By Hope Moses-Ashike, Business Day Online
Since the launch of microfinance policy, several efforts have been made to ensure that stakeholders come together.
For instance, there is the National Association of Microfinance Banks (NAMB) at the national, state and zonal levels, and that has provided adequate platform for interaction and experience sharing among microfinance bankers.
The Central Bank of Nigeria (CBN) stated in the policy framework for microfinance banks (MFBs) support for apex associations of microfinance institutions/banks to promote self-regulation, uniform standards, transparency and good corporate practices. The associations shall also serve as platform for capacity building, product development and marketing, as well as resource sharing.
The sector at the moment will require moving a step further by having a platform for all the stakeholders in microfinance sector to interact, said Godwin Ehigiamusoe, managing director, Lift Above Poverty Organisation (LAPO) Microfinance Bank.
Ehigiamusoe, who spoke with BusinessDay in an interview, said this time it may not necessarily be a formalised institution but simply a forum or a platform for stakeholders such as the regulators – CBN and NDIC, MFBs and banks, who provide rating services, credit bureaus operators, trainers and indeed other sectors of the economy that have significant relationship with the sector.
Earlier, Mathias Omeh, former president of NAMB, said the MFBs had repositioned to ensure efficient service delivery to Nigerians.
According to him, the sub-sector will continue to collaborate with other stakeholders, especially development partners, in order to attract more funds.
That the executives of the association would continue to work hard to ensure that the microfinance banking in Nigeria met international standards.
His advice to the members of the association was that they should work hard to improve on the standards already set, warning that the CBN would not hesitate to clamp down on those who failed to comply with the revised micro-finance policy.
The CBN’s policy framework for MFBs also stated that the apex associations of microfinance institutions/banks shall ensure that members of the association render returns on their operations to the CBN, and work with other stakeholders for the promotion of financial literacy and consumer protection.
Also speaking on other issues such as the performance of MFBs after the sanitisation exercise by the CBN, Ehigiamusoe said, “After the challenges experienced in the microfinance sector some few years ago, it is obvious to most stakeholders in the sector that the industry is gradually taken off.
Afterwards, making more commitment to best practices we also know that a certification training programme organised by the CBN and other training centres across the country is also making a lot of contribution to the development of capacity in the sector.
“I hope in the next few years when there shall be adequate refinancing facilities, microfinance banks will be able to leverage the fund for on-lending the sector. It will definitely make considerable impact on the economy and particularly on low income people.”
The official rolling out of a trust fund by the National Association of Microfinance Banks (NAMB) Lagos chapter and the BGL known as the NAMBLAG/BGL Trust Fund is expected to bring to an end the long financial starvation of the people at the grassroots as there will not only be enough funds for on lending to them.
Apart from having enough funds, they will also access the credit at a single digit interest rate. Presently, most microfinance banks are charging six percent interest rate per month on a reducing balance. This, however, has been attributed to high cost of sourcing fund by operators.
More so, as the Federal Government is trying to diversify the economy with much focus on agriculture, the local farmers can now have access to funds to boost their agricultural business. This will in turn lead to employment creation because as businesses expand, more human capital will be required.
Taking a bull by the horn after waiting endlessly for the one percent of the annual budget of the local and State governments, support from the Federal government and the Central Bank of Nigeria (CBN)’s microfinance development fund, the Association last week officially rolled out a NAMBLA/BGL trust fund targeted at alleviating poverty in the country.
The NAMBLAG/BGL trust fund is a private fund set up to provide liquidity to microfinance banks at a single digit for onward lending to the active poor in Nigeria.
The parties to the fund include, BGL group, CDL Asset management limited, GTB trustees, credit registry, board of advisors, Emmanule Ijewere, Adebayo Adewusi, Valentine Whensu, Uhy Maaji, world view chambers, credit consultants, Nsikak Ekure, payment and settlement banks – skye bank plc, Fidelity bank, executive committee to the fund – Capstone, VCL, Infinity, Echo, Karies, Owotutu, Unicredit Microfinance banks.
The NAMBLAG/BGL trust fund will provide shirt term, medium and long term funds to microfinance banks at a single rate.
It was packed with the active support of international donors, agencies, Non Governmental Agencies (NGOs), and corporate bodies that are willing to support poverty alleviation, empowerment of the active poor and provide banking services to the underbanked.
“It is the first private fund initiative in Africa. It is going to be a landmark success. We want to set the pace that other countries can emulate,” said Olufemi Babajide, chairman of the Association.
He explained that there are 12 parties with track record involved in the fund that will ensure that it is well managed.
“The implication is that the rate at which we give to our members will be low. We want to do something reasonable and affordable to our customers,” he said.
Babajide advised every member of the association to contribute a minimum of N500, 000 to the fund before they can access it.
Speaking earlier on mismanagement of funds by operators, in an interview with BusinessDay, he said, “Those that can do that are gone. With our internal regulation, with the way we are meeting, as an association that will not happen. A lot of things happened in the past because there was no strong association. But we all know that we have burnt our fingers, we have made mistakes, let us get this fund and let us use this judiciously.”
SOURCE: Business Day Online
By Hope Moses-Ashike, Business Day Online
China’s central government plans to spend 170 billion yuan ($27 billion) this year to promote energy conservation, emission reductions and renewable energy.
Also, about 30,000 small solar panels that can generate between 12 to 30 watts of renewable energy are in use in rural communities in Kenya. These solar panels power household appliances such as light, heating system, cooker and lamps among others.
Despite being a major fossil fuel producer and having an abundance of renewable energy sources, Nigeria is plagued by a persistent energy crisis characterised by inefficiency, poor quality and low access to energy resources.
The poor are especially vulnerable to paying higher prices for non renewable energy sources that are hazardous to their own health and the environment.
All these will soon be over as the National Association of Microfinance Banks Lagos (NAMBLAG) chapter is willing to partner Bank of Industry and United Nations Development Programme (UNDP) in the area of bringing renewable energy products to the door steps of their customers.
Operators say the introduction of renewable energy services into the microfinance sub-sector will mean alternative income opportunity to the industry.
Olufemi Babajide, chirman of the Association, believes that the renewable energy will help in poverty alleviation, improve the quality of life of the active under privilege, create opportunity for self employment, increase in microfinance outreach programme and support their linkage programme.
According to him, energy is very critical in human development. However, challenges of the present form of energy generation include high cost of distribution, very high cost of extraction/exploration and production, and increased cost and high risk of transportation.
Other major challenges include price volatility and high rate of emission of greenhouse of gases that harm the environment.
To him, there is the need to replace the present mode of energy generation with what is acclaimed to be the best form of energy generation which is cost effective and environmentally friendly. They are generated from sunlight, wind, rain geothermal heat plants, ocean waves and so on. He said the beauty of renewable energy was that they can carefully replaced and controlled. They have no risk of finishing.
In his brief remarks at the renewable energy finance training for microfinance institutions in Lagos, Babajide said about 16 percent of the global energy consumption comes from renewable. Wind power is growing massively worldwide; solar power growth is also on the increase. Renewable energy projects on small, medium and large scales are beginning to gain momentum in different parts of the world. They can be tailored made to suit rural and remote areas. Renewable energy has the ability to lift the poorest nations to new levels of prosperity.
“We need to deliver smooth, efficient and effective services. There is the need to add value to the lives and well being of our numerous clients and customers. This can only be achieved if we are innovative and forward looking in the sub-sector,” Babajide said.
Giving a brief update on the AtRE project, Lawal Gada, renewable energy manager, AtRE said the way forward for the project was to commence renewable energy project in Nigeria. Other ways, according to him are to eliminate all barriers for renewable energy funding in Nigeria and to link the renewable energy services providers with the financial institutions for funding.
Another way forward, he said, is to monitor and establish best practice in renewable development in Nigeria and to collaborate and network with other institutions with common goals, among others.
The UNDP/BOI Access to Renewable energy (AtRE) project is a project initiated by the Bank of Industry (BoI) with the support of the UNGP
By Hope Moses-Ashike, Business Day Online
Two years ago, the Central Bank of Nigeria (CBN) introduced certification programme that chief executive officers of microfinance banks, MFBs, must pass certain examinations or lose their jobs, which forms part of a capacity building programme to make the domestic MFB industry more robust and transparent.
The initiative was as a result of lack of capacity in practical microfinance banking, which has led to mission drift by operators of MFBs.
MFBs were operating like ‘micro-commercial banks’ with flamboyance, fleet of branded cars and high expenditure profile.
Other challenges are poor corporate governance and susceptibility to insider abuse, incompetence and ineffective oversight of the board, poor risk management and weak internal controls.
When the regulatory authority announced this project, operators of MFBs saw it as a welcome development, perhaps because of the huge advantage it will have on the sub-sector.
According to Edim Obim, managing director/CEO, Unical Microfinance Bank Limited, Calabar, Cross River State, the intension is to sharpen the conceptual, technical and human relations skills of management staff for more efficient management, better service delivery as well as better initiative and creativity.
This is a new and welcome innovation that will certainly impact positively on entrepreneurial development in Nigeria.
As a developing nation, this is very crucial considering the fact that MFBs are grassroots players.
The multiplier effect will be enormous in the area of employment generation, assets creation, growth in earnings, improvements in living standards and stemming of rural-urban drift. The bottom line of course is accelerated economic growth and development.
Although some of the chief executives of some MFBs have undergone the programme and obtained certificate, the capacity programme is a continuous project.
For instance, as a follow up to the certification programme, the CBN in collaboration with the Nigeria Deposit Insurance Corporation (NDIC) and Financial Institutions Training Centre (FITC) will be organising a one-week mandatory training programme for directors of all MFBs in six locations in June, 2012.
The programme is aimed at exposing these directors to microfinance fundamentals and in the process equips them with essential skills needed to operate their institutions efficiently, such that these institutions will be well positioned to effectively discharge their developmental role in the national economy, going forward.
Key topics to be covered during the training programme include – introduction to microfinance, managing microfinance banks, financial statement analysis and planning, risk management, corporate governance, and regulatory issues and management of microfinance banks.
To ensure national coverage and facilitate participation of all MFBs across the country, the training programme will be held at six centres over a three-week run. The centres are Port Harcourt and Enugu – from June 4 to 8, 2012; Ibadan and Abuja – from June 18 to 22, 2012, and the two centres in Lagos – from June 25 to 29, 2012.
In order to ensure affordability by all MFBs, the course fee has been heavily subsidised by the CBN and NDIC. In furtherance to this, each MFB is expected to nominate two of its directors to attend the training programme. It is expected that at the end of this mandatory training programme, the MFBs that participated will be in the right position to support the Federal Government’s aspiration to transform the national economy, as experienced in the emerging markets and the developed economies by delivering on their respective institution’s mandates.
By Akinola Ajibade, The Nation
• Fund was established as micro finance fund
A director, Other Financial Institutions Development (OFID) Department of the Central Bank of Nigeria (CBN), Olufemi Fabanwo, has said the Micro, Small and Medium Enterprises Development (MSMES) fund is not for weak microfinance banks.
Fabanwo said only institutions with proven record of performance would be able to access the fund. He said the fund is not meant to bailout distressed micro-finance banks as people have been made to believe.
He said: “The MSMEs fund is not medicine for those who are weak, it is going to be assessed by institutions that have shown proven record of performance; it is not for any micro finance bank. It is not a bailout fund. There is going to be a social window for capacity building in any area that will augur well for the development of the sub-sector.”
The director said CBN is not satisfied with the level of returns and rendition of the audited accounts of micro-finance banks.
He said only about 70 per cent rendition has been recorded by the apex bank since the end of the last financial year, stating that the MfBs recorded greater stability after the September ‘sanitation’ exercise carried out by the apex bank in which 244 licences of MfBs were revoked.
Fabanwo stressed the need for micro-finance banks to update their subscriptions annually, warning that the CBN would not hesitate to penalise defaulters.
He said there was need for improvement as the figure only represents a quarter of the expected 1,708 participants.
Fabanwo observed that the shortfall in attendance indicated that apathy in the activities of the association is still an issue.
Commenting on the new development fund, the immediate past president of NAMB, Chief Matthias Omeh, said the announcement by CBN of the change in the name of MDF to MSME fund was new to him.
“I am just hearing about it for the first time from the Director of OFID, that they have changed the MDF to MSMEs,” he said, adding that although he had not seen the details, micro-finance banks still fall into the range of small and medium scale enterprises.
By Hope Moses-Ashike, Business Day Online
Recently, the government of Western Australia granted payroll tax rebate to small businesses operating in that country. Such small businesses with nationwide group payrolls of up to $1.5 million in the 2012/13 financial year would receive a full rebate of their WA payroll tax liabilities, with a maximum value of $41,250.
The rebate is part of the measures the Western Australian government has put in place to reduce the tax burden on small businesses, which were the backbone of the economy. This will help ensure that, that country remains an attractive place to do business.
If this is replicated in Nigeria, particularly in the microfinance sub-sector, operators say, the same advantage or benefit could be achieved.
Going by the policy guideline for microfinance banks by the Central Bank of Nigeria (CBN), in December 2005, the CBN introduced a Microfinance Policy Framework to enhance the access of micro-entrepreneurs to financial services required to boost, expand and/or modernise their operations and contribute to rapid national economic growth.
Investigation by BusinessDay shows that since inception, microfinance banks have not enjoyed any form of tax rebate or holiday from the governments.
Edim Obim, managing director/CEO of Unical Microfinance bank limited, Calabar, Cross River, said from the very year he commenced operation, he has been paying tax. He pays tax to the tune of N7 million per annum to government.
According to him, government should as a matter of policy and priority create or provide an enabling/stable Macro-economic, political and social environment for doing business generally and microfinance business in particular in the way of granting tax rebate/relief for micro institutions.
Obim advocates that government should grant microfinance banks tax relief in order to consolidate and provide financial services to the people at the grassroots.
Reacting to the development, Olufemi Babajide, National Association of Microfinance Banks, Lagos chapter (NAMLAG), confirmed that microfinance banks had not enjoyed tax holiday from governments, adding that the sub-sector has made some approach to the government to that effect, but without positive response yet.
“Microfinance banking is a new business. We should have tax holiday for at least 10 years so that we can establish well and serve the low income earners better,” said Babajide.
For Obim, government should provide basic infrastructure/amenities such as good/rural roads, portable water, functional electricity, Telecom facilities/Rural Telephony, Security of life and property, health and educational facilities, among others.
Moreso, the government should Foster easier land titling processes and other property rights to qualify land/property in rural areas as acceptable collateral for bank credits.
Other things government should do to encourage microfinance banks include assistance in publicity/enlightenment programmes, especially for the rural masses where microfinance services are needed most; enforce the one percent budgetary contribution by state and local governments through the enactment of appropriate legislation/law to back up the policy, and subsidise credit programmes in rural areas (e.g. through the Bank of Industry). The Bank of Industry could also provide funds for on-lending participation by microfinance institutions.
However, it has been reported that the Federal Government has promised tax rebates for companies that participate in the Surulere Job fair held recently in Lagos. Femi Gbajabiamila, minority leader, Federal House of Representatives, noted that President Goodluck Jonathan, in his budget presentation, said there would be tax rebates based on employment, meaning that companies that helped in reducing unemployment levels in the country would enjoy several tax incentives.
By Obinna Chima, This Day Live
As part of efforts to ensure that they smoothly migrate to the International Financial Reporting Standards (IFRS), Microfinance Banks (MFBs) in Lagos State had embarked on capacity building programmes.
Chairman, Lagos Chapter of the National Association of Microfinance Banks (NAMB), Mr. Olufemi Babajide, who disclosed this in an interview with THISDAY.
MFBs were expected to start reporting based on IFRS from next year.
Their counterparts in the commercial banking segment, last week disclosed that, in conjunction with the CBN, they had contributed a total of N500 million to fund the IFRS Academy.
The IFRS represents a set of generally accepted accounting principles (GAAP) used by companies to prepare financial statements. It IFRS aims at providing a global framework on how public companies prepare and disclose their financial statements. It also provides general guidance for the preparation of financial statements.
But Babajide said: “We started training our members on IFRS since last year. We have also held three capacity building programmes on IFRS this year. Although it is expected to commence next year, we have asked our members to prepare.”
On the cost associated with conversion to IFRS, NAMB Lagos boss said his group had identified firms that would see them through the conversion.
“We are beginning to see some consulting firms that are willing to take us through the process with charges that are moderate. We are seriously working to ensure that all our members comply,” he added.
Commenting on the directive by the CBN that MFBs and other financial institutions should adopt a uniform financial year-end, Babajide, said most MFBs in Lagos State had already complied with the directive, saying that before the announcement, the chapter had adopted a uniform year-end.
According to him, the MFBs took the decision in 2009, when the apex bank initially directed commercial banks to adopt a uniform financial year-end.
“About 90 per cent of our members have adopted a uniform,-accounting year-end. Only very few of us are remaining and we know that soon, they would also align with the common year-end,” he added.
The Lagos NAMB boss argued that operators in the industry had since the intervention of the regulator ion 2009, enhanced their capital, installed the necessary infrastructure and are waiting for the release of the microfinance development fund (MDF) to revive their operations.
“We also want the CBN to collaborate with the association, to create a law that will compel the three tiers of government to set aside one per cent of their budget, to be disbursed through microfinance banks to alleviate poverty in Nigeria. Once all these things are put in place, then we would be well positioned to deliver microfinance banking services efficiently,” Babajide declared.
The Central Bank of Nigeria (CBN) at the weekend said that the Micro, Small and Medium Enterprises Development (MSMEs) fund was not meant to bail out distressed micro-finance banks.
The Director, Other Financial Institutions Development (OFID) department of the CBN, Mr. Olufemi Fabanwo, made the clarification at the 2nd Annual General Meeting (AGM) of the National Association of Micro Finance Banks (NAMB) in Abuja.
Fabanwo said the fund, which was initially established as Micro Finance Development Fund (MDF), was changed to MSMEs Development Fund.
“The MSMEs fund is not medicine for those who are weak, the MSME fund is going to be assessed by institutions that have shown proven record of performance; it is not for any micro finance bank.
“It is not a bailout fund. There is going to be a social window for capacity building in any area that will augur well for the development of the sub-sector.’’
The director said CBN was not satisfied with the level of returns rendition and the audited accounts of micro-finance banks. He said that only about 70 per cent rendition had been recorded by the apex bank since the end of the last financial year.
Fabanwo, however, added that the MFBs had recorded greater stability after the September ‘sanitation’ carried out by the apex bank in which 244 licences of MFBs were revoked. He stressed the need for micro-finance banks to update their subscriptions annually, warning that the apex bank would not hesitate to penalise defaulters.
Nigeria: Micro Finance Banks Account For 3 Per Cent Of Nigeria’s GDP Growth In 2011, Says Association
From Leadership, Nigeria
The National Association of Micro finance Banks (NAMB) said on Wednesday in Abuja that microfinance banks improved the country’s Gross Domestic Product (GDP) by 3 per cent in 2011.
Alhaji Kabir Yar’adua, NAMB’s Executive Secretary, said this in an interview with the News Agency of Nigeria (NAN).
Yar’adua said that the association was doing all it could to ensure that it stepped up the its GDP contribution to At least 20 per cent.
“The intention is for the contribution to be up 15 to 20 per cent. We have a long way but surely we are going there. All indicators are pointing to that direction and don’t forget recently the Central Bank sanitised the sub-sector.’’
Yar’adua said a number of factors were working against the realisation of the objectives of the micro finance banks and gave the assurance that the association would do all it could to address some of the challenges.
He said that the inability of people to differentiate between microfinance banks and microfinance institutions was affecting the operations of microfinance banks.
“There is a lot of mistrust from the public; public don’t trust microfinance banks because they don’t know the difference between microfinance institutions and microfinance banks.
“We have microfinance institutions that get registered at the Corporate Affairs Commission to operate as cooperative societies or microfinance institutions.’’
He said that the mistrust had impacted negatively on the members.
According to him, no company has the right to canvass for deposits from the public without first obtaining licence from the central bank.
He suggested that Federal Government should introduce a kind of intervention fund to the microfinance industry just like it has done in other areas of the economy.
According to Yar’adua, the association has been meeting with the Central Bank of Nigeria (CBN) to set up the Microfinance Banks Development Fund.
He said that the fund would empower the micro and small enterprises, being the engine of growth of any economy.
The National Association of Microfinance Banks (NAMB) says the sub-sector has been repositioned to ensure efficient service delivery to Nigerians.
Mathias Omeh, the President of NAMB, who spoke in Lagos on Wednesday, explained that the sub- sector had focused on advocacy, capacity building
and information sharing through ICT in the last one year. He added that the association had undertaken exposure tours to Germany, Bangladesh and India in order to improve the sector.
According to him, more tours will be planned for members at all levels to Ghana, Kenya and other countries that have recorded successes in their micro-finance banking industry.
Omeh said the sub-sector would continue to collaborate with other stakeholders, especially development partners, in order to attract more funds into the sector.
He assured Nigerians that the executives of the association would continue to work hard to ensure that the micro-finance banking in Nigeria met international standards.
“There is now better stability, less occurrence of failure and a significant reduction of unethical behaviour in the micro-finance banking industry,” he said.
Omeh urged members to work hard to improve on the standard already set, warning that the Central Bank of Nigeria (CBN) would not hesitate to clamp down on those who failed to comply with the revised micro-finance policy.
He said the association was making efforts to establish a stabilisation fund to assist any micro-finance bank that might experience financial problems from going under.
“The stabilisation fund idea being proposed is used in Germany to keep afloat their micro-finance banks for 40 years without any failure.” Omeh urged the Federal Government, CBN and other agencies to emulate India by channelling funds meant for rural development through the micro-finance banks.
Fom Business Day Online