Nigeria: How $7.6m foreign fund can improve MFBs’ financial transparency
By Hope Moses-Ashike, Business Day Online
Financial transparency and consumer protection principles of microfinance banks in the country as well as other Sub-Saharan Africa will improve if they can leverage on the $7.6 million partnership programme of MasterCard Foundation and Small Enterprise Education and Promotion (SEEP).
The MasterCard Foundation, a private, Canada-based foundation that focuses on education and microfinance, and the SEEP Network, a US- based network of micro enterprise practitioners, recently entered into a four-year, USD 7.6 million partnership to improve microfinance associations in Sub-Saharan Africa.
The funds, according to Charlotte Newman, Research Associate,Microcapital.org, will enable eight microfinance associations with a membership of approximately 500 microfinance institutions (MFIs) to improve their management capacity and improve financial transparency and consumer protection principles.
Reeta Roy, president and CEO, MasterCard Foundation, said: “This partnership will enable African microfinance associations to mainstream client protection principles across the industry, so that clients benefit from the responsible delivery of financial services.”
Reacting to the development, Olufemi Babajide, chairman, National Association of Microfinance Banks (NAMB) South West zone, said the association was ready to receive the fund.
He said the association has everything it takes to access the fund including technology, human capacity, exposure among others, adding that what is lacking is fund for on-lending to the poor, but active people.
“It is coming at the right time. Let them come. We are set to have the fund. A lot of donor agencies are willing to support microfinance banks in Nigeria,” he said.
The six clients protection principles was agreed upon by the international microfinance community to protect the clients at a possible exploitation, unethical practices by microfinance banks and other operators in the sector.
The rationale for the protection principle is because the main clients of microfinance banks are usually not empowered to be able to engage the microfinance banks in a very usual business relationship. For instance, they do not have the right education; they do not have access to some information, so there is therefore the possibility that they can be undermined by operators.
Adoption of these client protection principles can bring about a healthy relationship between stakeholder and customers of microfinance banks.
The six principles are very clear, which include having pricing that are affordable in terms of interest rates and other charges. It also talked about not using unethical process to make demand for repayment, and maintaining the privacy of your client, among others.
However, most microfinance banks operating in the country have not yet adopted the principles except Lift Above Poverty Organisation (LAPO) Microfinance bank limited.
According to Godwin Ehigiamusoe, managing director, LAPO Microfinance Bank, some of the microfinance banks have been encouraged to adopt and implement the principles.