Nigeria: NAMB Strengthening Microfinance Sector
The National Association of Microfinance Banks (NAMB) has in the past few years been striving hard to ensure that the microfinance banking services is delivered to the economically active poor that reside in rural areas across Nigeria.
The Association is not unaware of the difficult turf it found itself where several attempts were made in the past to reach the rural poor that constitute over 60% of the population through a continuous unsustainable rural development programmes.
This is also compounded by the fact the commercial banks are reluctant to venture into rural banking or are unsuccessful in some cases because of the perceived risks associated with it even though there is huge potential yet to be tapped.
Also associated to these and other challenges is the lack of confidence in the microfinance sector resulting from the nefarious activities of fraudulent operators and dashed hopes from unfulfilled poverty intervention programmes from several levels.
The sector was however, gladly, revamped with introduction of Microfinance Policy Framework by the Central Bank of Nigeria in 2005 and revised in 2011. The policy, “seeks to enhance the access of micro-entrepreneurs and low income household to financial services required to expand and modernise their operations”.
The 2011 revised Policy also categorised the microfinance banks in to three in order to strengthen them for better efficiency. The policy also encourages microfinance banks to merge as a way of improving their financial liquidity and ensure stability in the industry.
The microfinance were classified into Unit banks with N20m as share capital, State banks having N100m as share capital and National bank with a paid up share capital of N1bn.
It is from this policy that NAMB derives its powers to coordinate the over 800 microfinance banks currently operating in the sector. The policy mandates NAMB to ensure uniform standards, transparency, and good corporate governance practices among members.
The Association is also to serve as a platform for peer review, capacity building, generic product development and marketing, as well as resource sharing.
Barely a couple of weeks into office the first executive officers of NAMB were faced with the most daring challenge of having to deal with the revocation of 224 microfinance banks licences, which was a tsunami of sort in the industry. This axe by CBN was the test case for the new association and the industry at large.
The new executive in dealing with the problem showed commitment and tenacity of purpose by engaging the CBN into taking a second look at some these banks whose licences were revoked. While the diplomatic shuttle lasted, which paid off at the end, the CBN was able to give 121 microfinance banks a second chance. This singular action calmed the industry that was just coming out from brinks.
Having overcoming this gargantuan test, the Association is now poised to address other numerous challenges facing the microfinance banking sector. And one of such challenges is the managerial ineptitude.
Microfinance banking can be said to be new and the core industry participants, especially the managing directors, whom were former staffers of commercial banks came into the industry with the training and orientation they received from the commercial banks, whose sole purpose is profit making rather than alleviating poverty, which is seen as social service. This development did not augur well for the development microfinance banking and thus became a cork in the development of a vibrant industry that is meant to serve the poor living in both urban and rural areas.
One other factor worthy of noting is that the best hands industry are unwilling to serve at rural areas.
To address this gap the CBN, NAMB and the Chartered Institute of Bankers (CIBN) formed a tria pertrait relationship in providing certification training known as Microfinance Certification Programme (MCP) for the all the managing directors of microfinance banks in country. The certification exercise will eventually become the entry requirement for any will – be managing director. At the moment about three hundred managing directors have been certified by CIBN. In addition to this feat NAMB is now represented by its president on the board of CIBN.
There is also the Mandatory Continuing Professional Education (MCPE), which is meant to update the staff of microfinance banks with the relevant skills in microfinance banking.
The CBN is also looking at extending such training to directors of these microfinance banks, whose role is critical in the attainment of the overall objective of improving financial access and stimulating economic growth at the rural level.
On its part, NAMB has made the capacity building one of the core activities, which it intends to impact the requisite microfinance banking knowledge to its members for an effective and efficient service delivery that meets internationally best practices. To this end the Association organised a workshop for internal auditors of all the microfinance banks and it was conducted simultaneously in the six geo-political zones of the country.
The internal audit workshop was meant to prepare the participants with the knowledge of reporting financial and operating information as accurately and reliably as possible that would lead to attainment of the organization’s objectives. And also to make them understand that their work will assist other staff in the discharge their responsibilities effectively.
Meanwhile, prior to this, members of NAMB Central Executive Committee undertook an exposure tour to Germany, where for fourty years not a single microfinance bank has gone under. The tour was organised by German International Cooperation (GIZ).
The Association is also strategically positioned within the regulatory organs of the CBN such the Microfinance Advisory Board Meeting (MAB) and the Committee of Microfinance Banks in Nigeria (COMBIN) with a view to be having hindsights into the activities of microfinance banking in general and to make inputs in the interest of its members.
In line with its vision of being an internationally respected microfinance industry representative, the Association signed two memorandums of understanding (MoU) with German International Cooperation (GIZ) and FGN/IFAD Rural Finance Institute Building Programme (RUFIN) of the Federal Ministry of Agriculture and Rural Development.
The MoU with GIZ is under the its Pro-poor Growth and Promotion of Employment in Nigeria (SEDAN), which involves support for the Accounting and MIS system development of NAMB and its states chapters and the provision of a consultant, hardware and accounting software. In fulfilment of the first phase of the agreement GIZ has trained secretariat staff of 9 state chapters in the use of Cloud Accounting Software.
While the agreement with FGN/IFAD RUFIN is to technical support, facility linkage, capacity building and exposure programmes for NAMB executives to get acquainted with operations and sustainability strategies in line with internationally recognised best practices.
In order to consolidate these gains and strengthening the Association towards meeting it goals and objectives of fostering the growth and development of the microfinance banking sector appointed Mal. Kabir Mustapha Yar’adua as Executive Secretary to head the National Secretariat.
On assumption of office Mal.Yar’adua took a colossal look at the constitution which is the working document and the guide for the operations of the Association and streamline its objectives into four main areas; Advocacy, Networking, Training and Promotion of self regulation.
He also developed a business plan that lunches the association on the path of sustainability.
The Association to further reinforce the national secretariat employed five heads of department to oversee its operations in the following areas; Accounts, Admin/Training, Audit and Public Affairs.
The National Association of Microfinance Banks (NAMB) with its 2nd elected executive led by Hon. Jethro M. Akun (mon) is now better positioned to implement its planned policies that will ensure every member operates in a conducive environment and in line with the microfinance policy, regulatory and supervisory framework.
By Abdel – Rahman Muhammad
Public Affairs Department
National Association of Microfinance Banks
No. 13, Road 125, Dagah Street
Kado Phase I, Kado