For Microfinance Banks, MfBs, operating in Nigeria, year 2018 would not be forgotten too quickly as it opened with the suspension of their customers’ accounts that are without Bank Verification Number, BVN.
The apex regulator, Central Bank of Nigeria, CBN, thereafter, set a state-by-state financial inclusion target for the commercial banks and MfBs to ensure that every Nigerian adult has access to financial services such as payments, savings, credit, insurance and pension in a bid to achieve 80 percent financial inclusion by 2020.
As at January 22, 2018, MfBs operating in the country stood at 1008, rising to 1028 by the end of June 2018. True to speculations, the CBN in October reduced the subsector from 1028 to 882 by revoking the operational licences of 154 microfinance banks.
Giving reasons for the revocation, CBN explained that 62 of the MfBs have already closed shop, while 73 were insolvent; 11 terminally distressed, while five voluntarily filed for liquidation.
Meanwhile, the apex bank, less than one month to the revocation exercise, issued a circular to announce an increase in the minimum capital requirements for MfBs. The minimum capital requirements for State and Unit MfBs were increased by 900 percent to N1billion from N100 million for state MfBs and N200 million from N20 for Unit MfBs, while that of National MfBs was increased by 150 percent to N5 billion from N2 billion.
The new capital requirements were with immediate effect for new applications, while existing MfBs are required to comply effective from April 1, 2020.
MfBs operators were however divergent in the assessment of developments in subsector in 2018.
Managing Director, Crutech Community Micro-Finance Bank Nigeria Limited, Mr. Maurice Ekpenyong, pointed out that while the licensing of some banks enhanced public confidence in the subsector, the recent increase in capital requirement of MfBs has also created fear in the operators as regards their ability to raise the capital by April 2020.
Ekpenyong stated: “It is a mixed bag because with what is happening in the industry now, to meet the new capital requirement and remain in business are the major developments in the industry. Our operations are positive because of the public confidence we have generated over the years and the support we are getting from the institution.
“We are managing the threat; so to speak, we don’t think the current development would have any adverse bearing on our operations. Even though we have to strategize to see how we can overcome those challenges, in the short to medium term”.”
Also, Managing Director, Ilutitun-Osoro Microfinance Bank Limited, Ondo State, Mr. Ohizemokhai Mascot, said that MfB activities are robust especially as the CBN just imposed another round of recapitalisation on the industry. He said: “That means that the industry is growing. You would recall that there were MfBs that were not doing well before now. We commend the CBN for publishing those names so that they can know who is who in the industry. The recapitalization drive of the CBN puts a Unit MfB at ₦200 million, State at ₦1 billion and National at ₦5 billion, this is a welcome development.
“We industry players are proud to say that we have touched lives and the microfinance sub sector is growing. Look at an industry that has a total paid up capital of less than N100 billion eight years ago, now increased to nearly ₦600 billion, such a thing is commendable. We must commend the CBN for what they are doing because it is a step in the right direction. At a point, ₦25 billion was imposed on the commercial banks, it shows that the industry has come to stay particularly the way we have touched lives. Presently we are the only sector that is touching lives because we give out loans.
“The microfinance sub sector has come to stay in the sense that we have deposit insurance and, insurance for products we offer. I can boldly tell you that the confidence in the sub sector is growing unlike before.”