challenge that combats the banking sector especially the micro-finance specie is the inability of human capital to understand an all round overview of the functionality of the industry. just like an organization, the body of humans functions as a concert of various parts producing a synergy infected result per time. No part of the body does function on its own. well, do the human force behind the mishaps in the banking sector understand the placement of all aspect of the banking industry? do they understand what they represent in the banking organizational body?. I studied human physiology and I have a development Idea for the banking sector that could boost her effectiveness in Nigeria. I am a Nigerian I want to air my views. the education I have is Nigerian. I want to prove the worth. thanks: 07030293299
You are right in your comment about the the challenges facing Microfinance Banks in Nigeria. CBN is addressing some of the regulatory issues facing the sector and I believe this will improve the sector, but there is still much more that needs to be done and this will fall to those involved in the sector. Edcuation and training is important. Understanding the need of their target market and developing products that meet these is also very important. Microfinance in Nigeria still has huge hurdles to overcome before the full potential can be realised
Government or central bank of nigeria decision on revoking microfiance bank licence is a welcome idea.Please they should make sure all customers money is paid back to the least kobo. Currently I took INTEGRATED MICROFINANCE BANK PLC TO HIGHCOURT IN PORTHARCOURT AND A JUDGEMENT WAS PAST ON THE 29TH OF JULY 2010 TO PAY ME MY N3,500,000 AND THE AGREED INTEREST OF 17% FOR MORE THAN A YEAR. TWICE MR MINI RICHARD(BUSINESS MANAGER) HAS THREATENED MY LIFE WITH ARMED BOYS.I HAVE WRITTEN TO ALL THE GOVERNMENT BODIES BUT I END UP PAYING MORE MONEY AND NO ACTION IS CARRIED OUT.THIS BANK EVEN GO TO APPEAL COURT TO BUY MORE TIME TO RUN AWAY WITH PEOPLE’S MONEY.PLEASE REVOKE THERE LICENCE AND SAVE US FROM THIS GREAT LOSE.
SANUSI HAVE WHAT IT TAKES TO IMPROVE NIGERIA ECONOMY.FIRST: MERGE THE MICRO FINANCE BANK TOGETHER TO CREATE BANK FINANCIAL STRENGTH, REMOVE FRAUDULENT MICROFINANCE BANK THAT DESTROY THE GOOD IMAGE OF THE BANKING SECTOR AND THE ECONOMY OF THE NATION,CREATE A PROGRAM OF CASH AVAILABILITY TO THE NIGERIAN POPULACE WERE INCOME WILL BE PROVIDED TO THE COMMON MAN AND YET WILL NOT BE GIVING ACCESS TO DIRECT WITHDRAWAL.ALL HE CAN DO IS TO SCOUT FOR A GOVERNMENT RECOGNIZE JOB,COMES BACK AND INFORM THE BANK.AND IF CREDIBLY CORRECT IS SPONSORED BY THE BANK AND ONLY THE PROFIT IS GIVING TO HIM.THAT WILL MAKE THE COMMON MAN PRODUCTIVE AND LIFT OUR ECONOMY.IT IS ONLY A LAZY MAN THAT WILL NOT WORK.REMEMBER DONOT ALLOW THEM ACCESS TO THE MONEY.A PAYEE BODY SHOULD BE SET UP TO DO AND MONITOR ALL THE TRANSACTION.
I really commend the Governor Sanusi on these last sweeping of illegal microfinance bank in industry.
Sir, i will also glad if you can implore or give order to some of these microfinance bank that refused to pay their customer`s money like GOLD PACKAGE MICROFINANCE BANK. we customers are suferring ,they have been holding our money now for ELEVEN MONTHS.
THANKS
Really the present Governor of CBN has done alot in order to upgrade banks in Nigeria especially the MFB, keep it up
pls sir, l want u to send me the lists of micro-finance banks that has received their licences from CBN in nigeria. Thanks
why is central bank of nigeria official website not well updated,,i think its a shame.
i still dont understand why official websites of most nigerian banks is not well updated….no quality information…where are all the profits?
I am a staff of ezimuzo micro finance bank iyiowa odekpe anambra state. Since september 2010 till now we’ve not been paid by ndic. Though the is closed but we are helping ndic to pay customers. Pls cbn should try and pay us because have been working wit ndic since 6months without any salary. 08035511933
Allah ya saka da al-khairi ameen
The cbn are realy doing their best in the banking sector but i still feel that propal screening should be done to both the staff of the cbn and the mfb, becos that i feel is one important factor that is affecting the sector (unqualify personnel).
I think the issue with the micro finance bank is their inability to determine their position as a result of bad software, I think the cbn should also assess the various local softwares, since foreign ones are expensive, there are many softwares that are compounding the mfbs’ problems.
cbn should invite software developers/companies in order to eveluate their softwares. I can recommend one of such softwares “Bank Expert” It is good by my own standard and some mfb are using it but the cbn need to evaluate it along with other ones and recommend to the mfb the list of software to chose from.
Also the insincerity on the part of the mgt of the mfb is of great concern, cbn should increase its visit to the mfbs
Thanks