Five million customers borrow N97bn from MFBs

The total loan portfolio of microfinance banks operating in the country stood at N97bn as of December 31, 2012, the President, National Association of Microfinance Banks, Mr. Jethro Akun, has said.

Akun stated this in a presentation made to the Managing Director, Nigerian Deposit Insurance Corporation, Alhaji Umaru Ibrahim, when the executives of the association visited the NDIC headquarters in Abuja on Wednesday.

He noted that the microfinance sector had about five million borrowers, and had in the past few years, contributed significantly to the economic development of the country.

For instance, the NAMB president said between 2012 and now, 22,000 people had been employed in 1,732 branches and cash centres of the MFBs.

Akun said with six million customers, the total deposit of the sector had grown to N125bn, while the total assets stood at N222bn.

He said the NDIC, under the leadership of Ibrahim, had introduced several initiatives that had helped to reposition the sector.

Some of the initiatives, according to him, are the setting up of a N16bn special fund to augment any foreseeable deficit in the premium expected from the MFBs; payment of N2.50bn to 75,322 verified depositors of 93 out of the 103 closed MFBs as of 2012; and the offer to provide on-lending package for the MFBs having liquidity issues.

On the challenges facing the sector, Akun said there was a need for the review of the policy on unit branches to ensure the opening of more branches at the local government level.

“One of the challenges we are currently confronting is the issue of banks having over 50 shareholders should convert to Public Liability Company. We have already written to the Corporate Affairs Commission that it should be optional and we are awaiting their response,” he added.

He also said the association was currently engaging the Federal Inland Revenue Service in order to work on some areas of disagreement, which had been a problem to its members.

For instance, Akun said, “It was agreed that the MFBs should be exempted from paying Value Added Tax and other charges. We are pursuing these and other issues and we hope to resolve them.”

He also called for the establishment of a private sector microfinance stabilisation fund to be managed by fund managers.

The association advocated the removal of the National Poverty Eradication Programme funds from the balance sheet of the MFBs, noting that this “has become a thorn in the flesh for most of them.”

On the default rate of the MFBs in the payment of insurance premium to the NDIC, Akun said, “The corporation should develop an appropriate premium payment system by the MFBs that will include punitive measures to defaulting banks and as a condition for member banks before accessing the Micro, Small and Medium Enterprise Development Fund as contained in the guideline.”

Ibrahim had threatened to withdraw insurance cover from any microfinance bank that consistently failed to pay its insurance premium.

He said about N398m had been received from the sector as insurance premium, adding that N44m was still being expected from about 100 MFBs.

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