Micro-Finance Banks And Poverty Alleviation In Rivers

A 33 year old Steven Aruba owns a welding workshop located in the New Layout area of old Port Harcourt Township with which he fends for his family. His ambition to expand his business has not materialised as every effort to raise enough money from relatives and friends to procure standard equipment had not yielded positive result. Worse still, he finds it difficult to meet the increasing daily patronise in the welding business.

 So when the government of Governor Chibuike Amaechi early in 2009 announced that it had floated a Micro Finance Agency (RIMA) to cater for the needs of small-scale business operators in the state, he saw it as a relief and an opportunity to realise his dream. He quickly applied for a loan of three hundred thousand naira after an initial of Three Thousand naira to open an account at one of the Micro Finance banks to pick the forms, which he completed and submitted, but till date that dream has not been realised more than one year after.

Steven is particularly irked that no reason has been given for the delay, just as many others who applied for loans from the authority.

Micro-Finance banking was introduced in Nigeria in 2007 in the wake of economic challenges of the time. The initiative came from the then Governor of the Central Bank of Nigeria (CBN) Professor Chukwuma Soludo.

Prior to the banking scheme, community banking was adopted as part of the federal government’s measures to open up credit lines and other financial services to people. So many prospective business men and women who had opened account with these micro-finance banks are yet to get their loans.

Although banking and finance experts explain that the role of micro finance experts explain that the role of micro finance banks is similar to the roles of the community banks, their ownership and lending pattern differ.

According to them, while community banks were owned by a community or group of communities, micro-finance banks could be established by individuals or investors who have met the required N20 million and above capital base.

Presently, there are about 920 micro finance banks in the country operating under the umbrella of the National Association of Micro Finance Banks (NAMB), and the years after their existence citizens are beginning to wonder if they have been able to meet its relevance in charting a new path for the economic development of the people despite several challenges.

A Port Harcourt businessman, Mr. Tonye Miebaka, thinks micro-finance banks floated in the state are mainly busy canvassing for customers without necessarily granting loans to prospective customers. ‘All they do is ask customers save up to a certain amount of money to qualify for paltry sum of money as loan’, he said.

He stated that some customers had at several time loosed their temper at officials of micro-finance banks for not keeping to the terms of the loan agreement even after they had met all the requirements for loan.

This scenario is not much different with the Rivers State Micro Finance Agency (RIMA), which was established in the wake of economic challenges among urban and rural dwellers in the state.

The government had advised RIMA to put in place workable programme that would ensure repayment by loan beneficiary to pave way for others who are interested in the scheme. But government advice had failed to yield positive result as RIMA has not meet the demand of prospective small and medium scale business  outfits in the state.

A Port Harcourt based trader, Mr. Iyobu Thomas, said: “I am disappointed that prospective customers could experience delay for several months after they had undergone several hurdles to attain rigours of obtaining the loan forms from micro-finance banks.

“When the Rivers State governor announced that his administration was out to alleviate poverty through the establishment of the Rivers State Micro Finance Agency (RIMA), trader,  civil servants thought small scale business would be empowered in the state to alleviate poverty but their hopes have been dashed. The sight of several micro-finance banks throughout the nooks and crannies of the state capital have not helped the hunger by people  to float their small businesses. Thomas said, I have lost confidence in the operation of the micro-finance banks as they are unhelpful to the business environment.

He said the micro-finance banks have outlived their existence and it is ripe for the state government to send the management packing.

A Port Harcourt based accountant, Mr. Tonye Omiebi,  said caution  should be taken for the  disbursement of micro finance loans to avoid  defaulters infiltrating into the scheme. This has become necessary because most community banks had to fold up due to non-performing loans.

Mr. Omiebi said: “There is a general feeling among economists that the micro-finance banks could spur remarkable growth in the small and micro sectors of the nation’s economy, where purposeful entrepreneurs require loans to finance viable projects.

He acknowledged the efforts of the agency to avoid the pitfalls of the past and urged the agency to strictly follow guidelines to justify and sustain their relevance in the nation’s economy.

The Managing Director of RIMA Sir, Victor Halliday said, contrary to perceived delay in the process of disbursing loans to prospective beneficiaries of the scheme, the agency is effectively perfecting plans that would benefit the entire state. The managing director pointed out that without proper planning and scrutiny the desired result would not be achieved.

“The issue is not disbursement, but productive utilisation and recovery for recycling. The money is intact, however there are technicalities in this business which is made more complex, because of the seeming belief in some quarters that government money is no man’s money” he stressed.

“The micro-finance loans depend on the ability of the beneficiary to pay back as at when due for repayment, adding that the maximum amount stands at N500,000 while the minimum is N100,000.

He emphasised that the agency was on course in the task and disclosed that it has so far cleared over 3,500 applications that fulfilled its requirement out of 8,000 received, pointing out that plans have not been concluded for the commencement of a pre-disbursement business ethics programme for beneficiaries across the 23 local government areas just as seven non-governmental organisations to serve as inspectors have been appointed.

The Managing Director stated that offer letters have similarly been granted to certified applicants through their micro-finance banks, stressing that although the law establishing the agency empowers it to make profit for government, its focus remains granting loans to business oriented Rivers men and women.

Patterson Koko