Talks heighten on mergers in MFB sector

Key micro finance banking (MFB) institutions in the country are already discussing possibilities of merging to scale up their operations and create a banking platform for the unbanked.

Rising concerns on the performance in the industry, which as of today has over 960 institutions, are major factor now driving the possibility of mergers, experts said on Thursday.

The Nigerian micro-finance platform consisting of Nigeria Police Force MFB, ACCION MFB, and LAPO MFB are already holding discussions that would ensure over the 960 MFB institutions perform optimally.

“We have come to the realisation of the fact that there are many micro-finance banks that are under performing, and the need to come together has become inevitable. We are hopeful that the Central Bank should apply some regulatory interventions and directive for improved performance,” Godwin Ehigiamusoe, managing director of LAPO MFB, told BusinessDay in Abuja after their symposium.

“It may be difficult to gather over 960 MFBs in the country, that is why we commenced talks with some bigger ones on the need of scaling up our activities. We have seen the benefits of consolidations in the commercial banks, and how it paid off. There is no better time than now for us to throw up these issues.

“We need to be more proactive, take bold steps and reap the benefits just like the commercial banks. In this light, it is timely that conversation on consolidation is already on going among key Micro-finance institutions in the country on better operational strategies.”

Nigeria has about 960 MFBs, however, only 50 percent control industry assets, and deposits and loans.

Nnanna Joel-Ezeugo, chief risk control and compliance officer at ACCION MFB, who doubles as the acting managing director, said discussions on consolidation should target offering improved opportunities for those at the bottom of the pyramid, and not otherwise.

“We are hoping that at the end of this platform, if the consolidation takes place we would have stronger Micro finance Bank system that extends opportunities to vulnerable Nigerians and encourages more financial inclusion,” she said.

 Azubuike Joel Udah, retired deputy inspector general of police and chairman of the Nigerian Police Force MFB, was of the opinion that micro finance must lead financial inclusiveness strategy.

For instance, the Nigeria Police MFB platform is expanding is services and advocacy to the public, he said, “informing them that the bank is not restricted to Officers and Men of the Force alone, but would extend the olive Branch to other entrepreneurs to encourage Financial inclusiveness.”

In his submission, Ahmad Abdullaji, director, other financial institutions Supervision department challenged the key MFBs to target market driven consolidations.

He said it was critical for the industry to find a way of bringing on board 40 percent unbanked Nigerians into the financial sector, while challenging them further to live up to its potential.