Microfinance Banks Move To Stimulate Economy

The National Association of Microfinance Banks (NAMB), an umbrella body of all licensed microcredit commercial financial institutions in Nigeria, yesterday restated their commitment to stimulating the economy through rebranding.
National President of NAMB, Valentine Whensu, told newsmen in Lagos the association was developing new and sustainable modalities for microcredit financial intermediation in the rural areas.
He said the association’s approach was to encourage the establishment of more microfinance banks in rural areas for effective service delivery and actualisation of bottom to up economic development.
Whensu said their renewed commitment to driving the economy, especially the rural economy, stemmed from the absence of an effective microcredit system in Nigeria’s developing economy.
He noted that such made poverty alleviation and economic growth difficult.
According to Enhancing Financial Innovation Access (EFInA) data, 34.9 million people were in 2012 excluded from financial institutions services, as only 28.6 million benefitted from such banking services.
“This is a sharp contrast considering that Nigeria is populated with about 166 million people.
“A developing economy without an effective microcredit system is doomed to be in perpetual cycle of underperforming and crushing poverty,” Whensu said.
He also lamented the billions of naira circulating within the informal sector that it was unaccounted for in national and economic planning.
“NAMB sub-sector is set to address all these challenges,” he said.
The NAMB president said the anticipated effective service delivery would only be possible through a conscious effort by banks to develop attractive and less cumbersome loan packages.
He said that the operational loans environment created by banks would to a large extent determine the capacity and willingness of Nigerians to service the facilities as and when due.
Whensu said that microfinance bank operators would also be encouraged by the association to be proactive and to extend their business portfolios in such areas as micro-leasing, among others.
On the Central Bank of Nigeria (CBN) policies moderating their business, he described it as reasonable with rooms for expansion.
“If the CBN says, microfinance banks, your shareholding equity is now N100 million, it’s reasonable, at least, when people ask for loans, they can give. But I urge the apex regulatory body when it comes to equity, the banks in the villages should be considered because microfinance banks in rural areas don’t have that kind of money.

“The microfinance banks in the rural areas could be asked to have between N20 million and N40 million shareholders fund to attract investors to rural areas”.