The desire of the federal government to see effective microfinance banks is encountering some challenges. Already, the Central Bank of Nigeria (CBN) has sanctioned a total of 83of the 900 licensed microfinance banks in Nigeria.
Alhaji Umaru Ibrahim, managing director of the Nigeria Deposit Insurance Corporation (NDIC), who made the disclosure when he appeared before the Senate Committee on Banking and Currency to defend NDIC’s 2014 budget, however, gave assurance that NDIC was already working to determine the number of depositors, their individual deposits and modalities for paying them.
He said the NDIC maintained confidence and stability of the banking system by effectively supervising and regulating the system, as well as paying depositors of liquidated institutions.
The NDIC has also stepped up awareness and campaigns about its activities to ensure that members of the public put up claims of their locked up deposits in liquidated financial institutions.
Since the operation of the microfinance bank is discovered to be epileptic, N105billion has been provided in the 2014 budget as payoff fund, should any bank collapse.
Most of these banks are not operating or in constant operation. Some of them lock up their offices for weeks or months and open briefly again so as to deceive the inspecting authorities.
This obviously shows that all is not well with the institution that is meant to stimulate investment and stir up the small-scale enterprises.Apart from the irregular opening of the microfinance banks to customers, there are reports of failures of these banks to keep their promises when it comes to acquisition of loans by depositors.
Most times these banks give juicy prospects and untapped opportunities that are available to customers, but when it comes to collecting loans they give conditions that discourage borrowing.
So far, there is no evidence to show that more people have ventured into small businesses, or that people engage in small-scale businesses have access to obtain loans for their businesses.
For example, where the microfinance bank customers may not be asked to give collaterals, in some cases, he or she is asked to deposit a postdated cheque duly signed by a guarantor or guarantors for the amount of money being borrowed.
Most customers on hearing this wince and begin to have a second thought about the need for the loan, since they reason that any person who can give them a postdated cheque for two hundred thousand naira (N200,000), five hundred thousand naira (N500,000) or one million naira (N1million) is as good as givingthem the loan.
Some prospective borrowers have questioned the wisdom in this aspect of collateral. To then, if they have a relation or friend who can give them this money they will not go to bank or microfinance bank for such facility, and any person who can give his postdated cheque as collateralin any bank can as well provide the loan.
Another concern often expressed by borrowers is the urgency of recovering the loan by the microfinance banks, which does not give the customer any breathing space within a short time.
Some microfinance banks seem to lack the capacity to employ the right calibre of staff for the jobs. Indeed, in some cases few hands are recruited on part-time basis and are owed salaries or wages for months.
If the purpose of setting up microfinance banks is for the stimulation of the economy by empowering those who cannot access or receive quality services in the conventional banks, we suggest the inclusion of new ideas that will help to provide quality services to the target beneficiaries.
