The Chief Executive Officer of Accion Microfinance Bank, Ms. Bunmi Lawson, has decried the cost of doing business in Nigeria, stressing that the hash operating environment is hindering the growth of microfinance banks in the country.
In a chat with newsmen in Lagos, she stressed that the major challenge for MFBs and other growth companies was the cost of doing business in Nigeria.
Specifically, she said, “You have to spend a lot on infrastructure. You have to generate your own power, water supply, connectivity. So we spend a lot to bring these services to people at a cheap rate at cost that they can afford and is sustainable.
“Thankfully we have started to see some improvement and we hope that the government would continue to invest in infrastructure, power especially and technology to ensure that banks like us can operate and reduce our cost of operation and that would make us provide better services to our customers.”
She also disclosed that the sector witnessed low loan repayment last year as a result of the challenges most businesses faced in 2014.
“2014 was a challenging year especially for businesses and we saw a slight deterioration on the loan portfolio part. In 2013, only three per cent of our clients delayed beyond 30 days, not that we wrote it off. But in 2014 we closed at five per cent. Although the five per cent is still a good portfolio quality, we feel it was a reflection of the economy.
“We certainly hope that 2015 after the election has settled it would become better. Although when you look at the decline in oil prices and the deterioration of the naira, it may be a tough time. But God willing, we would be able to turn things around and ensure we continue to grow businesses and that people are able to repay their loans, “she stated.
Speaking on how MFBs can survive the hash operating environment, she said microfinance banks must have the right products and be more creative.
She stated that despite the economic turndown, tight liquidity and the devaluation of the naira businesses that it fund continue to thrive.
“So the impact of that downturn is not felt immediate on them and sometimes even the small businesses may then need our support and some who didn’t need our support would need it so the economic downturn does not affect them in a negative way. In fact with the downturn, microfinance banks are even more required for people to save their money to also access loans to ensure that they are growing their business.
“We did a study recently that people who had consistently banked with us over the period of five have been able to increase their income almost 300 per cent so certainly we know that what we are doing helps people to improve their income and grow their businesses. It rewarding to hear and that we are actually achieving what microfinance banks is set out to do,” she stated.
SOURCE: This Day Live (Nigeria)
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