No fewer than 200 Microfinance Banks (MfBs) may be affected by the new Central Bank of Nigeria (CBN) guidelines that put minimum capital base for Tier-2 MfBs at N50 million, Managing Director/CEO, Nigeria Incentive-Based Risk Sharing for Agricultural Lending (NIRSAL), Aliyu Abdulhameed, has said.
Speaking yesterday at the ongoing Finance Correspondents and Business Editors workshop organized by the CBN in Gombe State, Abdulhameed, said capitalisation for MfBs is crucial, as it determines the level of lending an operator can embark on.
The CBN had last month, approved N5 billion minimum capital base for National Microfinance Banks. The minimum capital bases for State Microfinance banks was set at N1 billion; Tier 1 Unit Microfinance Bank, N200 million and Tier 2 Unit Microfinance Bank minimum capital base was pegged at N50 million. The apex bank also set a three-year timeline for all categories of MfBs to complete their recapitalisation process on or before April 2021.
Abdulhameed, who spoke on the theme: NIRSAL Micro-Finance Bank and Real Sector Financing said that there are over 37 million Small and Medium Enterprises (SMEs) in the country, and that only one million operators have access to credit.
He said MfBs have to adequately capitalized to lend more to SMEs adding that more lending to the sector will be achieved with the partnership that has brought Nigeria Postal Service (NIPOST).
According to him, NIPOST operates in 1,800 locations across the country, and has the capacity to help bring financial services closer to the grassroots.
He said that NIRSAL has already brought in two million farmers into the financial system adding that bringing down interest on loans will require MFBs’s cost of operation to be reduced adding that 25 per cent of their operating cost goes to diesel.
Also speaking, CBN Director, Other Financial Institutions Department, Mrs. Tokunbo Martins, said that SMEs sector is the biggest employer of labour globally and Nigeria is not an exception.
Source: By Nduka Chiejina and Collins Nweze