Business
‘High Operational Cost Killing Micro Finance Institutions’
Chief Executive Officer, Olive Micro Finance Bank Ltd, Mr
Eniola Agbesoyin, has identified high cost of operation as a major challenge to
the growth of micro finance banks in Nigeria.
Agbesoyin told
newsmen in Lagos on Sunday that high operation cost had led to the collapse of
many micro finance banks.
He said for
instance, ‘’the epileptic power supply in the country has made operators in the
sub-sector to incur extra business cost.’’
Agbesoyin added that the cost of servicing other logistics,
including local government levies, were also challenging for their operations.
“The cost of providing alternative source of power and other
logistics like fuelling operational vehicles are too high.
“If you practise micro finance bank in Lagos, there are so
many issues to talk about, like the Lagos state Waste Management Authority, the
Local Government levies and others.
“Usually, high cost of operation is what is making a lot of
micro finance institutions to fail, especially when you are not making much
money,” he said.
Agbesoyin said that part of the money used for operational
costs could be used for the expansion of the business and providing better
services for customers.
He said that the micro finance sub-sector could only thrive
in an environment where there were viable infrastructure.
Agbesoyin said that micro finance banks were established to
empower the poor to grow their businesses.
He said that in view of the financial status of the clients,
the bank charges were very low.
“These are the people that cannot afford to pay so much
interest per transaction, so you need to ensure that you don’t over-charge
them.
“If you make things difficult for them, you might not be
able to fulfil the mandate of the sub-sector, which is to help the poor succeed
in their businesses,” he said.
Agbesoyin urged the government to assist the micro finance
institutions by way of providing reliable infrastructure that would enhance the
growth of the sub-sector.
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