Central Bank to announce new template for microfinance banks
The Central Bank of
Nigeria (CBN) yesterday said it is developing a comprehensive template
to guide and regulate microfinance banking in the country.
Joe Alegienu, the
bank’s Director of Development Banking, said this at a meeting with the
management of the National Poverty Alleviation Programme (NAPEP) in
Abuja, adding that the new template will become operational before the
end of this year’s second quarter.
According to Mr.
Alegienu, microfinance banking has failed in the fight against poverty
as a result of the proliferation of mini-commercial bank operators
masquerading as microfinance operators.
The CBN, he said,
has observed with dismay the negative impact of the activities of these
operators, adding that most of them are former staff of commercial
financial institutions that failed to meet the conditions under the
recent banking sector consolidation policy.
“We do not want a
situation where the microfinance banks that were established to support
the fight against poverty among rural people are allowed to turn into a
monster that would consume the people,” Mr. Alegienu said. “We will
soon publish an operational template that would serve as a guide on how
microfinance banks are going to do business. It is time to tell those
not qualified to do the business to stay away.
“Every operator
must adapt itself to the principles of micro financing, which is that
microfinance banking does not succeed with large deposits mobilised
from depositors, but on large number of savings from ‘small peoples’,”
he said.
Beyond tricycle
Magnus Kpakol, the
Senior Special Adviser to the President and National Coordinator,
NAPEP, explained that the meeting was convened to enable coordinators
and microfinance bank operators discuss the various approaches to adopt
in the fight against poverty, which he said would not be won if the
people were not exposed to ways of applying the resources at their
disposal to their benefit.
“We want to go
beyond ‘keke NAPEP’,” Mr. Kpakol said. “We have to come up with
strategies on combating poverty. We must be seen as investing in
people. We are a wealthy nation in terms of resources, but to use the
resources to create wealth and raise income for the people is
important.”
He condemned the
practice where the government doles out money directly to cooperative
societies, saying this should be stopped or a way found to minimise the
practice, pointing out that the market place should henceforth be made
to allocate resources to the people.
“We have already written to state governments to lend interest-free
funds directly to the microfinance banks, which will lend to people at
commercial bank market rate of 20 percent and not cooperative
societies. These lending should be tied to performance and delivery. We
are also trying to involve the local government to ensure that they set
up at least five production activities every year.”