By Hope Moses-Ashike, Businessday –

The liquidity crisis, which has bedevilled the microfinance banks (MFBs) in the country, will soon be a thing of the past following the release of secured funds to the tune of N60 billion by a Nigerian firm.
The funds secured by Africa Capital and Business Support Limited, (ACBS) in partnership with Suisse Bank of London will allow MFBs in the country to access long term debt funds of up to 10 years. Benjamin Aduli, vice-chairman, ACBS Nigeria, said the funds available are enough to guarantee liquidity for the MFBs in the long term and that the interest rate for the structure is likely to be single digit.

To him, additional benefits include the provision allowing for equity investment considerations to be triggered only by request or declaration of intent of sale or a public offer by the MFB, stating also that the entire arrangement does not limit additional stock or equity offerings

The funds would be unveiled at the Business Day/ACBS 1st Annual Master Class for Microfinance Banks (MFBs) and Microfinance Institutions (MFIs) scheduled for June 24 and 25, 2010 at Transcorp Hilton, Abuja. The theme of the event is “Options for recapitalising MFBs and institutions.” It includes Cooperative Trust Fund, Tractorisation Programme, GloProf Trust Fund and Warehouse Receipt Financing.

Commenting on the development, Olutayo Adenekan, chairman, National Association of MFBs Lagos State chapter, says it’s good news but the problem is management of the funds. He admits that microfinance banks need a lot of funds to manage illiquidity. “Any fund secured for microfinance banks will help to solve the problem in the sub-sector.”

The programme is for managing directors /chief executive officers of microfinance banks, chief finance officers, business development managers, venture capitalists, Small and Medium Enterprises (SMEs) department of banks, donor agencies, registered cooperative societies, fund managers, insurance companies among others. Speakers are Karl Laryea, chairman, Biga Technologies, Czech Republic, Wolfgang Zulauf, chairman/chief executive, Suisse Bank Plc, London, Vijay Kumar, managing director/chief executive officer Smart Links ltd, Dubai and Benjamin Aduli, vice-chairman, ACBS Nigeria.

Meanwhile, Lagos State Microfinance Associations recently announced its move to bail members from drowning by establishing an intervention fund. Adenekan believes that the association has come to the realisation that the contribution of MFBs toward the fund might not be enough to make meaningful impact, rather it is planning to mobilise funds from outside the country as well as from private individuals. “Some people and organisations have already shown interest but they want us to register the fund first,” he says.

However, under the deal, Nigerian microfinance banks participating in the Mechanised Agricultural & Micro credit Investment Scheme (MAMCIS) will be given money as a Subordinated Convertible Debenture (SCD) through a specially designed scheme by Africa Capital and Business Support Limited called Africa Investor Protector Programme (AIPP).

MAMCIS is a special funding scheme designed by ACBS to provide finance to micro and small-scale farmers across the country through participating Microfinance Banks. The farmers must, however, be members of participating cooperative societies. This is intended to leverage the Agricultural Credit Guarantee Scheme (ACGS) of the Central Bank of Nigeria and make it accessible to the common man.

Explaining the dynamics of Africa Investor Protector Programme, Aduli, says the benefit to microfinance banks participating in MAMCIS programme and taking advantage of Africa Investor Protector Programme (AIPP) funding programme are many.

“For any MFB taking advantage of this scheme, it will have access to long-term debt fund, which can be capitalised by the MFBs in the process of repayment. This means that the MFBs retain control. Also, the Subordinated Convertible Debentures are naira denominated, thereby mitigating exchange rate risks as hedging is done by an offshore trust fund (AfProf Investment Trust Fund),” he states.