* Why we’re seeking stronger capital base for MFBs – Apex bank
As part of efforts to further promote financial inclusion, while ensuring the financial system is robust, the Central Bank of Nigeria (CBN) is currently considering increasing capital base for Microfinance Banks (MFBs).
Responding to questions posted on Wednesday during ‘CBN Tweet Meet 2018’ with the theme, ‘#GrowthNG Building on Nigeria’s Economic Recovery’, the Acting Director, Corporate Communications Department, CBN, Mr. Isaac Okoroafor, said that the apex bank is currently looking at stronger Capital Base for MFBs.
He said: “We believe that viable banks are required at this level to promote financial inclusion and Micro and Small Enterprises. As soon as a decision is taken on this, it will be made public.”
Okoroafor, who responded to different issues relating to the Nigerian economy, explained that the bank went into developmental functions because of gaps in Infrastructure like power, food supply and raw materials as in agriculture, among others because these sectors are key to price formation, cost of doing business and ultimately monetary and price stability.
Commenting on key success factors of growth in 2017 and outlook on 2018, Okoroafor said: “In 2017, more prudent use of forex reserves, vigorous funding of food production and manufacturing by CBN, introduction of a more flexible forex market especially the Investors & Exporters (I&E) FX window were key.”
On what Nigerians should expect in 2018, he explained that Nigerians should expect a better year than 2017.
“All the indices are positive. Better Oil price regime. Better growth figures expected, Inflation is trending down, and the exchange rate is stable. These are the markers of economic health, so @cenbank remains positive”, he stated.
Although the apex bank spokesperson noted that employment is not one of the direct mandates of CBN, he explained that the bank has funded agriculture and industry in order to create jobs as well as activities that will generate employment fall within the mandate of the fiscal side.
“Nevertheless, our interventions such as Anchor Borrowers Programme, MSME, Youth Entrepreneurship Development Programme, Accelerated Agric. Development Scheme (AADS), etc are geared towards funding the real sector for job creation|”, he added.
But speaking in an exclusive telephone chat with our correspondent on Wednesday, the erstwhile President of the National Association of Microfinance Banks (NAMB) and Managing Director/CEO, Global Initiative Microfinance Bank Limited, Mr. Valentine Whensu, explained that “Capital base increment is still under discussion, because this business actually needs money. Instead of them to witness any issue of under capitalisation that will affect the system, CBN is considering three options, either consolidation, merger or to increase the capital base.
“If they do that, of course they will discuss with the association in order to discuss with its members. But as it is, it is still under discussion.
“Increasing capital base is a good thing to the microfinance bank business; it is just that sentiment of ownership by communities that own some of these banks. But if we have to be serious, we have to put aside sentiments.
“However, there are some things that also have to be done in terms of legal framework that would assist the sub-sector such that if you give out money to people and when they don’t pay, what will happen to them?
“If we have something like that in place, and now increase the capital base, it makes the system robust and engenders more businesses and also help the financial inclusion programme of the Federal Government”, he added.