By Stanley Oronsaye, 234next.com

About 50 microfinance banks in the country may soon get a lifeline as a firm of investors has indicated interest in the sector.

Africa Capital and Business Support Limited (ACBS) said it has secured $400 million (N6 billion) from Suisse Bank Plc for onward investment in microfinance institutions. Benjamin Aduli, vice chairman of the company said it will invest in as many microfinance institutions in West Africa as possible.

“For now, we plan to invest in only 50 microfinance banks (MFBs) in Nigeria and if there is justification we may increase the number in future.”

Funding partnership

A fortnight ago, ACBS announced the signing of a Memorandum of Understanding with Integrated Microfinance Bank Limited (IMFB) for injection of funds. He said the firm was interested in IMFB because of its customer base and branch network. IMFB was one of the largest microfinance banks in the country until it applied to the regulators in September last year to temporarily close its operations due to liquidity problems.

According to Aduli, it is currently doing due diligence on five MFBs in Nigeria in line with the criteria set by its foreign partners. He however said the funds injection is not in form of equity as the company would pull out their funds as soon as possible.

“We represent Suisse Bank Plc in Nigeria. We do not do equity; we plan to exit though an Initial Public Offering in a few years time when the MFBs are stabilized,” he stated in an email response.

Microfinance sector

The microfinance sector has faced turbulence in the last few years since the reforms carried out by the Central Bank of Nigeria (CBN) in 2006. Since then, over 800 MFBs have been issued license with many of them not able to meet obligations to their customers.

Sanusi Lamido, CBN governor said recently that microfinance banks in the country have performed at less than optimal and that it was carrying out a systematic review of the current microfinance policy with a view to making it add more value to the economy. He said chief executive officers of microfinance banks in the country would be made to undergo examination in order to determine their level of professional competence, adding that those found wanting will be relieved of the positions.

Nigeria Deposit Insurance Corporation (NDIC) has also expressed concern about the poor performance of the sector. Umaru Ibrahim, acting managing director and chief executive of NDIC said recently that the poor corporate governance culture among operators was responsible for the dismal performance of companies in the sector. He said the corporation has completed a special audit of microfinance banks in the country, adding that operators found wanting will face appropriate sanctions.