Clara Oloniniyi, the chairperson, National Association of Microfinance Banks (NAMB), Lagos chapter, on Sunday predicted that the microfinance banking industry would witness a major boom in 2015.
She made the prediction in an interview with the News Agency of Nigeria (NAN) in Lagos.
The chairperson said that she based her prediction on the premise that the year held much prospects for market in the industry.
“Though it is a year of elections and the government purse is leaner because of the falling oil prices, we in microfinance industry still expect buoyancy.
“We will do well this year because we serve the grassroots and households.
“The grassroots people we deal with operate in free enterprise economy, where there is freedom to take your own economic decisions.
“We deal with active poor at grassroots, not the aggregate economy; so, we can easily study factors and the effect of changes in these factors,” she said.
She added that the grassroots operations could isolate the industry from economic downturn, because growth at the grassroots remained relatively stable.
Oloniniyi said that when growth rate in the macro economy was slowed, the growth at the micro economic level could be relatively stable.
She said that people would meet the basic needs of life before saving and engaging in other luxuries.
“I, therefore, advise my colleagues to concentrate on the core business of micro-financing”.
Oloniniyi, who commended stakeholders in the industry, said their efforts contributed to the stability and progress of the banks in 2014.
She, however, warned on the need to exercise caution on bigger loans because of the forthcoming elections. “Consequently, I advise my colleagues not to be too bullish in taking on bigger loans but to be cautious in their risk management approach until the elections are over.
“Though we believe everything will go smoothly by the grace of God, it is always good to maintain all our regulatory ratios within tolerable limits. “This is because these ratios are put there to guide and protect the business and the market.
“Caution is the word. If the regulator requires liquidity ratio of 20 percent, there is nothing bad in doing 30 percent.
“If it requires one percent for corporate entity, there is nothing bad in doing three percent or two percent.
“But, why must you expose five percent of your shareholders’ fund to only one customer and over-concentrate your risk when you can spread your risk”.
SOURCE: Businessday Online
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