by David Masters, financialmarkets.co.uk -
Blue Orchard, the world’s biggest private sector investor in microfinance loans, has raised $195 million for a fund to help microfinance institutions (MFIs) expand and modernise.
The private equity fund will buy minority stakes in MFIs to pay for their expansion and modernisation.
BlueOrchard claims many MFIs need capital injections to improve their corporate governance and risk management systems.
With a targeted return of 20% per year, BlueOrchard said the fund is a way for investors to help people out of poverty while getting a good return for their money.
Other microfinance fund managers are planning to follow BlueOrchard’s lead.
Belgium-based Incofin and Germany-based Finance in Motion are both planning to raise similar funds.
By Hope Moses-Ashike, Businessday –
Following the liquidity crisis that has crippled operations of microfinance banks (MFBs) in the country, operators are looking offshore to beef up their capital. This formed part of the recently released 10-point plan to revitalise the sector by the national executive council of Nigerian National Association of Microfinance Banks (NAMB).
One of the central components of the plan is to strengthen ties with developmental institutions, donor agencies and foreign MFBs that would take the form of bilateral visits, meetings, conferences and exchange programmes. More so, the plan includes the creation of an emergency endowment fund for banks to use during critical emergencies. Interestingly, some financial firms in conjunction with foreign investment companies are already coming into the Nigerian microfinance sector to meet their needs.
To this effect, BusinessDay Media Limited and Africa Capital and Business Support Limited (ACBS) over the weekend, held the first Annual Master Class for MFBs and Microfinance Institutions (MFIs) at Transcorp Hilton, Abuja. The theme of the two-day conference was “Options for Recapitalising MFBs and institutions” – it included Cooperative Trust Funds, Tractorisation Programme, GloProf Trust Fund, and Warehouse Receipt Financing.
Speaking on the conference, Benjamin Aduli, vice-chairman, ACBS, said the objective was to discuss in details how the entire microfinance industry could recapitalise efficiently. “If you look at the most of the recapitalising programmes that government and the CBN have, none of them address the need of microfinance banks. The bailout by the CBN was never addressed to microfinance banks, the AMC that is going on now do not address the needs of microfinance banks. “Several funds that the CBN has created for Small and Medium Enterprises (SMEs), textiles and so on, none of them is addressed to microfinance banks,” he disclosed.
On that perspective, he stated that MFBs on their own were not having anybody focusing on providing solutions for them, as far as access to capital was concerned, and “what we are doing therefore is helping the microfinance to identify different ways they can access capital to grow.”
Meanwhile, ACBS has secured funding, totalling $400 million (N60 billion) for MFBs in the country. The funds were provided by Mainsail Trading Limited (Dubai) and secured with bank guarantees from Suisse Bank plc, a private bank based in the United Kingdom.
Against the backdrop of growing call for increase in capacity for MFBs, operators are seeking new financing options. This perhaps is coming on the heels of speculations that the CBN is making moves to increase the share capital of MFBs to N100 million, especially for those in the urban areas, and N20 million for those in the rural areas. Presently, MFBs are operating with N20 million share capital, for unit microfinance banks and N1billion for state microfinance banks.
According to Mathias Omeh, national president, NAMB, although, the CBN had not come out with a specified increase, but “it is believed it is still consulting with stakeholders and may come up with a new policy guideline at the end of this quarter.”
Meanwhile, Lagos State Microfinance Associations recently announced its move to bail out members from drowning by establishing an intervention fund.
Olutayo Adenekan, chairman of the association, believed that the association had come to the realisation that the contribution of MFBs toward the fund might not be enough to make meaningful impact, rather it was planning to mobilise funds from outside the country as well as from private individuals.
“Some people and organisations have already shown interest, but they want us to register the fund first,” he stated.
Many microfinance banks have closed shop due to poor corporate governance and lack of funds.
By Stanley Oronsaye, 234next.com
About 50 microfinance banks in the country may soon get a lifeline as a firm of investors has indicated interest in the sector.
Africa Capital and Business Support Limited (ACBS) said it has secured $400 million (N6 billion) from Suisse Bank Plc for onward investment in microfinance institutions. Benjamin Aduli, vice chairman of the company said it will invest in as many microfinance institutions in West Africa as possible.
“For now, we plan to invest in only 50 microfinance banks (MFBs) in Nigeria and if there is justification we may increase the number in future.”
Funding partnership
A fortnight ago, ACBS announced the signing of a Memorandum of Understanding with Integrated Microfinance Bank Limited (IMFB) for injection of funds. He said the firm was interested in IMFB because of its customer base and branch network. IMFB was one of the largest microfinance banks in the country until it applied to the regulators in September last year to temporarily close its operations due to liquidity problems.
According to Aduli, it is currently doing due diligence on five MFBs in Nigeria in line with the criteria set by its foreign partners. He however said the funds injection is not in form of equity as the company would pull out their funds as soon as possible.
“We represent Suisse Bank Plc in Nigeria. We do not do equity; we plan to exit though an Initial Public Offering in a few years time when the MFBs are stabilized,” he stated in an email response.
Microfinance sector
The microfinance sector has faced turbulence in the last few years since the reforms carried out by the Central Bank of Nigeria (CBN) in 2006. Since then, over 800 MFBs have been issued license with many of them not able to meet obligations to their customers.
Sanusi Lamido, CBN governor said recently that microfinance banks in the country have performed at less than optimal and that it was carrying out a systematic review of the current microfinance policy with a view to making it add more value to the economy. He said chief executive officers of microfinance banks in the country would be made to undergo examination in order to determine their level of professional competence, adding that those found wanting will be relieved of the positions.
Nigeria Deposit Insurance Corporation (NDIC) has also expressed concern about the poor performance of the sector. Umaru Ibrahim, acting managing director and chief executive of NDIC said recently that the poor corporate governance culture among operators was responsible for the dismal performance of companies in the sector. He said the corporation has completed a special audit of microfinance banks in the country, adding that operators found wanting will face appropriate sanctions.
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