Central Bank of Nigeria (CBN) has identified sound corporate governance and proficient, competent human resources (HR) as key requirements to a sustainable microfinance sector.
Agnes Martins, director, other financial institutions department, Central Bank of Nigeria (CBN), made the remark at the 5th conference on Microfinance and Enterprise Development organised by LAPO Institute on Wednesday in Benin City.
The conference has in its theme, ‘Human Resources, Corporate Governance and Microfinance Sustainability in Nigeria.’
It is impossible for any institution including microfinance to survive without sound corporate governance and proficient, competent human resources, Agnes noted.
The apex bank director, who however, hinged high rate of microfinance banks’ failure to poor asset quality and sometimes outright fraud, added that quality of human resources should be given utmost priority.
According to Agnes, ascribing adequate importance to quality of human resources in any organisation is key to its survival.
“Efficient and effective human resource is a necessary condition for sustaining the microfinance institutions in the country.
“It is said that the most critical asset of any organisation is its human resource. Thus, it is important to attract and retain the right kind of staff.
“With a strong workforce and best practice corporate governance, appropriate policies and strategies can be formulated. Effective oversight hinged on the presence of a principled board and management will enhance productivity at all levels within an organisation and translate to sustainability.
“The question arises why some institutions are able to consistently meet and even beat all regulatory minimum prudential ratios and financial soundness indicators while some eventually fail. The critical distinguishing factors are the quality of corporate governance and human resources,” she said.
She said sustainability of microfinance was the crux of the financial inclusion and poverty alleviation efforts of stakeholders, which include government, investors and regulators.
The CBN explained that surveys had shown that 30 percent of microfinance programmes fail while in years 2010, 2012, 2013 and 2017 the licences of 224, 103, 83 and 154 MFBs in Nigeria were respectively revoked.
She advocated that a sustainable microfinance institution or bank must be able to cover its costs through interest and other income paid by its customers.
Earlier, chairman, governing council, LAPO Institute, Godwin Ehigiamusoe, said achieving institutional sustainability remain a huge challenge for many microfinance banks and institutions.
Ehigiamusoe said the potentials of microfinance banks to address mass poverty and unemployment would remain mere “potentials” in the absence of sound corporate governance practices.
“A strong relationship between good corporate governance and institutional viability has been amply demonstrated.
“Effective governance is required to set viable goals and direction, perform over- sight functions and demand for performance and accountability from the management,” he added.
