Nigeria: Microfinance banks may receive N4.7tr ($30 billion) grant from nine investors

NIGERIAN microfinance banks may soon be recapitalised to the tune of $30 billion about (N4.7 trillion), as nine investors have announced their willingness to inject more fund into the sector.

The $30 billion fund that may come in the form of grants to the banks would be provided by Blue Orchard; Alietheia Capital, Bank of Agriculture (BOA); Patners for Development, Nigeria Capital Development fund, French Development Agency; Proparco; PlaNet Finance, and African Development Bank (AfDB).

The Representative of Blue Orchard Microfinance Investment Managers, Maxime Bouan who spoke to journalist at the on-going first Nigeria International Microfinance Investors Conference yesterday in Abuja, said his company alone was ready to invest $5 million in the sector.

He said, with a population of 160 million people, Nigeria MFB market was the most important sector given the number of people that needs funding.

According to him, the company has already approved $3 million, which would be disbursed to MFBs in a couple of months, adding that the company was planning to double its investment in the banks because of its ability to raise more funds.

The President National Association of Microfinance Bank (NAMB) Jethro Akun in his address disclosed that a Nigerian Microfinance Private Fund institution would be established to collect funds from foreign investors to invests in MFB, which will in turn grant credit facilities to the people.

He maintained that the conference was aimed at bringing foreign investors, who are already investing in MFBs into an organised system to ensure coordinated and organised service delivery in the sector.

Akum noted that the establishment of MFB private fund institution would help in stabilising the sector by alleviating the challenges of liquidity and available refinancing funds for MFB and MFI in the country.

The MFB private fund institution, he said, would also provide the rural dwellers easy access to soft loans, and fast track the attainment of food security.

The Country Representative, International Fund for Agricultural Development (IFAD), Ms. Atsuko Toda, believed that access to finance could play a crucial role in the agricultural transformation agenda, because farmers have always been looking for credit for the adoption of technologies.

She also emphasised the importance of finance, saying it was necessary to fuel the growth of value chains and creation of job opportunities for the unemployed youths, adding that access to micro finance was crucial for smallholder farmers.

By Joke Akanmu, The Guardian

Nigeria: Finance Ministry urged to stop creation of micro agric banks

By Akinola Ajibade, The Nation

The Ministry of Finance and Central Bank of Nigeria (CBN) have been advised to stop the Bank of Agriculture (BOA) from setting up microfinance banks.

The development follows the decision of the Bank of Agriculture to establish microfinance banks in the 776 local government councils.

Giving the advise, the National Association of Microfinance Banks (NAMB) said the idea is tantamount to the abdication of duties and responsibilities on the part of Bank of Agriculture.

NAMB’s Chairman, Lagos State Chapter, Mr Olufemi Babajide, said the Bank of Agriculture would lose focus if it goes ahead with the decision to set up microfinance banks.

He said: “The policies setting up microfinance banks and the Bank of Agriculture are different. While the former was set up to reduce poverty to a minimal level, the latter was established to provide loans to small and medium scale farmers at a more flexible, and lower rates. So, inability to stop the Bank of Agriculture on the issue would affect the operations of the microfinance institutions. If the Bank of Agriculture loses its focus, what would happen to the farmers.”

He said the development is going to have spillover effects on the operations of microfinance banks, adding that the goals of setting up the banks would be defeated.

“We have over 900 microfinance banks in Nigeria today. What the Federal Government agencies need to do is to support the microfinance institutions financially, instead of trying to duplicate the efforts of the banks”, he said.

He said the Ministry of Transport is treading a similar path, arguing such efforts must be checked to avoid problems.

Babajide said many investors have sold their properties to set up microfinance banks, adding that they would find it difficult to make appreciable growth if the activities of such agencies are not checked.

Babajide said agencies, such as defunct Peoples Bank, Directorate for Food Roads and Rural Infrastructure (DFFRI), Better Life Programme, among others, were set up in the past to render microfinance services without making any success, advising the Bank of Agriculture to learn from history.

“Where is DFFRI and the Peoples Bank today? They have gone. All these agencies set up microfinance banks in the past. But they have failed to tackle the issue of poverty in Nigeria,” he added.

The CBN owns 40 per cent in the Bank of Agriculture, while the Ministry of Finance owns 60 per cent. Under the regulation, the two agencies are required to monitor and control the affairs of the bank. Besides, they are mandated to ensure the bank keeps to its goals of promoting agriculture via providing facilities to the farmers.

Nigeria: FG Provides N1bn Finance for Rural Farmers

By Yemi Akinsuyi, This Day Live

In a renewed commitment to fast-track access to finance in rural part of the country, the Bank of Agriculture has injected N1 billion for on-lending to Micro Finance Banks (MFBs) in remote areas.

The National Project Coordinator for Rural Finance Institution building Programme (RUFIN), Alhaji Musibau Azeez, disclosed this in Abuja while presenting a communiqué issued at the end of a Financial Linkage forum organised by International Fund for Agricultural Development (IFAD) and RUFIN.

To facilitate access of the Micro Finance institutions to the N1 billion, Azeez disclosed that a committee has been set up on access to the fund, calling on the development banks to increase it.

He disclosed that the target of the IFAD RUFFIN project was to attain a sustainable rural financial system in 12 states of the federation, in which 36 Local Government Areas were selected, hinting that 33 rural MFBs had already benefited.

He stressed that the importance of the stakeholders meeting was to link commercial and development banks with selected Microfinance Institutions for refinancing their micro lending and also to increase access to finance in the rural areas by encouraging financial deepening.

The statement however stressed the need to facilitate the establishment of contact and involvement of RUFIN Microfinance banks to access the N450 billion Nigerian Incentive- Based risk Sharing System for Agricultural Lending (NISAL) that is being promoted by the Central Bank and AGRA.
They further harped on the need to get affirmative action from the LGA chairmen to provide some level of funding to the MFBs.

Noting the contribution of the Bank of Agriculture and Bank of Industry in the funding of some MFBs, the forum advised RUFIN to follow-up the One billion naira set aside or on lending, so that the MFBs can access the fund as soon as possible.

They enjoined the CBN to issue detailed guidelines on down scaling and financial linkage to assist and encourage Development Micro Finance Banks to actively pursue the programme of linkage and wholesale funding support to the financial institutions.

The statement further recommended that credit facilities to farmers and rural populace should be channelled through Micro Finance institutions across the country, appealing to that fund providers for Micro lending purposes to recognise the unique cash flow cycles for various farm products when structuring repayment cycles for agriculture lending.

They urged the RUFIN project to do a follow up the issue of interest rates between commercial Banks and MFBs on one hand, and the MFBS and Village savings Groups, Micro Finance Institutions and farmers groups on the other hand.

RUFIN Technical Adviser, Prof. Adeniyi Osuntogun, however urged micro finance institutions to make savings and deposit mobilisation important aspects of their activities, adding that increase access to finance through micro lending should be deepened.

Nigeria: MFBs disburse N66bn ($406m) in six months

BY Amaka Abayomi, Vanguard

THE Central Bank of Nigeria (CBN) has disclosed that loans and advances disbursed by micro-finance banks (MfBs) in the first half of year 2011 increased by 23.8 per cent to N65.5 billion, as against N52.9bn recorded at end-December 2010.

According to the Economic Report for the first half of 2011 released by the CBN, MfBs’ total assets and liabilities increased by 9.9 per cent to N187.2bn,  while their paid-up share capital and shareholders’ funds increased by 7.2 and 7.8 per cent over the levels in December 2010 to N44.5bn and N47.4bn, respectively.

“Investible funds available to the microfinance sub-sector amounted to N17.7bn, compared with N8.8bn at end-June 2010,” the Report said.

“The funds were sourced mainly from increases in deposit liabilities (N9.3bn), paid-up capital (N3.0bn) and long-term loans (N2.8bn); and were used mainly to increase loans and advances (N12.6bn), balances with banks (N2.8bn) and short-term investments (N2bn).”

Continuing, the Report stated that among the resolutions reached at the 5th Annual Micro-finance Conference and Entrepreneurship Awards which had 1,198 participants are: the huge benefits of micro-leasing and micro-insurance should be explored by MFBs/MFIs to deepen financial inclusion; MFBs should inculcate sound risk management practices and good corporate governance, design innovative products and financial literacy/education for their clients; the CBN should endeavour to enhance the financial literacy of MSMEs; and the CBN should align regulatory actions with other policies of government, for harmony, economic and financial stability.

Microfinance policy

Also, the key decisions reached at the 11th meeting of the National Microfinance Policy Consultative Committee (NMFPCC) held on January 8, 2011 were: the deferment of the sensitization exercise and the stoppage of licensing of new MfBs; training of operators in the first and third quarters of 2011; and commencement of operations of the microfinance rating agencies in the fourth quarter of 2011.

Of equal importance is the launch of the Rural Finance Institutions Building (RUFIN) Programme, an IFAD-assisted programme in Abuja in February 2011.

The participating agencies were the CBN, Bank of Agriculture, National Poverty Alleviation Agency (NAPEP) and the Federal Department of Co-operatives.

Furthermore, the CBN, RUFIN, the United Nations Development Programme (UNDP) and NBS met to harmonise the baseline surveys on the National Micro-finance Development Strategy (NMDS) and RUFIN.

The baseline survey would provide reliable and up-to-date database on the activities of the microfinance and rural finance sub-sector.

The pilot phase of the Entrepreneurship Development Centres (EDCs)  was completed by the consultants and the final report was submitted to the Management of the CBN.

This resulted to the establishment of State Entrepreneurship Development Satellite Centres in nine states and Abuja.

Already, 84,758 entrepreneurs, comprising 42,615 graduate trainees and other 42,143 trainees who were offered business advisory services, have been trained by the EDCs.

Nigeria: Bank of Agriculture (BOA) Gives N1bn ($6.2m) To MFBs

By Grace Azubuike, Leadership

As part of efforts to facilitate increased lending to the agriculture sector of the economy, the Bank of Agriculture (BOA), has given the sum of N1 billion to rural microfinance banks.
Speaking yesterday in Abuja at the financial linkage forum held by Rural Finance Institution Building Programme (RUFIN), the National Programme Coordinator RUFIN, Mallam Musibau Azeez, said that financial linkage was a good tool which provides the needed refinancing window for the agricultural and rural transformation in the country.

According to him, loans management strategy manual already developed by the National Programme for Agriculture and Food Security (NPFS), should be widely circulated in order to help microfinance banks develop best practices in on-lending arrangements.

He, however recommended that credit facilities to farmers and the srural populace should be channelled through MFBs across the country and that the existing cooperative lending institutions should be acknowledged and built upon in the design and implementation of rural financing programmes.

In his words: “In terms of disbursement of funds under the linkage programme, the existing farmers groups under the on-going donor projects namely: NPFS and FADAMA III, should be used to pilot the scheme and there should be need for capacity building training for MFBs on designing partnership and linkage service agreement.’’ Azeez said.

The coordinator assured that women were the major target group of the programme,adding that rural poor families would directly benefit from the financial services that would be improved in terms of quality, quantity and access to deposit, loan and transfer services.