A public relations and advertising consultant, Prince Emman Omadivi, has urged the Central Bank of Nigeria (CBN) to reconsider its stand on the recapitalization of Micro Finance Banks in Nigeria.
In a circular sent with REF: FRR/DIR/GEN/07/016, dated October 22, 2018 to all MFBs in the country, the apex bank directed them to recapitalize and comply with effect from April 01, 2020.
The Apex Bank had in a circular to MFBs put the deadline nationwide for recapitalization at April, 2020.
According to the circular, the new capital requirement are: Unit Microfinance Bank-N200m, State Microfinance Bank-N1 billion, National Microfinance Bank-N5 billion.
The circular stated among other things, that the sub-sector had been contending with such challenges as inadequate capital base, weak corporate governance, ineffective risk management practices, dearth of requisite capacity and mission drift.
It further stated that it had reviewed the state of health of the sub-sector and was of the view that MFBs as presently constituted would be unable to meet the critical targets set out in the microfinance policy, hence the need for specific reforms to strengthen the sub-sector and reposition MFBs toward improved performance.
Prince Omadivi contended that if truly MFBs were set up to increase financial inclusion rate in the country, improve access to financial services for the active rural poor and pursue poverty eradication, the present position of the CBN would negate the purpose, pointing out that most of the MFBs were initially community banks set up by very poor communities.
Although the CBN has advised the sub-sector to explore the possibility of mergers and acquisitions or direct injection of funds, many of the MFBs would be wound up and this would affect the same target-the active rural poor.
There is no doubt that some MFBs had hit the billion mark before now, such few ones are either corporate bodies or those owned and promoted by billionaires. One good example of a corporate MFB is the police MFB.
Prince Omadivi advised state governments to use this opportunity to inject funds into the MFBs in their states in order to use them to fight poverty, “even if they have to acquire the institutions.”
