Microfinance bank policy should be reviewed to protect sector – Experts

Stakeholders in the Nigerian microfinance banking sub-sector have called for a review of the microfinance bank capitalization policy saying that it will ensure the survival of microfinance banks and deepen financial inclusion in the country.

The call is contained in a communiqué issued at the end of the two-day conference on microfinance and enterprise development organized by LAPO institute in Benin City. The third edition of the conference has as its theme, “Entrepreneurship, Financial Inclusion and Economic Development.”

Kenneth Okakwu, director-general of the institute, described the current capitalization policy of microfinance banks as anti-productive.

The stakeholders also re-stated the need for the government to review credit allocation to microfinance banks, noting that microfinance banks (MFBs) should be adequately funded to facilitate the desired growth and development of micro, small and medium businesses (MSMEs) in the .

They pointed out that high interest rate on commercial bank loans and delinquencies among MSMEs are major impediments to the smooth operations of microfinance banks in Nigeria.

The conference advised the federal government to reduce pressure on borrowing from the money market by sourcing its funds directly from the capital market as this will reduce the problem of fund unavailability for the banks. It also enjoined MSMEs to cultivate good credit behaviour towards loan repayment.

In addition, the experts noted that financial inclusion requires the collaboration of key stakeholders just and therefore advised development institutions like the LAPO Institute and LAPO Microfinance Bank to double their efforts towards deepening financial literacy and restoring confidence in the sector.

The conference also said that sustainable partnership with individuals and organizations, provision of inclusive financing, more engagement of social entrepreneurs (non- governmental organisations) are panaceas to poverty in Nigeria.

It observed that financial inclusion requires the collaboration of key stakeholders, and therefore advised development institutions like the LAPO Institute and LAPO Microfinance Bank to double their efforts towards deepening financial literacy and restoring confidence in the sector.

The conference commended the management of LAPO Institute for training over 36,000 Nigerians on microfinance and enterprise development, and for the provision of N2.8 million as Thesis Support Grant to over 19 post-graduate students.

It also applauded the capacity building programme of the Institute, which has benefitted over 13,098 participants drawn from Federal and State government agencies.

Catherine Eromosele, chairman of the conference and former deputy vice- chancellor of the Federal University of Agriculture, Abeokuta, Ogun State was among the dignitaries at the conference.  Others were Akii Ibhadode, keynote speaker and Vice-chancellor of the Federal University of Petroleum Resources, Effurun, Delta State. Godwin Emeifele, governor of the Central Bank of Nigeria (CBN), was represented at the conference by Madashiru Olaitan, director of finance development department at the CBN.  Ayobore Aletor, former vice chancellor of Elizade University, was also among the attendees at the conference.

IDRIS UMAR MOMOH,  Benin