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Fred Itua, Abuja
Former Governor of Nasarawa State and a serving senator, Abdullahi Adamu, has raised concerns over Federal Government’s decision to raise the capital base of microfinance bank’s to N200million from the current N20million.
He warned that the policy if implemented, would pose survival challenges to the industry.
Adamu who spoke in Abuja, at the weekend during the 2019 annual general meeting of National Association of Micro-finance Banks (NAMB), with the theme, “Sustainable and Innovative Digital Finance in MSME Development in Nigeria”, said plans by the government, through the Central Bank of Nigeria (CBN) to raise microfinance bank capitalisation could trigger a major financial crisis in the sector.
He wondered what could have informed such a policy, warning that despite being a member of All Progressives Alliance (APC), he could not sit idly and watch some persons mislead the administration of President Muhammadu Buhari.
“In April this year, the government served a notice that it would raise the microfinance bank capital from N20 million to N200 million from April next year. I do not know the rationale for this new policy, but I have no doubt in my mind it would be inimical to the growth of that sector.”
The National President of the Association, Mr. Rogers Nwoke, in his remarks, said the establishment of Micro Finance Company Limited with an authorised share capital of N500 million would enable NAMBattract more wholesale capital that will drive fund availability to small scale businesses.
Rogers said the microfinance development company would serve as a special purpose vehicle to manage on-lending wholesale funds for the benefit of the banks and the sector as a whole.
He further noted that the Association’s intent of establishing the company was to ensure it reaches out to respective members in line with its risk acceptance criteria with a view to making funds available at better rates for easier access by small scale businesses.
On the Micro Finance Development Company, he said, “the company has developed its risk acceptance criteria for each unit of every microfinance bank. We developed different risk acceptance criteria and used them to attend to businesses according to their size, capitalisation and other characteristics. We then give the microfinance banks according to their needs and circumstances.
“Our Association, in collaboration with all the MFBs in Nigeria had set up a company called the Micro-finance Bank Development Company, which has a capital base of N500 million.”
He said, “our position, however, is that there should be a microfinance development fund. The intervention fund is great, but not exclusive to MFBs. We need that fund to come to microfinance banks.
“There is need to establish a microfinance development fund, as contained in the microfinance bank policy framework.”
