Microfinance banks want government to be proactive

By MODEY PETERS, 234next.com –

Operators of microfinance banks in Cross River State say the ongoing reforms in the banking sector will not be effective unless the Central Bank of Nigeria [CBN], ensures that government at all levels pay their one per cent contribution to micro finance banks as directed by the CBN.

Some of the operators who commented on the non remittance, said since the CBN unfolded the plan five years ago to get the three tiers of government to contribute to financing micro economic ventures through micro finance banks in the country, the programme has remained in the cooler as nothing has been done by the CBN to implement the decision.

Samuel Udoh, the secretary, National Association of Micro Finance Banks in Cross River state, explained that with a one per cent contribution by the governments to micro finance banks, more of the economically active poor will be touched thereby giving the economy a multiplier effect. Mr. Udoh, managing director of Bakassi Microfinance Bank, Calabar, said if the CBN means well for the economy through expansive private sector participation, then the contributory funding of economic ventures at the rural level was most necessary.

Microfinance banks can do more

While commending the CBN for the reforms in the banking sector which has also resulted in the training and certification of microfinance banks in the country, the micro finance bank chief said the development has further strengthened the capacity of the banks to operate adding that given the necessary incentives in addition to the training more community-based investors would be reached with facilities that enhance business growth and the economy in the long run.

John Owan, managing director of Ekondo Microfinance Bank, said the one percent contribution by government to micro finance banks will boost the economy, stressing that the Cross River State government has already proposed a legal framework under the Microfinance Agency to tow the line of the CBN in that regard.

On the banking reforms anchored by the CBN, Mr. Owan stated that “the reforms have affected us. Interest rates have plummeted downward. Cost of funds has changed. Business opportunities have declined. A plethora of bad debt has caused many banks to soft pedal on lending.” He expressed optimism that the reforms will get the microfinance banks to deliver efficient services to clients, noting that “many microfinance banks are operating as small ventures commercial banks, so reforms will make such banks do more to meet standard. They would alleviate more of the poverty of the economically active poor. So the social and profitability aspects of the microfinance banks will be measured by the expansion to more clients.