Nigeria: Association Prepares Micro-Finance Banks for Uniform Software

Chairman of the National Association of Microfinance Banks (NAMB) in the South-west zone, Mr Olufemi Babajide, has urged members to look forward to the proposed uniform software system.

Babajide said yesterday in Lagos that the Central Bank of Nigeria (CBN) was working on the modality to ensure the reality of the software system.

He said the apex bank recently invited some operators of micro-finance banks to make enquiries on some of the requirements.

“CBN has invited some micro-finance banks to make enquiries about the requirements that we need. That one is ongoing. They are working on that in about five centres including Lagos and Abuja,” he said.

The CBN in 2012 proposed a uniform software platform for operators of micro-finance banks to make the sub-sector vibrant.

Babajide said that the aim of the software was to help micro-finance operators maximise costs of operation. He said that it would enhance uniformity in the operation of the sub-sector.

He said: “It’s to ensure that we have uniformity so that when the regulators and donor agencies come, if they say they want information, they can get it. All we have presently is over 500 software.

“That one is confusing; quite a number of them can’t prepare ordinary basic report that the regulator needs and instead of us going to spend money, they want to make sure that we have what is called economies of scale whereby if we adopt same software, the cost will be better for the micro-finance banks, and for the providers too. About 1000 micro-finance banks can sign into one software, that’s beautiful, and the cost would be very low for all of us.

“Some are spending as high as N500, 000, N1 million on annual maintenance charges. We don’t need to spend more than N50, 000 if all of us are keyed into one software.”

Babajide said that the uniform software would facilitate auditing of the operators’ statement of accounts by the regulatory body. NAN

SOURCE: Daily Trust

Nigeria: Affordable housing requires microfinance approach – MfB MD

By Yinka Kolawole, Vanguard

The need to adopt the principles of microfinance has been advocated in the quest by government to provide affordable housing for low-income earners in the country.

Managing Director of LAPO Microfinance Bank, Mr. Godwin Ehigiamusoe, alluded to this in his presentation at a housing exhibition recently held in Abuja. Speaking on the topic, “Achieving affordable housing: Creating 500,000 housing units by 2016 through housing microfinance”, he noted that traditional mortgage practices do not take care of low-income people.

Microfinance basically entails the provision of financial services to micro-entrepreneurs and small businesses, which lack access to banking and related services due to the high transaction costs associated with serving these client categories. The two main mechanisms for the delivery of financial services to such clients are: relationship-based banking for individual entrepreneurs and small businesses; and group-based models, where several entrepreneurs come together to apply for loans and other services as a group.

Ehigiamusoe asserted that much like microfinance, affordable housing is about liberalising access to mortgage and also the possibility to use flexible structures and processes to achieve mass housing targets on a sustainable basis. He noted that housing is required by the poor because it is a basic human need. Also, because among the poor, there is strong connection between the home as a place of shelter or as a means for engaging in income generating activities.

The LAPO MfB boss said that the targets of affordable housing are ready clients, customers and members of microfinance institutions, such as MfBs, Cooperatives and NGOs. “These people organisations have developed flexible and responsive structures and procedures that could be useful for providing mass housing facility.

MFIs are already active in provision of houses to low-income people across developing nations such as Bangladesh, India, Kenya, Bolivia and Mexico.” He identified challenges of housing microfinance to include policy and regulatory constraints, lack of funding, and inadequacy capacity. According to him, a major constraint is the regulatory definition of micro-loans in terms of volume and tenor, adding that housing loans are usually of larger sizes and of longer tenor.

Ehigiamusoe said the challenge of lack of funding is two-dimensional – the volume of funds required for housing is not available to microfinance banks as they have limited options for deposit mobilisation; and the problem of asset-liability mismatch that will arise when housing microfinance is provided by MfBs.

On inadequate capacity, he noted that there is a lack of awareness on technical skills required for providing housing microfinance in the country. “Like microfinance, affordable housing for the poor will require flexible and responsive strategies which differ from the formal mortgage practices. It takes time and resources to build the required competences.”

He called for a review of the microfinance supervisory guidelines that will recognise the roles that microfinance banks can play in provision of mass housing and review size and tenor of micro-loans. On the issue of funding, Ehigiamusoe recommended the establishment of funding linkages between microfinance banks and cooperatives on the one hand, and commercial banks on the other and also called for the inclusion of mass housing loans into the proposed micro and small enterprise development fund by the Central Bank of Nigeria (CBN).

In addition, he emphasised the need for technical support for microfinance banks and cooperatives. “The soft technology of mass housing is reaching maturity in other countries and regulatory jurisdictions, and Nigerian microfinance banks can learn from the experiences. Technical assistance focus should be on mobilization of potential beneficiaries, need assessment, and structuring of loans and repayment schedule,” he stated.

Nigeria: KPMG – Only 20% of Nigeria’s Population in Banking System

By Obinna Chima, This Day Live

Notwithstanding the country’s position as Africa’s most populous country, KPMG has disclosed that only about 20 per cent of the population is banked.

The foremost audit, financial and tax advisory firm stated this in a report titled: ‘Africa Banking Industry Customer Satisfaction Survey,’ for April 2013, made available to THISDAY Tuesday.

It however stated that two-thirds of the country’s population “have never banked at all before.”
In a bid to increase access to financial services, the Central Bank of Nigeria (CBN) had last year launched the Financial Inclusion Strategy (FIS).

The FIS is a concerted attempt to increase access to a range of financial services such as payments, savings, and bring more people into the banking system. The apex bank had identified lack of access to financial services as a challenge to the country’s growth.

Continuing, the KPMG report pointed out that the Nigerian banking industry is made up of 20 banks with nearly 6,000 branches, most of which are concentrated in the urban areas. It also identified the concentration of banks in urban areas as a factor that contributes to the low level of banking penetration.

It explained: “Nigeria’s banking sector is expected to grow from about $117 billion in 2011 to more than $168 billion in 2015 (a CAGR of around 10 per cent). The sector has recently experienced a number of regulatory changes including a repeal of universal banking licenses and the promulgation of more stringent regulations by the country’s central bank which is aiming to reduce soaring books of non-performing loans and stamp out severe breaches of corporate governance.

“However, with the establishment of the Asset Management Corporation of Nigeria (AMCON) to purchase toxic assets of banks and recapitalise troubled banks, some stability has returned to the sector leading rating agency Standard & Poor’s (S&P) to upgrade the sector in 2012 to a positive outlook due to the country’s improved asset quality, capitalisation and corporate governance.”

With 77.9 per cent, the report ranked Guaranty Trust Bank Plc emerged top among the first 10 ‘Most Customer-focused Banks’ in the country. It was closely followed by Zenith Bank Plc with 77.7 per cent and Stanbic IBTC with 76.1 per cent. Others on the list were Diamond Bank (75.7 per cent), Fidelity Bank (75 per cent), Standard Chartered (74.8 per cent), First City Monument Bank Plc (74.4 per cent), Sterling Bank (73.9 per cent) and Access Bank (73.1 per cent).

“With ATMs becoming almost ubiquitous in Nigerian cities, it is not surprising that it has been the fastest growing channel in recent years. Almost eight in 10 customers surveyed use the ATM and nearly two thirds of these people visit an ATM on a weekly basis with cash withdrawal and balance enquiry amongst the most common transactions customers perform via the ATM.

“However, despite the proliferation of new channels in recent years, our findings show that adoption of other alternate channels is still comparatively low with very few respondents saying they use internet banking (7 per cent), Point of Sale (PoS) (6 per cent), telephone banking (5 per cent) and mobile payments (2 per cent),” it added.

Nigeria: CBN Extends Deadline for MFBs, Mortgage Institutions

By Obinna Chima, This Day Live

The Central Bank of Nigeria (CBN) Tuesday announced the extension of the deadline for compliance with the revised microfinance policy regulation and supervisory framework for Microfinance Banks (MFBs) from December 31, 2012 to December 31, 2013.

The was just as the apex bank also revealed that the compliance with the revised guidelines for Primary Mortgage Banks (PMBs) has been moved from April 30, 2013 to December 31, 2013.

The CBN stated this in separate circulars signed by its Director, Other Financial Institutions Supervision Department, Mr. Olufemi Fabamwo, posted on its website.

The circular for MFB operators explained that the decision extend the deadline was “to allow more time for capital raising and business combination options towards meeting the capital requirements for each category of MFB and for rationalising the existing branches/cash centres, etc., where necessary.”

On the other hand, the circular for PMBs said that the extension was to afford all affected PMBs sufficient time to exercise any of the options for capital raising, business combination and downscaling highlighted in an earlier circular dated 14thDecember, 2012 issued by the banking sector regulator.

“All PMBs are once again strongly advised to conduct due diligence and seek professional advice in exercising any of the options and to conclude the processes before the new deadline in order to allow sufficient time for capital verification and necessary regulatory approvals.

“All directors, particularly the managing directors/chief executive officers of all PMBs are again reminded that prior approval of the CBN is required before the disposal of assets of the bank, as they will be held jointly and severally liable for any asset stripping,” it added.

Nigeria: Microfinance banks urge CBN to review directive on unit operators

The Ikeja branch of National Association of Microfinance Banks (NAMBs) has appealed to the Central Bank of Nigeria (CBN) to review its directive that unit microfinance banks should not operate cash outlets outside the bank.

Mr Dele Oyekanmi, chairman of the branch, said yesterday in Lagos that the directive had affected the sub-sector.

Oyekanmi said the outlets were the solid rock on which the unit operator thrived.

A unit operator is that who operates from one office, while the outlet is a meeting point between the unit operator and his customers. Oyekanmi said, adding that the directive that all transactions must hold at the head office had discouraged customers from transacting business with the unit operators.
“The situation is forcing customers to have divergent opinions on the viability of microfinance banks.
“Some customers are threatening to close their accounts for the fear of losing their money should the bank go under,” he said.

Oyekanmi said that the situation did not augur well for the operation of microfinance banks because an economy is built from the base to the peak, adding that those who make up the base are those in the grassroots.

“Microfinance operators take banking services to the people at market places because the traders do not have the luxury of time to go to the head office to withdraw or deposit money.
“Instead they do the transaction with us right in the cash outlets located in the market places,” he said. (NAN)

Nigeria: CBN begins N150,000 ($950) cheque withdrawal limit nationwide

By Collins Nweze, The Nation

The Central Bank of Nigeria (CBN) will from June 1, 2013 implement a policy that places N150,000 limit on all over-the-counter cheque withdrawals in commercial banks, microfinance banks and primary mortgage institutions (PMIs) nationwide.

In a circular to all stakeholders, CBN Director, Banking and Payment System, Dipo Fatokun said the policy is in recognition of the success recorded in Lagos. Besides, he said the need to extend such success to other states within the federation nessecisated the new regime.

He said the Lagos success story has also contributed to the reduction of fraud on cheques and aided the National Financial Inclusion (NFI) Strategy.

“All banks are therefore directed to ensure that implementation of N150,000 limit on third party cheques that could be cashed over the counter nationwide , with effect from June 1, 2013,” he said.

Also, the CBN Director, directed banks to stop charging their customers payments for third party cheque below N150,000 cashed over the counter.

“All banks are hereby directed to stop charging their customers for third party cheques of up to N150,000 cashed over the counter,” he said. He explained that the policy is in recognition of the CBN role in the development of an efficient payment and settlement system that is well modernized.

Head, Shared Services at the Central Bank of Nigeria (CBN), Mr Chidi Umeano had said that the cashless project has continued to record huge success, adding that the initial challenges associated with the alternative channels are being tackled. “Banks have continued to roll out more innovative electronic payment platforms to meet customers’ expectations. The cashless policy has been very successful in Lagos considering when we started and how far we have gone in terms of PoS deployment. “When we started the cashless Lagos, we had less than 10,000 PoS in Lagos, but currently we have over 150,000 PoS machines in the state alone,” he said.

Nigeria: 64 Million Nigerians Excluded From Financial Services, Says CBN Gov

By Njadvara Musa, The Guardian (Nigeria)

CENTRAL Bank of Nigeria (CBN) Governor, Sanusi Lamido Sanusi has disclosed that 64.8 million Nigerians representing 46.3 per cent of the adult population are excluded from financial and other banking services in the country.

Speaking at the apex bank’s flag-off the implementation of a pilot National Financial Inclusion Strategy (NFIS) in Maiduguri, the Borno State capital, Friday, Sanusi said the huge exclusion gap was occasioned by long distance access points, cumbersome eligibility requirements, low financial literacy, and high costs of financial services.

He noted that to achieve the CBN’s mandate and overall economic development of the North-East sub-region and the country, the barriers to financial services are to be overcome and removed.

“The four barriers to accessing financial services in the urban and rural centres underscored the need to develop and implement this National Financial Inclusion Strategy (NFIS),” he stressed.

He said the primary aim or objectives of NFIS, was to reduce the financial exclusion rate of adults to 20 per cent by the year 2020.

On how to ensure that every adult Nigerian has access to financial services, Sanusi said, “the key initiatives in the Strategy include a tiered approach to KYC agent banking, a cash-less policy, a financial literary framework, consumer protection, and the implementation of credit enhancement schemes and programmes.”

He said specific targets have already been set for payment services, credit, income, pension, DMB and Microfinance Banks branches, ATMs, POS, banking agents, youths, and women.

He added: “A variety of stakeholders have been identified to support the full implementation of this strategy and their roles and responsibilities have been defined.”

The stakeholders, according to the CBN chief, would need to commit sufficiently to supporting the strategy and the CBN would need to take a lead in coordinating and promoting the strategy in order to achieve its goals and objectives.

In his remarks, Governor Kashim Shettima stated that in Borno State, a total of four million adults are being excluded from banking services. He, however, noted that insecurity to lives and property in the state is not unconnected to poverty, unemployment, and illiteracy.

He also assured the CBN governor that maximum security would be provided to all the base-stations of telecom firms, as they are core and basic infrastructures needed for providing financial services to the people.

Nigeria: Should State Governments Operate Microfinance Banks?

By Graham Orodje

Microfinance in Nigeria has struggled to achieve the objective of providing affordable loans to Micro enterprises and entrepreneurs. Many reasons have been identified for this failure, ranging from lack of capacity to high default rates.
Central Bank of Nigeria (CBN) has introduced several initiatives and legislation to improve the sub-sector. These include the creation of three tier system based on capital. CBN recently amended its Microfinance guidelines and gave State Governments authority to create state owned Microfinance Banks. Is this likely to lead to positive growth in the sub-sector or will State controlled Microfinance Banks become ‘white elephants’?

Government are not traditionally good managers of commercial businesses in their remit. They lack the commercial discipline to make successes of commercial enterprises. Governments at various levels, including national, state and local are heavily bureaucratic, cumbersome and slow in decision making. In the last two decades Governments around the World have recognised their shortcoming and have largely disposed of commercial enterprises to other private sector businesses. This suggests CBN’s decision may not yield the desired result.

The funds State Governments are likely to earmark for creating State controlled Microfinance Banks can be utilised in ways that can enhance the sub-sector.

It has been widely reported that many Microfinance Banks are having difficulties obtaining debt and equity funding. State Governments can create cheap and easy to access loan funds. This should provide Microfinance Banks with the ability to provide loans at lower interest rates and increase their customer base. A further option is the creation of a Loan Guarantee Scheme. It should make it easier for State and Local Microfinance Banks to obtain loans from commercial providers. These two schemes and similar schemes are likely to have better impacts on the growth of Microfinance in Nigeria than the introduction of State owned Microfinance Banks.

Nigeria: CBN, NAMB agree on review of micro finance banks’ recapitalisation

Abuja – The Central Bank of Nigeria (CBN) and National Association of Micro Finance Banks (NAMB) have agreed to set up a technical committee to resolve “grey areas’’ in the recapitalisation of micro finance banks.

Mr Jethro Akun, the National President of NAMB in Abuja on Thursday said that the two reached the agreement in a meeting, chaired by CBN Governor, Malam Sanusi Lamido Sanusi, on Tuesday.

Akun said that the meeting discussed challenges facing operators of Micro Finance Banks (MFBs) in complying with the Revised Microfinance Policy Framework (RMPF).

He said that the meeting also discussed extensively issues on the capital requirements for each category of MFBs and existing branches as well as cash centres.

“We discussed and we finally agreed that as partners who are working toward financial inclusion, providing access to finance for development and employment for many unemployed people, there is need for us to set-up a technical committee.

“`The committee is made up of CBN and NAMB to look at grey areas of policy for the smooth operation of the micro finance sub-sector and the benefit of the entire society.

“We all acknowledged the contribution of micro finance banks to the economy and we are all happy that the CBN governor is passionate about the development of the sub-sector,’’ he said.

Akun said that the meeting also agreed to look at “any other thing seen as an impediment’’ to the smooth growth and expansion of the microfinance sub-sector.

The CBN had given MFBs up till Dec. 31, 2012 to comply with its new stipulated minimum capital requirements.

The policy provides for three categories of MFBs, namely unit, state and national.

According to the CBN, a unit MFB licence is authorised to operate in one location and shall be required to have a minimum paid up capital of N20 million.
The unit MFB is also prohibited from having branches or cash centres.

In the second category, state MFB is authorised to operate in one state or the Federal Capital Territory (FCT) with a minimum paid up capital of 100 million.
The state MFB is allowed to open branches within the state or the FCT, subject to prior written approval for each new branch or cash centre.

In the third category, national MFBs are expected to have N2 billion and are allowed to open branches in all states of the federation and the FCT, subject to prior written approval for each new branch or cash centre.

NAN also recalls that the CBN had previously issued circulars threatening to revoke licences of MFBs operating unapproved branches and cash centres after the expiration of the Dec. 31, 2012 deadline.

However, till date, the apex bank has yet to sanction any defaulting bank. (NAN)

Nigeria: Boji Boji Micro-Finance Bank Limited And CBN Mandate

BY Obi, Chiejile, The Pointer

BOJI Boji Micro Finance Bank Limited (BBMFBL) is one of the banks statutory established under the roll call of community banks. The BBMFBL was established in 1995 when two others of the same designation had long been functioning in Boji Boji metropolis of Agbor and Owa sides.

Understandably, community banks were put in place for rural communities to access and benefit from banking operations. This was to help and sustain business at the grass root. The euphoria that greeted the new concept in banking industry became motivational for many communities which have men and women with financial muscles to have rat race to establish their own community banks.

As a result of the financial impropriety, dishonesty and lack of credibility, customers became apprehensive to do business with community banks which inevitably failed. Boji Boji Community Bank did not lose hope of emerging from the seeming dark tunnel to luminous light of community banking. As if personified, the BBCBL trudged on.

The founders of the bank then includes, Chief Godwin Chukwuka Melekwe, Lieutenant Colonel Buzubge, Chief Onyebigwua Christian Nwokenye; Chief Ephraim Osondu, Nze Samuel Odinga Ojikwu and then Mr. Peter Oiwo proved to be astonished, but unsuspecting world that they meant business by investing on their capital shares rather than touching them, the capital. They continued recapitalizing to the glory and advancement of Boji Boji Community Bank.

While commercial banks and other community banks gradually fizzled out of operation. Boji Boji Community bank continued leaping from glory to glory.

With passage of time, most of the surviving community banks were christened Microfinance banks. This was aimed, understandably to give out credit facilities for small and medium enterprises. Of these banks which survived their teething problem in the banking industry, is Boji Boji Microfinance Bank now situated at its permanent site at no. 6 Morka Street, Boji Boji Owa.

With this status, the Delta State Government partnered with it to give microfinance to cluster groups in two Ika and Ukwuani Local Government Areas of the State.

From 2010, even till now, customers drawn from College of Education, Agbor, primary and post primary school teachers, business men and women, traders, market women and even artisans, flock the banking hall for lodgement, withdrawal, obtaining and returning loans to the bank. There is always a beehive of activities in the banking hall.

The question that readily comes to mind is what were/are the enabling factors that have kept and still keeping BBMFBL going following the whirl-n-gig of the banking times?

I think the answers to the continuity of operation of Boji Boji Microfinance Bank Limited, were/are contingent on three premises.

Firstly, prudent management. This bank since inception in the 90s has enjoyed managerial competence and ingenuity of a crop of management team under the behest of the now Managing Director (MD), Barrister Peter Oiwo from the on-near physiological appraisal of the man, he is calm, calculated and administratively committed gentleman that takes the business of the management very seriously

Secondly, the founding fathers of the Bank, now led by chief Onyebigwua. C. Nwokenye has continued to retain their share holdings without withdrawing the shares but capitalization.

Thirdly –good take home packets of members of staff and teaching on the job, and job-satisfaction by the management and staff of the bank. Conversely, with the fattish salaries in the public of the economy if their condition of service was/is nothing to write home about, many staff would have been the bank clean pairs of heels.

These three factors in chief have made the bank as strong as the bank of England. What more, facilities for modern banking are found and used in the bank.

As a result of competence, reliability and accessibility to facility which is more of osmosis have drawn many members of the academic world and privet individuals including market women and to glue to the bank.

Apart from the empowerment of the rural populace and facility to customers, the bank is community friendly.

When the bank was at its temporary site at Abraka Road, Boji-Boji Owa, a part of the road was not motorable, thus making it difficult for customers to access the bank was rehabilitated by the bank. That project no doubt, entailed huge sums of money.

The bank also embarked on the rehabilitation of the portion that has gone bad along the Morka Street, Boji Boji, Owa where the bank is situated. The road was ultimately rehabilitated last year (2012).

No customer of the bank has any course to complain of either unfriendliness nor not getting his/her deposited on demand, little wonder the banking hall is flocked by its customers everyday especially on pay days for salary customers.

Boji Boji Microfinance Bank Limited is no doubt meeting the needs of the people and developing the area.

The Board of Directors deftly managed by the Chairman, Chief Onyebigwa Christian Nwokenye has continued to offer their administrative ingenuities to be financially disciplined board.

From the grave vines, it is understood that no stakeholders withdraw his capital rather they seem to be re-capitalizing with shareholders having a sustained faith in the financial property and transparency of the management of the bank.

However, is not yet Uhuru or Eureka as the financial institution has Some challenges that that threaten to scuttle the success of the BBMFBL. At this juncture, it is pertinently worthwhile to resort to the chairman’s statement in the 14th Annual General Meeting (AGM) of the bank held on November 28,2012.

Chief Nwokenye said that the bank has not hooked to electricity generated by Power Holding Company of Nigeria (PHCN) as a result of outages, bad road at the front of the bank, increased fuel pump price and the worsening insecurity situation across the country.

The chairman pointed out that, in spite the obvious challenges that the bank performed well in the year 2011 under review.

The chairman stated that the staff during the year was exposed to training to enable them to be certified by the Chartered Institution of Bankers Nigeria as Microfinance Bankers by exposing them to relevant examinations of the institute.

The highpoint of Chief Nwokenye’s statement was that the management of the bank has applied to the Central Bank of Nigeria (CBN) to upgrade the bank from Unit Microfinance Bank to State Microfinance Bank to enable it to get branches in the state.

The successful operation of Unit Microfinance Bank on the back drop of transparency, propriety and superior number of customers, have made the Central Bank of Nigeria to give them, the microfinance bank mandate on Electronic Payment in Nigeria.

A letter of October 10,2012 with reference AG/CMFB/882/C/11/90 headed: “RE: CBN mandate on Electronic Payment in Nigeria Issues with payment of staff salaries Through ‘Microfinance Bank” advised all staff and pensioners of Delta State Government who would want to operate their salary or pension account with them (the Banks) could do so.

The CBN letter routed through the State Accountant General’s office, Asaba pointed out that Microfinance Banks has met with the requirement of CBN on Electronic Payment by integration of their banking system into E transact electronic pay system.

It is no gainsay the truism that Boji Boji Microfinance Bank Limited and other few microfinance banks may have been used as a case study that made the mandate by the CBN possible.

The CBN’s mandate to BBMFBL and other microfinance banks is to further credit the transparency, propriety and dependability of mostly, the Bank (BBMFBL).

The mandate is to strengthen the bank in all ramifications of Banking business with a prediction that this finance would no doubt be upgraded to City Bank to enable it diversify and have branches throughout the State.

Many of the banks’ customers have been praying that Boji Boji Microfinance Bank be upgraded to the desired City Microfinance Bank Limited.

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